Focus Point - How much spending is too much?Commentary by Pete du Pont
August 09, 2000
I'm Pete du Pont with the National Center for Policy Analysis. How much government spending is enough?
In developed countries, it averages 45 percent of GDP. A new NCPA study by Gerald Scully says countries don't get their money's worth.
Some spending -- roads, education, defense -- positively affects per capita GDP. But beyond a certain point the tax burden necessary to finance spending retards the growth of per capita GDP.
Advanced countries realize no benefit in terms of social progress from government spending beyond 19 percent of GDP. The U.S. is now 21 percent.
And the optimal level of per capita spending -- where a dollar increase in public spending buys a dollar's worth of additional improvement in social progress -- is just 5.6 percent.
So virtually all the world's most developed countries are receiving no gains in social progress at the margin from government spending - and they're spending a ton.
The evidence is there; countries can shrink the size of the fiscal state without doing harm to social progress.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, the voucher showdown.