More Government Spending Will Not Help Social Progress, New NCPA Study Say

DALLAS (July 17, 2000) - Many studies have shown that bloated government budgets can become a drag on economic growth. But is big government needed to achieve such non-economic objectives as literacy and better health care outcomes?

A new study says "no." The study, by the National Center for Policy Analysis (NCPA), finds that around the world there is a relationship between the size of government and higher literacy, higher life expectancy and lower infant mortality. But almost all developed countries have gone well beyond the point at which larger government has a positive impact on these and other measures of social progress.

"Many people think you can solve a lot of social problems by spending more money on new government programs," said Gerald Scully, a senior fellow with the NCPA and the study's author. "The data fails to support that view."

The study notes that many different types of government spending may affect measures of social progress - including spending of roads, police, hospitals and schools. But given current spending patterns among developed countries, there is virtually no relationship between the size of government and measures of social progress. For example:

  • The United States and Australia (in which government spending on goods and services is less that 40 percent of GDP) have about the same level of progress as France and Germany (where government spending is 50 percent of GDP) and Denmark (where they spend more than 60 percent).
  • Japan, which spends less than 40 percent of GDP, scores better on quality of life indicators than either Sweden or Denmark, both of whom spend more than 60 percent of GDP.

"Countries that tax more and spend more don't have fewer social problems," Scully added.

In addition to literacy and health, the study also looked at such other quality of life indicators as crime rates and the availability of roads and telephones for 112 different countries.