7/5/12

Prog Formula Works Like A Charm

How Statists Are Getting Away with It
Government does smother growth, for example. But it does so slowly and incrementally, making it difficult for the average person to notice from day to day or year to year. Armageddon never comes. We don't go over some "cliff."

Because of this, statists have been able to get away with growing government without alarming the populace. To the average voter, government grows a bit every year, yet things get a little better every year (on average, over time), so there must not be a conflict. In fact, many believe that more government caused the improvement.

I can explain all this in fairly precise terms -- an equation, in fact.

Growth = 7% - 0.1 X Spending

"Growth" is the annual percentage growth rate of real GDP, and "Spending" is total government spending as a percent of GDP.

If government were all but nonexistent, growth would be near 7% per year. Growth happens; government didn't need to do much of anything beyond enforce property rights and some amount of rule of law. On the other hand, if government spent 70% of GDP, growth would be zero. And if government spent even more than that, GDP would shrink.

But in between government spending zero and 70% of GDP, some amount of economic growth will occur. Suppose government spending is 40% of GDP. Then the real growth rate would be 7% - 4% = 3% per year, or about the average growth in the U.S. from 1968 to 2008.

If our statists can be patient and accept incrementalism as a strategy, they can convince enough people enough of the time that conservatives are unnecessarily alarmist, that economic growth is compatible with big government, and that things are actually getting better, probably because of big government.

In the meantime, they'll be taking about half of everything, and you won't know you could have been a lot better off without them.

It's an awesome strategy. It's about 80 years old now, and working like a charm.
(full story at americanthinker.com)

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