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Big Government Means Poorer People

Richard Nixon meets Leonid Brezhnev June 19, 1...
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“By one measure, the government already plays an outsize role in our so-called free-market economy—and it has little to do with the recession. Economist Gary Shilling has calculated that 58 percent of the population is dependent on the government for “major parts of their income” including teachers, soldiers, bureaucrats, and other government employees; welfare and Social Security recipients; government pensioners; public housing beneficiaries; and people who work for government contractors. By 2018, Shilling estimates, an astounding 67 percent of Americans could be dependent on the government for their livelihood. The implications aren’t comforting.”

The shocking quote above is from an article by Rick Newman.

Bigger government means poorer people. The government arguably produces no goods and few services. It has no money. It can only get money three ways: 1) borrow it, 2)tax or 3)print it. The first two merely shifts money from the private (productive) sector to have it spent by the public (unproductive) sector. What the government spends, the private sector cannot. The third way, printing it, produces no long-run production and only inflation (a hidden tax borne by all citizens in the form of higher prices).

If government spending represents 25% of the economy, it means that only 75% are producing and supporting the others. When you get up to the 50% and higher ranges, then you have less than half the people supporting the others. Anyone that thinks an economy imbalanced in this fashion can grow or grow at reasonably fast rates should look at the sclerotic economies of Old Europe. Even Communist Premier Leonid I. Brezhnev understood that “One can only distribute and consume what has been produced, this is an elementary truth.”

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