This is adapted from something I wrote in a response to another post (which I nicked from an argument someone made in the Salon forums).
Over the past few decades, the US has tended to have unusually low levels of government spending relative to GDP, at least by the standards of major wealthy nations. Generally speaking, the governments of wealthy democracies tend to spend somewhere between 25% and 55% of GDP on non-military matters.
COVID-era numbers have been distorted both in terms of spending and GDP, but here's how it looked shortly before the pandemic:
https://web.archive.org/web/20200316...pending-to-gdp
After adjusting for 2019 military spending, non-military government spending was highest in France, at 54.14%, the EU as a whole was at 43.8%, and the US was at 34.4%. Only a trio of wealthy countries were lower than the US: Switzerland at 31.7%, and South Korea at 27.57%, and Ireland at 25.4%.
So, imagine you were training for a marathon and you were wondering whether maybe you should cut back on your miles, for fear of overtraining and getting hurt. Or are you undertraining, and you should increase your mileage? Well, what if you found out that you were already closer to the bottom of the range of mileage than the middle, in terms of the runners you were competing with? What if you know that some of your peers who are excellent marathoners train a lot more miles than you do, but that almost none trains a lot less than you?
That would suggest you could probably improve with more mileage, and that there's not much risk you're already overtraining. If nearly everyone who trained fewer miles than you was a much slower marathoner, it would strongly suggest decreasing your miles would hurt your times.
Similarly, if nearly every country that spends less of its GDP on non-military government spending than us is a much poorer country than us, it suggests that moving in their direction is likely to hurt our prosperity.
We KNOW, from real examples, that it's possible to have a wealthy democracy with much higher non-military government spending as a share of GDP than we have -- and to sustain that.... 15 or 20 points higher, in fact. There's no reason to think we'd be entering into a "danger zone" if we boosted such spending by eight points, for example, since that would still leave us a bit below average by EU standards, and still far below several wealthy countries. By comparison, if we dropped it by eight points, we'd be in a range where no other wealthy nation has sustained besides Ireland (which only did it by way of accounting tricks[SUP]*[/SUP]).
With us knowing we could move up our spending a lot while still being in good company, whereas moving our spending down would soon have us only in the company of poor nations, I'd argue it makes more sense to experiment with higher government spending, rather than risking still lower.
[SUP]*[/SUP][SUB]Irish GDP is overstated, since it's a tax shelter where GDP shows up on paper, from international corporations overpaying their own Irish subsidiaries for services, merely to recognize revenues in that tax haven. It's not actually creating that much value.... merely hosting it for accounting purposes. That, in turn, results in making their government spending look artificially low relative to GDP.[/SUB]
Over the past few decades, the US has tended to have unusually low levels of government spending relative to GDP, at least by the standards of major wealthy nations. Generally speaking, the governments of wealthy democracies tend to spend somewhere between 25% and 55% of GDP on non-military matters.
COVID-era numbers have been distorted both in terms of spending and GDP, but here's how it looked shortly before the pandemic:
https://web.archive.org/web/20200316...pending-to-gdp
After adjusting for 2019 military spending, non-military government spending was highest in France, at 54.14%, the EU as a whole was at 43.8%, and the US was at 34.4%. Only a trio of wealthy countries were lower than the US: Switzerland at 31.7%, and South Korea at 27.57%, and Ireland at 25.4%.
So, imagine you were training for a marathon and you were wondering whether maybe you should cut back on your miles, for fear of overtraining and getting hurt. Or are you undertraining, and you should increase your mileage? Well, what if you found out that you were already closer to the bottom of the range of mileage than the middle, in terms of the runners you were competing with? What if you know that some of your peers who are excellent marathoners train a lot more miles than you do, but that almost none trains a lot less than you?
That would suggest you could probably improve with more mileage, and that there's not much risk you're already overtraining. If nearly everyone who trained fewer miles than you was a much slower marathoner, it would strongly suggest decreasing your miles would hurt your times.
Similarly, if nearly every country that spends less of its GDP on non-military government spending than us is a much poorer country than us, it suggests that moving in their direction is likely to hurt our prosperity.
We KNOW, from real examples, that it's possible to have a wealthy democracy with much higher non-military government spending as a share of GDP than we have -- and to sustain that.... 15 or 20 points higher, in fact. There's no reason to think we'd be entering into a "danger zone" if we boosted such spending by eight points, for example, since that would still leave us a bit below average by EU standards, and still far below several wealthy countries. By comparison, if we dropped it by eight points, we'd be in a range where no other wealthy nation has sustained besides Ireland (which only did it by way of accounting tricks[SUP]*[/SUP]).
With us knowing we could move up our spending a lot while still being in good company, whereas moving our spending down would soon have us only in the company of poor nations, I'd argue it makes more sense to experiment with higher government spending, rather than risking still lower.
[SUP]*[/SUP][SUB]Irish GDP is overstated, since it's a tax shelter where GDP shows up on paper, from international corporations overpaying their own Irish subsidiaries for services, merely to recognize revenues in that tax haven. It's not actually creating that much value.... merely hosting it for accounting purposes. That, in turn, results in making their government spending look artificially low relative to GDP.[/SUB]
