(Economist) Governments are bigger than ever. They are also more useless

You may

sense that governments are not as competent as they once were. Upon entering the White House in 2021, President Joe Biden promised to revitalise American infrastructure. In fact, spending on things like roads and rail has fallen. A flagship plan to expand access to fast broadband for rural Americans has so far helped precisely no one. Britain’s National Health Service soaks up ever more money, and provides ever worse care. Germany mothballed its last three nuclear plants last year, despite uncertain energy supplies. The country’s trains, once a source of national pride, are now always late.

You may also have noticed that governments are bigger than they once were. Whereas in 1960 state spending across the rich world was equal to 30% of GDP, now it is above 40%. In some countries growth in the state’s economic power has been still more dramatic. Since the mid-1990s Britain’s government spending has risen by six percentage points of gdp, while South Korea’s has risen by ten points. All of which raises a paradox: if governments are so big, why are they so ineffective?

The answer is that they have turned into what can be called “Lumbering Leviathans”. In recent decades governments have overseen an enormous expansion in spending on entitlements. Because there has not been a commensurate increase in taxes, redistribution is crowding out spending on other functions of government, which, in turn, is damaging the quality of public services and bureaucracies. The phenomenon may help explain why people across the rich world have such little faith in politicians. It may also help explain why economic growth across the rich world is weak by historical standards.

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Governments are bigger than ever. They are also more useless https://t.co/kt5sIZ1OqF

— Igor Wortel (@itwortel) September 23, 2024