Dan Mitchell finds an OECD report that he likes

Dan Mitchell, our man in DC, has used up a lot of electrons rubbishing the OECD but this week he found a paper which says some things in favour of not so big government. This post is packed with information on the negative effects of big spending by governments. The bottom line for Dan:
Larger governments are associated with lower long-term growth. Larger governments also slowdown the catch-up to the productivity frontier.

Governments in the OECD spend on average about 40% of GDP on the provision of public goods, services and transfers. The sheer size of the public sector has prompted a large amount of research on the link between the size of government and economic growth. …This paper investigates empirically the effect of the size and the composition of public spending on long-term growth… The main findings that emerge from the analysis are…Larger governments are associated with lower long-term growth. Larger governments also slowdown the catch-up to the productivity frontier.

Scanning the abstract and some of the comments I am not as keen as Dan, I think the authors are far too friendly towards redistribution.

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9 Responses to Dan Mitchell finds an OECD report that he likes

  1. Nicholas (Unlicensed Joker!) Gray

    Hang on! We need governments so that we can have our fair share of movie and tevee actresses! I’m still waiting for a fair dating law! Hang on, Jessica Marais, my turn soon! (Though I’ll settle for Sophie Monk, or Sophie Lowe!)

  2. Mundi

    Do they measure growth on terms of gdp with government spending?

  3. Far Right Heretic

    Finally a judge grows some balls and calls a muslim woman out on her bullshit. Best of all, it took a female judge so feminists will have to think twice before calling sexist. Wife of some arsehole terrorist recruiter who claims police punched her face is refusing to take off her garbage bag to testify and the judge isn’t having it. I am sure dot will be along shortly to call the judge a racist but for those of us sick of the growing caliphate here is the story:

    http://www.dailytelegraph.com.au/news/national/judge-refuses-to-hear-muslim-womans-evidence-in-court-after-the-woman-refused-to-remove-her-veil/news-story/3dc1aefecd24543123dc99a99441e42a

  4. Far Right Heretic

    By the way, if anyone wants to trigger lefties then compare Castro to Kim Jong Il.

  5. Rabz

    Larger governments are associated with lower long-term growth

    Gee, no sh*t, Sherlock!

    They’re also associated with:

    Unacceptable state coercion
    Unnecessary regulation
    Massively inefficient and stupid bureaucracies (BIRM)
    Higher taxes
    Voteherd buying
    Unnecessary restrictions on individual behaviour
    Moronic, corrupt “leaders”

    That will do for now.

  6. Helen

    I’ve just read the working paper behind the post. It’s complex and even with a background in stats, I probably need to read it again.
    A few things stuck out. A lack of explanation of how the percentages of GDP to be saved were calculated. Real measured financial data combined with soft data eg what I assume are poll results (eg confidence in government). Lack of consistency of inclusion of countries in graphs – Australia in some, not in others. Most importantly no apparent consideration of the demography of the different countries. The issues of effect of education and pensions will vary depending of the relative numbers of young people being educated and moving into work force compared with numbers of aged people who depend on pensions. This is a key issue for many western countries, Australia included.
    That’s just the stats. I could take issue with the suggestion that reducing pensions would improve GDP. It might, but at what other cost? Greater health costs? Shorter life span? After all if everyone just died when they reached retirement age, then old age pensions would not be needed and the GDP would soar.

  7. Empire

    . I could take issue with the suggestion that reducing pensions would improve GDP. It might, but at what other cost? Greater health costs? Shorter life span? After all if everyone just died when they reached retirement age, then old age pensions would not be needed and the GDP would soar.

    GDP is a rubbish metric. It gives legitimacy to the statanist cartel that is the OECD and the rapacious elites of the member states that sustain it.

    There was a time when welfare was largely a private or club endeavour. Now the state is viewed as the sole benefactor, rather than the support of last resort. Don’t fall for the trap of believing that if the state retreats from welfare provision that the sky will fall.

    Decent people care for their own. Only those without their own people need state welfare.

  8. JohnA

    Governments in the OECD spend on average about 40% of GDP on the provision of public goods, services and transfers. The sheer size of the public sector has prompted a large amount of research on the link between the size of government and economic growth.

    And the new atheists and other “non-believers” deride the Biblical tithe (10% given to God) as an impossible imposition!

  9. Petros

    Helen, I am sure many countries have realised what you said regarding retirees dying off quickly, hence they allow people to smoke still. They are not stupid.

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