Public Choice III

Much attention in both lay and academic discourse has been given to the question of the proper size of government and the reasons for its growth. Public choice, the economic analysis of political institutions, would seem to be the natural tool for answering these questions, and it has frequently been employed in this task. A review of these efforts follows.

The facts

That government has grown, and grown dramatically in recent years, cannot be questioned. Total government expenditure in the United States in 1999 as a percentage of GNP was 28.3 percent, up from 23 percent in 1949 and 10 percent in 1929 (see Table 21.1). Moreover, this growth is confined neither to this century nor to the United States. Federal government expenditures as a percentage of national income in the United States were only 1.4 percent of national income in 1799. They rose to double that figure by the end of the nineteenth century, but were still only 3 percent of the GNP in 1929. Starting in the 1930s, however, federal expenditures took off, rising sevenfold as a percentage of the GNP over the next 70 years.

The government sector has also grown outside of the United States with this growth beginning at least as far back as the nineteenth century. Table 21.2 presents figures from Tanzi and Schuknecht (2000) for 16 countries in addition to the United States.