How the Scope of Government Shapes the Wealth of Nations

There are two nearly universally accepted broad principles on the scope of government and its impact on economic growth.

First, some level of government spending is neces­sary to ensure that the basic structures of society func­tion smoothly enough to facilitate economic activity.

Second, excessive government spending shifts resources from the private sector and impedes eco­nomic growth.

Between these two principles lies an ocean of pos­sibilities encompassing the small-government tenden­cies of Hong Kong, Ireland, New Zealand, Singapore, and the United States; the decidedly robust govern­ment philosophies of the countries of Western Europe; and the many developing countries that hope to use government spending to meet their develop­ment goals.

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