Teaching Comparative

Issue: size of government

The size of government is a global issue. And The Economist offers a great teaching tool in the Jan. 23 issue. The article offers many international comparisons and good arguments why large government is necessary and a potential problem. It also suggests that shrinking government will be very difficult. I'd want to use this early in the course and ask students to evaluate the comparisons and the arguments.

Leviathan stirs again: The return of big government means that policymakers must grapple again with some basic questions. They are now even harder to answer

FIFTEEN years ago it seemed that the great debate about the proper size and role of the state had been resolved. In Britain and America alike, Tony Blair and Bill Clinton pronounced the last rites of “the era of big government”. Privatising state-run companies was all the rage. The Washington consensus reigned supreme: persuade governments to put on “the golden straitjacket”, in Tom Friedman’s phrase, and prosperity would follow.

Today big government is back with a vengeance: not just as a brute fact, but as a vigorous ideology. Britain’s public spending is set to exceed 50% of GDP (see chart 1). America’s financial capital has shifted from New York to Washington, DC, and the government has been trying to extend its control over the health-care industry. Huge state-run companies such as Gazprom and PetroChina are on the march. Nicolas Sarkozy, having run for office as a French Margaret Thatcher, now argues that the main feature of the credit crisis is “the return of the state, the end of the ideology of public powerlessness”.

“The return of the state” is stirring up fiery opposition as well as praise...

The obvious reason for the change is the financial crisis...

The crisis upended conventional wisdom about the relative merits of governments and markets. Where government, in Ronald Reagan’s aphorism, was once the problem, today the default villain is the market...

The demand for public services will soar in the coming decades, thanks to the ageing of the population...

Fear of terrorism and worries about rising crime have also inflated the state...

Another form of the advancing state is more insidious. Annual lists of the world’s biggest companies have begun to feature new kinds of corporate entities: companies that are either directly owned or substantially controlled by the state...

The rise of state capitalism is fraught with problems. It may be hard to argue with China’s 30 years of hefty economic growth and $2.3 trillion in foreign-currency reserves. But subordinating economic decisions to political ones can come with a price-tag in the long term: politicians are reluctant to let “strategic” companies fail, and companies become adjuncts of the state patronage machine. Giving the imprimatur of the state to global companies is also fraught with risks...

The most interesting arguments over the next few years will weigh government failure against market failure... The rise of cowboy capitalism in Russia under Boris Yeltsin persuaded many people—not least the Chinese—of the importance of strong government. And the threat of global warming is an obvious example of how government intervention is needed to deter people from overheating the world...

But the fact that markets are prone to sometimes spectacular failure does not mean that governments are immune to it. Government departments are good at expanding their empires...

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Labels: concepts, demographics, economics, pedagogy, state

posted by Ken Wedding @ 7:50 AM