Government Spending Is Bad For Growth
‘Big government is bad for economic growth.’
No shit, Sherlock, i hear you cry.
But this isn’t my view, nor one of a neo-liberal free market think tank.
It’s from that respected inflation-fighting institution, the European Central Bank, which has come to this conclusion all by itself. No surprise to readers of this blog but papers like this will help spread the gospel of smaller government.
The paper concludes that each additional 1% of government spending reduces growth by 0.13%.
One interesting finding. The taxes that have the least harmful effects on growth are income taxes. Those that hinder growth the most are consumption taxes and government subsidies.
Something to chew on.
via UK left-libertarian and freakonomics-style blogger, Chris Dillow.
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