The Rahn Curve and the Growth-Maximizing Level of Government

Government spending can promote economic growth if money is used for core "public goods" such as rule of law and property rights. But the burden of government spending in the United States and other industrialized nations is far higher than needed to finance such activities. Citing scholarly studies, this CF&P Foundation video examines the Rahn Curve, which graphically illustrates the negative impact of excessive government spending. www.freedomandprosperity.org

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[Dweepnes]

lol i only now noticed that rahn curve prooved that communism fails

[lmt61251]

@UBSCARED you're smoking crack. Reagan never raised taxes, but the Democrat Congress did, after promising Reagan they'd reduce them.  Figures. Maybe you'll recall Reagan's OPM Director Don Devine. He got the same treatment as Walker's getting in Wisconsin from the Left's precious government unions. So trying to overcome the growth of government, stymied again by the socialists. Socialist hate this country so much they're willing to do anything to bring it down. Are you one of them?

[Kelso Anderson]

I have a plan to reduce government to 17.9% of GDP

[lmt61251]

When the German/Scandinavian countries per capita output matches the USA's, we can continue the discussion. Until then, the govt spending/economic output ratio (Rahn Curve) stands.

[MrDrwhocares]

Also, your comparison effectiveness vs. efficiency is misconstrued. Assuming you desire a small government then generally one subscribes to a Hayek/Freidman approach to governance. There main emphasis in running an economy is to make it efficient; let the consumers form there own markets and reduce the effective influence of government which they state forms economic bubbles and thus false market forces and collapses.

[MrDrwhocares]

Additionally, there ‘big government’ approach has not caused a reduction in ‘effectiveness’ (as you deem as the ideal) meaning financial rankings, economic performance/output/income, or HDI ranking as they consistently rank much higher then the US.

[MrDrwhocares]

It seems you are a bit narrow minded in your analysis of this topic. A broad scale analysis of macro economics tells us that the many of the countries depicted in this video [Germany (negating external factors i.e. euro collapse), Scandinavian countries – depicting a Keynesian like model] are in much better economic standing then the US.

[lmt61251]

It's not an oversimplification. It simply goes to the root of our economic problems. The federal government is far too big, spending money on mammoth entitlement programs that rob the productive sector of the where-with-all to create growth.

[lmt61251]

What's annoying are Liberals who confuse effectiveness with efficiency. The federal government cannot manage the economy effectively. It inevitably ends up screwing things up because it is impossible for central planners to manage the level of complexity that the overall economy encompasses. Those who think otherwise display a serious intellectual deficiency.

[lmt61251]

I couldn't have said it better myself. In fact I think/thought I might have written your response. It's good.

[bigravensfan21]

The Democrat Congress promised Reagan spending cuts, not tax cuts. Reagan agreed to tax increases in exchange for spending cuts. The tax increases happened, but the spending cuts never did. The same thing happened during George H.W. Bush's time- Democrats got the GOP to agree to spending cuts in exchange for tax increases, but the only thing that actually happened was tax increases. No spending cuts ever happened. This is the reason for conservatives' distrust of Democrats on financial issues.

[Wintran]

Of course governments must be made more efficient, and you can certainly question many specific programs and spendings. But to criticize them only on the grounds that their total spendings exceed some arbitrary number is just childish.