The Shifting Boundaries of Democratic Governments

TABLE 1. TOTAL GOVERNMENT EXPENDITURE AS A PERCENTAGE or GDP AT CURRENT PRICES, 1880-1992

              1880    1913    1938    1950    1973    1992

France        11.2     8.9    23.2    27.6    38.8    51.0
Netherlands   n.a.     8.2    21.7    26.8    45.5    54.1
UK             9.9    13.3    28.8    34.2    41.5    51.2
USA           n.a.     8.0    19.8    21.4    31.1    38.5

Average        9.0    23.4    27.5    39.2    48.7

Source: Angus Maddison, Monitoring the World Economy 1890-1992 (OECD, 1995).

Even political leaders like Ronald Reagan in the United States and Margaret Thatcher in Britain, who decried tax burdens and the welfare state, made little dent in government revenues and outlays. Among nineteen older democratic countries, the total outlays of general governments were, on average, a little under half of GDP in 1990 and remained virtually unchanged in 1997. The extremes ranged from around 60% in Sweden to about 31% in Japan and the United States (Table 2).

TABLE 2. GENERAL GOVERNMENT TOTAL OUTLAYS AS A PERCENTAGE OF NOMINAL GDP

                 1990   1997   2000(*)

Australia        34.8   35        33.3
Austria          48.6   49.8      49.2
Belgium          53.6   51.7      49.9
Canada           46.7   42.6      41.2
Denmark          56.0   56.4      52.5
Finland          45.4   54.1      48.6
France           49.8   54.2      53.5
Germany          45.1   47.9      46.3
Iceland          39.3   36.7      35.5
Ireland          39.0   34.7      32.1
Italy            53.6   50.6      48.8
Japan            31.3   35.2      39.1
Netherlands      54.1   48.7      47.3
New Zealand      48.8   38.5      40.4
Norway           49.7   46.8      43.7
Sweden           59.1   63.3      58.1
Switzerland      41.0   48.8      49.3
United Kingdom   41.8   41.0      40.6
United States    32.8   31.6      31.1

Mean             45.8   45.6      44.2
Median           48.6   49.8      49.2

Least: Entries in bold. Most: Entries in italics; (*) Projections

Source: OECD Website, 1999.

Although some classic liberals feared that increasing the scope of government programs and policies would wreak great harm to individual liberties and ultimately even threaten the survival of democratic institutions, experience appears to confound their fears. Indeed, evidence suggests that the relationship just might be the inverse. It is in the mature democracies, which have the largest governments measured by their role in the economy, that civil and political liberties are most secure.(3) Given the fact that a substantial part of their large government expenditures go to health, education, income maintenance, and the like, it is not surprising that these countries also rank highest on assorted indicators of human development.(4) Bigger governments are, it appears better. After measuring the size of the public sector by such variables as transfers, subsidies, and government consumption as percentages of GDP, and public sector employment as a percent of total population, the authors of one recent study of government performance in 152 countries conclude that "bigger governments, while taxing more, look better on just about every measure of performance. This result--that the larger governments tend to be the higher quality ones--is one of our key findings"(5) (Table 3).