Government growth and spending

Economic Freedom and Prosperity

Why is it that across the globe and across time, some civilizations have enjoyed genuine and lasting prosperity while others have languished under persistent, grinding poverty?

Many answers have been proposed: geography, natural resources, climate. However, thorough study – reflected in hundreds of peer-reviewed articles – confirms it is a society’s economic freedom that correlates consistently with its prosperity. Using a holistic assessment of not only material wealth but also life expectancy, education, air quality, access to clean water, and other elements of well-being, economically free countries tend to be much more prosperous than their less-free counterparts. (Read more here).

Economically free countries have smaller, less intrusive governments which spend less, tax less and regulate selectively. They have legal systems that protect the rule of law and private property, and they have monetary policies that allow for stable currencies.

Economic Freedom and Government Size

Limited government spending is a key dimension of economic freedom and for much of its history, the United States has been a place where government taxed little and spent prudently. Unfortunately, that is no longer true. For the last several decades—irrespective of which political party was in power—the federal government has rapidly and continuously expanded. Today, federal spending totals more than $33,000 per household, compared to $22,000 (adjusted for inflation) throughout the 1980s and 1990s. State governments have grown at an even faster pace. When one includes government’s future promises to spend (on items like Social Security, Medicare and pensions), the United States government is bankrupt. Take a look at the U.S. Debt Clock for a real-time snapshot of the nation's balance sheet. By the government’s own accounting, the net present value of these unfunded liabilities is now over $100 trillion. This is greater than the net worth of the entire economy, and is almost 10 times the value of every product and service produced annually in the U.S.

Because government spending threatens the prosperity of every American, urgent reform is needed now. Unfortunately, in response to the current recession, the Federal government has dramatically quickened the pace at which it spends, as this three-minute video illustrates.