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Monday, February 02, 2009

Should government get bigger, or smaller?

Richard Rahn has a commentary for the Cato Institute on the "optimal size of government".  He takes the premise that we need some level of government (to protect our lives and property, provide public goods, etc), but that too much government undermines freedom and economic growth. 

Rahn contends that many economist have found the "optimal size" of government to be about 25% of GDP.  When government spending represents more than 25% of GDP, it hinders economic growth.  Currently, government spending in the US represents 36% of GDP. 

Here is a tough question for third-graders learning "greater than" and "less than," and lawmakers considering an "economic stimulus" - Should government get bigger, or smaller?

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