Leviathan is unstoppable, moans The Economist. Not even Reagan and Thatcher could stop it. With demographic and climate change, it is bound to get even bigger. All that freedom-loving people can do is restrain it and try to make it more efficient.
How much of this is true? It is accurate to say that Reagan and Thatcher did little to limit the size of the welfare state; Thatcher’s causes were privatization and smashing union power, while Reagan was more into tax cuts and deregulation. It is misleading, however, to suggest that the history of the last 40 years has been one of new and dramatically expanded welfare programs; in fact, the increase in GDP percentage is due largely to three other reasons:
- The demographic change driving more public spending isn’t in the near future, as the article suggests; it has been here for at least a decade. Boomers have been retiring on the taxpayers’ dime and enjoying low cost health care since 2011;
- Rising unit costs for education and health care represent a bipartisan failure of government, not a deliberate effort to expand the state; and
- Military spending is a much higher percentage of GDP than it was back in, say, the good old days of the 1920s. The Economist doesn’t pay any attention to that.
It is undoubtedly true that an aging population and climate change mitigation will add a few more percentage points to GDP in the coming years, as there is no free market solution to either of these problems. It is also correct to say that small government liberals should focus their attention on making the system more efficient. That is in everyone’s best interest, regardless of ideology.