From Terry Corcoran's page in the FP. Note the source: "Andrew Coyne Economics." At last: I'm a consultant!
March 21, 2007
From Terry Corcoran's page in the FP. Note the source: "Andrew Coyne Economics." At last: I'm a consultant!
From Terry Corcoran's page in the FP. Note the source: "Andrew Coyne Economics." At last: I'm a consultant!
3/21/2007
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3 Comments
Would the graph look similar if it was plotting spending as a % of GDP?
Congratulations. Now just don't steal any of my clients.
Mike Moffatt
President
Neoclassical Economics Inc.
to yadayadayada
Yes, it would look different. That's why Flaherty refers to the pace of spending relative to GDP. However, in my view, Andrew's way is the better way to look at it. The "value" of goverment programs provided to individuals is measured by real spending per capita. That's what's behind the idea of keeping spending growth equal to population growth plus inflation. In that way, the real value of services provided to individuals remains the same. Keeping spending rising at the same rate as nominal GDP assumes that governments must keep spending growing in sync with private sector productivity as well.