In regards to your query (my paraphrase): Why do these intellectually detached libertarians believe they can derive policy from a simplistic principle of privitization? We need pragmatic solutions, not policy derived from first principles.

I believe the support for privitization and free markets proceeds from precisely the fundamental problem you identify. It doesn’t matter how subtle or complex any particular ruling group’s model is, or how sincerely they wish the best for everyone. All proposals that attempt to set forth a unitary preference (i.e. figure out the best way for everyone to do something; take money from them; then do things that way) are inherently simplistic. They all suffer from the defect of vastly inadequete intellegence and information to make such decisions; as well as the assumption that people share a ‘best’.

‘Privitization’ is not itself a unitary preference choice – it is the attempt to leverage each person’s own body of information about their life, their needs, and their preferences. There certainly may be better or worse ways to go about leveraging this information (money works well to describe value hence markets), but privitization or market plans are inherently less simplistic and more accepting of limitations on human intellegence than the most subtle or complex centrally directed plan.

Support for markets grows from humility about mental capacity, not from arrogance; from a respect for complexity and difference, not insistence on unitary solutions for 300 million people.

Brian

Still, it’s pretty clear that for the developed countries as a group, government spending relative to GDP rose dramatically after WWII

Well, I’m looking at Penn World Tables data so that’s 1950 till 2000 which I guess includes right after WWII and I don’t really see that, at least not the “dramatically” part – unless it happened 45-50. Some countries have a fairly steep decline, like France (going from 23.79 share in 1950 to 18 in 1977, then dropping to 8.4 or so in 1978) (what happened in Australia in 1989? It goes from 16.34 to 7.6). Most have a roughly constant share – at a time when incomes are rising, hence the negative correlation.

I don’t know. Government basically has three functions, rent seeking, providing public goods (provision of non public goods goes in rent seeking), and redistributing income. I haven’t thought about the first two but theoretically the last one would depend on the difference between the median and the average income (if you believe in the MVT) which could go either way with growth.

Also known as the gated community.

“Fortunately for the libertarian-inclined, government appears to be self-sabotaging.”

Hence no harm, no foul, when we elect anti-government ideologues who actively trash it, right?

Still, it’s pretty clear that for the developed countries as a group, government spending relative to GDP rose dramatically after WWII, and then levelled out, despite a generally dominant political view that spending should be cut. Looked at sector by sector (health, education and so on) the income elasticity story looks pretty good.

I’m under the impression that we’re pretty much stuck with trying to learn from experience because we just aren’t smart enough to predict results from first principles.

But ok, industralized countries only. Regressed that too. Pooled data for the industrialized countries since 1950. Bit of bias because some were not industrialized in 1950, like Japan, Korea, Greece, Portugal and Spain. But whatever. Excluded Eastern Europe for obvious reasons. The relationship is if anything stronger and looks roughly the same – a curved “l” shape – which would suggest that the government share levels off and eventually further increases in income don’t do anything to it. (Data from the Penn World tables, R2 between .05 and .15, depending on specification which ain’t bad for a univariate regression, t-stats on income between 7 and 35)

I’m sure there’s a literature on this but since it’s not my area, I don’t know what it is.

As for more money = more government, aren’t we ignoring the potential role “government” plays in helping to create wealth? That strong economies & strong governments often grow side by side is a correlation that ought to be noticed, or at the very least the idea that government is the antithesis of economic growth should be discarded.

A basic philosophy of “Liberty Good” is one I can get on board with. I’m basically sympathetic to the libertarian world view excepting that I don’t care about high taxes so long as they aren’t so high as to pose economic harm (and we’re aways from that) and the size of government as an abstract concept doesen’t concern me.

“Liberty Good” that should be the new motto.

Of course, advocates of downsizing government can’t lose. If the program works, people will be happy and vote them in again. If it doesn’t work that will just be further confirmation that government is the problem not the solution, vote them in again, and support further privitazation until all the institutions of civil society are run by corporations and the military is a mercenary force supplied by contractors.

Maybe at that point citizens will demand cheaper, better services, the firms that run these enterprises will get together and try to coordinate their efforts for greater efficiency, and will re-invent government.