Home > economics, General Comment, political-economy, politics, shorter work time > Is serious left criticism of government’s share of GDP possible?

Is serious left criticism of government’s share of GDP possible?

In response to my last post, Jared Bernstein’s Fog (Or, how an economist becomes a flack…) a portion of which I posted back to his article on the Huffington Post, I received the following:

“Government is not the solution. Government is the problem.” Blah, blah, blah… That argument is so tired, Charley. Get a new one. ErnestineBass

My reply was a bit long-winded, I am afraid:

I apologize for being consistent.

How tired is it to suggest government is just another lobby standing in line begging the voter to cough a little more and it will fix everything. Just as we have been promised electric cars, clean energy, and an end to this despicable war?

But, that is not all:

When you go into the grocery store and food is through the roof because of ethanol handouts to the agriculture lobby – how tired does this argument sound?

When you go to the pump and spend 4+ dollars for a gallon, because investment banks were bailed out by the Fed – how tired does this argument sound?

When you watch the constant ticking off of another young life lost in Baghdad, and, this does not even include the 1.2 million Iraqi dead – how tired does this argument sound?

Your fetishistic belief that government enlargement is a net social good is demonstrably unproven, and, clearly wrong by recent history.

If the left continues to cling to this fetish, every appealing argument to the contrary will lead voters into the slimy arms of the Republicans.

There is no justification for sailing aircraft carriers around the Persian Gulf when 47 million people don’t have health care.

You’re supposed to care for the sick, FIRST, then for Oil Sheiks.

And, there is no justification for Democrats to plead insufficient budgetary means to accomplish the above when they are more than willing to tolerate this.

The exchange caused me to wonder if there is not room for a left criticism of government spending as a share of our economy.

If there is, how might that argument look?

Of course, every critical argument must be counterposed to the existing dominant view. And, as example of the dominant view, I offer Jared Bernstein’s in the above mentioned article on the Huffington Post:

It’s obviously key, in no small part because we can’t rebalance our economic system without an adequately funded public sector. But it’s not the whole shooting match. It’s one piece of the blueprint in a policy architecture designed to reconnect economic growth and broadly shared prosperity.

We have no idea what this means, as we stated earlier, but, since we cannot define the mainstream Democratic Party economic policy view for its advocates, the statement will have to stand (perhaps, lean unsteadily, drunkenly) on its own.

That said, according to Jared, government spending effects these ends:

  1. Rebalancing our economic system, and
  2. Reconnecting economic growth and broadly shared prosperity.

Admirable goals, we are so sure, despite our inability to understand what any of this means.

For instance, how does our economic system become unbalanced in the first place? What is being balanced here? And, why not directly address the source of the imbalance?

The same is true for the greater second goal: how does economic growth becomes disconnected from broadly shared prosperity? What is broadly shared prosperity, and how did it come to be disconnected from economic growth? Can you have broadly shared prosperity and no economic growth? Can you have economic growth and no broadly shared prosperity? If, you had a choice between the economic growth and broadly shared prosperity, which would you choose?

So many questions, and so little time to address them between now and the November election.

To cut to the chase, we will simply pose our counter-argument this way:

  1. Government is a form of the imbalance in our economic system – not the only form, mind you, but the most important form currently, and,
  2. Economic growth, so-called, is incompatible with a broadly shared prosperity.

We would like to offer this first piece of evidence in favor of our argument:

Year Ag Goods Non-Ag Goods All Goods Services Govt All Services Total
1914 13580 10504 24084 10877 1809 12686 36770
2002 886 22558 23444 86272 21513 107784

131228

In the above chart you can see the composition of the labor force in 1914 and again in 2002. If you are observing closely, you will notice agriculture virtually disappeared as a significant job for Americans. Manufacturing, mining and construction – listed here as Non-agriculture goods – doubled over the same period.

Overall, the number of people producing of goods remained mostly unchanged, but shifted decidedly to away from farming and into industry.

On the services side of the economy, we have lumped all non-government services – including transportation, financial, retail and wholesale trade, real estate, information technology, etc. – into a single column. In the other column we have left government broken out as a separate item for clarity.

The change from 1914 to 2002 is this: all services grew rapidly over the period to its present status as the main form of employment in the economy. Government, during the same period, grew just as rapidly from about 2 million people to 21 million in 2002.

The overall workforce went from 36 million people to 131 million – all of it on the services side of the economy.

And, this is really important!

Since, as we will show, this is the actual form imbalance takes in our economy that Jared proposes to fix with government economic policy – despite the fact that government is clearly part of this imbalance.

And, we will show, this imbalance is the actual result of economic growth which is itself undermining broadly shared prosperity

To be continued

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