Tuesday, May 4, 2010

How Much Bigger is the State Really Getting?

It's pretty well accepted that government grows significantly with development. There's an actual theory behind this, though I can't remember whose it was. Anyway, what I've been musing on is whether the state has actually enlarged that much if you think of it in terms of disposable income rather than total GDP. After reading Braudel, something that really struck me is how much of income used to be devoted to simply staying alive. This percentage has declined massively with time and is continuing to do so. So if you think of the cost of government only in relation to the percentage of GDP left after the cost of the food, clothing, and shelter necessary for survival are taken out, is the state that much bigger of a slice of GDP than it was in earlier times when the simple cost of staying alive was a significant portion of GDP? Maybe the state actually occupies a fairly constant share of disposable income and it is disposable income that is expanding as we develop?

I'm sure someone has done these numbers, though I haven't seen them. Just something I've been musing on. Though if you really wanted to set about calculating this you'd need some way to deal with the changed role of medicine in daily life from the past and longer life expectancies. Still, might be an interesting angle to look at the state's size from.


  1. I'm not sure about the math or the source of the theory, but I find the size of the state less interesting than what it has been tasked with and how that's going. I prefer to think of the right size of government in terms of which functions it is really helpful at.

  2. Doug, I'd agree. It's just something I was thinking about after reading the supply side economics article since that group seems to believe it is so important. I quite often feel that economics should distinguish between disposable income and total income more often. People tend to act differently when you're taking the money they need to eat instead of the money they need for a Porsche. It always struck me as something important to take into account with developed country economics, particularly if you're comparing them to earlier eras, like the late 19th century.

  3. Tz,

    Remember that in the past, at least the past that Braudel usually studies, the Church also played a significant role and imposed its costs on society, so you have to add that up too. The State/Church ensamble played all the time a very important role in regulating the life of citizens (i.e: what kind/colour of clothes could people put on, activities engaged in, sexual practices, burning coal, fishing nets, etc.) and if one starts only with Hammurabi's code, can see the detailed level of regulation that existed even in the very distant past. Not to mention the strict rules on phariseis that jews saddled themselves with.

    I am inclined to think that the size of the state, given the complexities of today's life has not grown compared with the past. But I do think that the regulatory system is catering more to the individual

  4. Cornel,

    I'd agree with that. When I hear the growth of the state mentioned though the people mentioning it seem generally unconcerned with the size of non-state entities such as the church or pretty much any other type of organization. Generally I think the conception is that the size of the state was just about right in the 19th century as opposed to the period Braudel is studying, though I still don't think this is necessarily true if you really unpack the concept of the state and use a more nuanced conception of the economy.

    I had been forgetting to take the church into account though, that does add basically a whole additional layer of government. On the whole I don't think the size of the state is actually all that important of a consideration relative to other things, just hadn't considered critiquing the idea of whether or not its growth was itself a concept worth calling into question.

  5. Churches are important, but also NGO's, not-for-profits, government lobbies, corporations and citizens groups like even your local PTA, grassroots groups are part of your "government" today.