Relationship between size of government and social issues

Is big government bad for freedom, civil society, and happiness? | Lane Kenworthy

relationship between size of government and social issues

3 Correlation between inequality and an index of health and social problems show that income inequality causes health and social problems, the size of this effect governments be tackling inequality alongside or even instead of poverty?. Public spending enables governments to produce and purchase goods and services, The available long-run data shows that the role and size of governments . How do OECD countries typically distribute their allocations to social spending? . positive correlation: high-income countries tend to have larger government. The government needs to tackle the causes and effects of population decline, for instance by The size and demographics of the population change when.

To better isolate the effect of the various manifestations of globalization, it is important to control for a range of country-level factors that may simultaneously affect individual overweight risk and the country-level indicators of globalization, including the total GDP as a proxy of the size of the market, the Human Development Index, as well as the Index of Economic Freedom from the Heritage Foundation, which measures the quality of economic and legal institutions.

Through this analysis we aim to find out whether overall globalization indeed increases the individual likelihood of overweight, and whether the different dimensions of globalization — economic, political and social — play a greater or lesser part in raising the risk of overweight.

Methods and their rationale 2. Definition and measurement of the component variables of globalization Globalization is our independent variable of primary interest. We seek to capture both the influence of globalization as a whole as well as its relevant sub-components: Our primary measure of economic globalization is the relevant KOF sub-index, which is a composite measure comprising the following variables: We take advantage of the political KOF index mentioned above, which is a composite measure including information on the following four components: This component is designed to measure the degree of a country's international political engagement Dreher, Our main measure of this type of globalization is the social KOF globalization index, which is based on the following variables: Econometric specifications Starting with the most parsimonious model, we are primarily interested in how individual risk of overweight is affected by various manifestations of globalization: To account for potential spatial correlation of the error term, all our standard errors are clustered according to cluster IDs provided in the dataset.

Our data came from several sources. Outcome and individual control variables were obtained from the Demographic and Health Surveys DHS collected in a total of 56 countries over the period — variable definitions, as well as the full list of countries and survey years used is provided in the online Annex Supplementary material.

The DHS surveys have been extensively described elsewhere S. Finally, Economic Freedom Index from the Heritage Foundation was used as an additional control variable.

The outcome variable of interest i. The BMI was calculated by dividing each person's weight in kilograms by height squared in meters. In addition, observations for women whose height was recorded as either greater than or equal to 2. We restricted the sample for the analysis to non-pregnant women only, aged 15—49 years. Although the original sample contained women who were older than 49, for the vast majority of observations the anthropometric data was collected only in the 15—49 group.

The actual sample size used in the regression analysis varied betweenandWe decided not to follow this approach, since increases in BMI associated with various independent variables may have very different implications, depending on the initial BMI value.

Higher on the vertical axis indicates larger debt.

Causes and effects of population decline

The pattern is similar for gross debt government financial liabilities. Competition drives innovation and economic dynamism. Does an increase in the size of government tend to weaken competition? On one view, the answer is yes.

But the larger the size and scope of government spending, the easier it is to make money by diverting public resources. After all, starting a business is difficult and involves a lot of risk. Getting a government favor or contract is easier, at least if you have connections, and is a much safer bet.

The vertical axis of figure 4 has an indicator of the degree of competition in product markets.

relationship between size of government and social issues

Competition is measured here as the degree of intensity of local competition, the degree to which corporate activity is spread across many firms rather than dominated by a few, the degree to which anti-monopoly policy effectively promotes competition, and the absence of barriers to imports. The scoring for each of these elements is based on a survey of executives conducted by the World Economic Forum. Though not a foolproof measure of competition, this is likely to be a reasonably accurate one.

The figure shows that nations with big governments are just as likely as those with small governments to have competitive product markets. Government size and product market competition The data are for One reason is that firms and other economic actors may care more about shaping government regulations in their favor than about getting government money.

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Consider the United States. Government taxes and spends less in the US than in most other rich countries, and Americans embrace competition. Yet the US economy is riddled with rules, regulations, and practices that inhibit competition or privilege particular firms and industries. Half-hearted antitrust enforcement allows corporate behemoths to maintain market share and profitability despite little innovation.

relationship between size of government and social issues

Patents limit competition in pharmaceuticals, computer software, entertainment, and a slew of other product markets. When they succeed, the result is less government revenue, not more — a smaller government rather than a larger one.

Third, the hypothesis that big government results in less competition fails to consider the types of programs on which government spends money. Public insurance programs mainly transfer money to individuals; they offer little opportunity for firms or interest groups to grab a piece of the pie. That is largely true of government provision of services as well.

The hypothesis that higher government spending will lessen competition in product markets is a plausible one. This yields high income inequality, but it stimulates lots of entrepreneurial effort and hence is conducive to innovation. This yields modest income inequality but less innovation.

Acemoglu and colleagues say their model might help us understand patterns of innovation and economic growth in the United States and the Nordic countries — Denmark, Finland, Norway, and Sweden. Because of technological spillover from the US, the Nordics, which have opted for cuddly capitalism, enjoy economic growth comparable to the US. But if America were to decide to go cuddly, innovation would slow, according to the model, and both sets of nations would then grow less rapidly.

Are incentives to innovate really weaker in the Nordic countries? In the s Sweden instituted a major tax reform, reducing marginal rates and eliminating loopholes and deductions. Later the wealth tax was done away with. Both are shown in figure 5, going back to The two countries were similar until the second half of the twentieth century. Government spending began to diverge in the s, and income inequality diverged in the s. World Wealth and Income Database.

relationship between size of government and social issues

Yet there was plenty of innovation in the s and s, including notable advances in computers, medical technology, and other fields. Given that the hypothesized cross-country difference in incentives emerged in the s or s, if modest inequality and generous cushions are bad for innovation we would expect the Nordic nations today to be far behind the United States. However, innovation rankings consistently place the Nordic countries on par with the US, or only slightly behind. But as figure 6 indicates, the innovation rankings suggest that these other cutthroat capitalist countries tend to be less innovative than the Nordics, not more.

Government size and innovation Innovation rank: The comparative and historical data offer little, if any, support for the notion that big government is bad for innovation.

Working-age French, Belgians, and Germans spend, on average, about 1, hours a year in paid employment. In the United States, Switzerland, and Japan, by contrast, the average is 1, to 1, Is it due to differences in the size of government? These averages are determined by the share of people who have a paying job and by the number of hours they work over the course of a year.

The pattern is consistent with the notion that high taxes reduce work hours. Government size and employment The data are for But knowledgeable comparativists will notice a familiar clustering of countries in this graph.

These countries, along with Austria, have several features that might contribute to low employment hours. One is strong unions. Organized labor has been the principal force pushing for a shorter work week, more holiday and vacation time, and earlier retirement.

These nations also have been characterized by a preference for traditional family roles — breadwinner husband, homemaker wife. Treasury bonds denominated in U. This disregards the risk to foreign purchasers of depreciation in the dollar relative to the lender's currency.

In addition, a risk-free status implicitly assumes the stability of the US government and its ability to continue repayments during any financial crisis.

Lending to a national government in a currency other than its own does not give the same confidence in the ability to repay, but this may be offset by reducing the exchange rate risk to foreign lenders.

On the other hand, national debt in foreign currency cannot be disposed of by starting a hyperinflation;[ citation needed ] and this increases the credibility of the debtor.

Usually small states with volatile economies have most of their national debt in foreign currency. For countries in the Eurozonethe euro is the local currency, although no single state can trigger inflation by creating more currency. Lending to a local or municipal government can be just as risky as a loan to a private company, unless the local or municipal government has sufficient power to tax.

In this case, the local government could to a certain extent pay its debts by increasing the taxes, or reduce spending, just as a national one could. Further, local government loans are sometimes guaranteed by the national government, and this reduces the risk. In some jurisdictions, interest earned on local or municipal bonds is tax-exempt income, which can be an important consideration for the wealthy. Clearing and defaults[ edit ] Main articles: Globally, the International Monetary Fund can take certain steps to intervene to prevent anticipated defaults.

It is sometimes criticized for the measures it advises nations to take, which often involve cutting back on government spending as part of an economic austerity regime.

In triple bottom line analysis, this can be seen as degrading capital on which the nation's economy ultimately depends. Those considerations do not apply to private debts, by contrast: Governments need a far more complex way of managing defaults because they cannot really go bankrupt and suddenly stop providing services to citizensalbeit in some cases a government may disappear as it happened in Somalia or as it may happen in cases of occupied countries where the occupier doesn't recognize the occupied country's debts.

Smaller jurisdictions, such as cities, are usually guaranteed by their regional or national levels of government. When New York City declined into what would have been a bankrupt status during the s had it been a private entityby the mids a " bailout " was required from New York State and the United States.

In general, such measures amount to merging the smaller entity's debt into that of the larger entity and thereby giving it access to the lower interest rates the larger entity enjoys. The larger entity may then assume some agreed-upon oversight in order to prevent recurrence of the problem. Economic policy basis[ edit ] According to Modern Monetary Theorypublic debt is seen as private wealth and interest payments on the debt as private income.

The outstanding public debt is an expression of the accumulated previous budget deficits which have added financial assets to the private sector, providing demand for goods and services. Adherents of this school of economic thought argue that the scale of the problem is much less severe than is popularly supposed.