Is growth inversely related to government spending?
In the article below, Tim Draper is quoted:
“I’ve noticed that government spending as a percentage of GNP has grown from something like 7 percent to 43 percent in the last 100 years,” he said. “During that time the growth in GNP has gone down from 8 or 9 percent to almost flat. I think those two things are related–more government spending equals less growth.”
I don’t agree. I think if government spending is done right, and not to benefit special interests, then growth would follow. For example, a government investment in universal broadband access, just like electric power and phone lines access, will not only boost e-commerce, but we will also see increased innovation in tele-business practices, and Internet technologies.
Just because we have little to show for the doubling of our national debt in the past 8 years, doesn’t mean that all government spending is bad for growth.
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