The best stimulus is a smaller government


“At a time such as this, we need clarity. We need to know where we want to go—and then to boldly implement the policies that will get us there. For all those who wish to see a return to enduring prosperity, new research published today by the Centre for Policy Studies suggests a simple, specific destination. We find that the size of government as a proportion of GDP is a major influence, controlling for other factors, on a country’s rate of economic growth. If you want growth, scaling back the state should be an aim whether you have a deficit or not.”

“countries whose governments tax and spend less than 40% of GDP have grown more quickly than the big-government countries.”

“Everyone—perhaps apart from the ultra-green fringe—accepts that higher growth is a good in itself. But it also has other benefits. Higher growth rates mean more money to spend on public services. As Margaret Thatcher used to say, if you want a bigger slice of cake, bake a bigger cake.”

“key measures of health and education are similar in both groups of countries—and in many cases are better for the small-government countries. For example, according to the OECD’s PISA studies, pupils in small-government countries achieve significantly better results in reading, math and science than those in big-government countries. Life expectancy is also slightly higher in small-government countries (at 81.3 years) than in big-government countries (79.9 years).”

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