To augment my four-part series on the economics of government spending, here’s a video from Prager University explaining how big government doesn’t work.
The video, narrated by Professor Joshua6 Rauh of Stanford, highlights three major types of spending and finds that bigger government has produced bad results.
Education: Per-pupil spending has increased enormously but there have been no improvements in student performance. Indeed, the video shows that huge spending increases in places such as California and Chicago have led to declining test scores. Not that any of this should be a surprise. Just a couple of days ago, I wrote about how Florida is getting great results while spending less.
Medicaid: Taxpayers finance an enormously expensive Medicaid program ($800 billion and counting), yet research shows that all that money does not produce better health outcomes. Though it does produce record levels of waste and fraud, so I guess that counts for something.
Welfare: There are dozens of redistribution program, the net effect of which is to discourage work and mobility. As Thomas Sowell wisely observed, “We have all heard the old saying that giving a man a fish feeds him only for a day, while teaching him to fish feeds him for a lifetime. Redistributionists give him a fish and leave him dependent on the government for more fish in the future.”
The video is a grim assessment of how big government has weakened America. But it actually understates the problem. As I wrote earlier this year, the burden of spending is going to significantly increase over the next couple of decades because of demographic change and poorly designed entitlement programs.
In other words, America has a major fiscal problem!
The video concludes by observing that America would be better off if more people understood Reagan’s wisdom about government being the problem rather than the solution.
I obviously agree. And I also agree with the message that the economy would perform better with much smaller government, like we had before FDR’s failed New Deal.
Fortunately, we know how to fix the problems. The video highlighted three major types of government spending, so let’s show the best way of addressing these problems.
Education: The simple answer is school choice. Good for students and good for taxpayers (though bad for teacher unions).
Medicaid: Block grant the program and let states learn from each other on the best way of providing health care to the indigent.
Welfare: Building on the success of Bill Clinton’s welfare reform, get Washington out of the business of redistribution.
Fixing these three problems would be a big step toward more growth and more freedom. As we also know how to fix Social Security, Medicare, agriculture, housing, and transportation.
So a much smaller government (which would be consistent with the vision of America’s Founders) is conceivable. But I fear we’ll have to wait another four years before we can even begin to think about it.
