The Second & Third Most Depressing Graphs: The Encroachment Of Government

Update This stays top for today because we’re still waiting for some regulars to chime in and because I’m busy.

Here is federal government spending as a fraction of the GDP (in 2008 dollars; here is the first most depressing graph: you have to add state and local yourself).

Government spending as fraction of GDP

Government spending as fraction of GDP

There are difficulties comparing government spending to GDP. First, as the bumps emphasize, government spending is part of GDP. That means this chart under-emphasizes the true size and encroachment of government into citizens’ lives. By how much it’s difficult to say, but it is a non-ignorable amount.

Around 1900, government spent about 2% of the GDP; in 2012 it was just over 25%. Since government spending is part of the GDP statistic, and since its contribution to the actual GDP has increased, the growth in government is higher than the indicated 12-13 times.

We repeatedly hear that health-care is “one-sixth of the economy.” That’s an exaggeration which relies on an expansive definition; plus, the government already owns a healthy chunk of medicine (and therefore of the GDP). Regardless, when Obamacare fully hits, this curve will spring northwards like a Canadian snowbird leaving Florida in March to get home in time to maintain his health insurance eligibility.

Anther way this curve under-estimates government size is to consider that gross federal debt was about $16 trillion last year, 3% larger than the GDP. There are other ways of measuring debt. Robert “Great Moustache” Samuleson pegs the most inclusive at $31 trillion, which is 200% of the GDP.

This is another trend which cannot continue, therefore it won’t.

Now it is true that at times and places government has contributed positively to the economy. Interstate highways, to name one worthy innovation. But perhaps not entirely worthy. Reliance on highway-bound trucks reduce the number of trains, therefore also passenger trains. Cars contribute to sprawl.

What would have happened in the state elected not to build freeways? Answer: nobody knows. All that is clear is that citizens would have acted differently. It is a matter of faith to say they would have been worse off. They would have been better. There is no data either way.

What one cannot do is point to a graph of GDP per capita (which is linear in constant dollars since 1901) and another of government spending and note that, because of their similarity, that one caused the other; rather, one cannot claim that the increase in GDP would have been absent or smaller without government intervention. The growth could have been larger if government were smaller. There is no direct data either way.

We do know this. Government spends by forcefully taking money from one group of citizens (alive and yet unborn), keeping some itself, then giving a portion to other groups. “Donors” are directly injured and recipients immediately prosper from the largess. Other constituencies grow jealous and demand their “fair” share. A cycle of dependency is created, subservience and servility become first nature. People forget they are part of government, which becomes a sort of royal, paternal Other.

Government growth becomes unstoppable when it takes more than is necessary for basic security, when it confuses pursuit of happiness for its guarantee. We are well past that point.

Other curves?

I wanted to show the increase in the number of federal laws. Not easy to do, since counting them is purposely difficult. All reports are that the number is growing, and will continue to grow, exponentially.

“There is no one in the United States over the age of 18 who cannot be indicted for some federal crime,” said John Baker, a retired Louisiana State University law professor who has also tried counting the number of new federal crimes created in recent years. “That is not an exaggeration.” [Source: WSJ]

Federal regulations? One method of counting said:

According to the Office of the Federal Register, in 1998, the Code of Federal Regulations (CFR), the official listing of all regulations in effect, contained a total of 134,723 pages in 201 volumes that claimed 19 feet of shelf space. In 1970, the CFR totaled only 54,834 pages.

The General Accountability Office (GAO) reports that in the four fiscal years from 1996 to 1999, a total of 15,286 new federal regulations went into effect. Of these, 222 were classified as “major” rules, each one having an annual effect on the economy of at least $100 million.

Here’s the Federal Register pages from 1975 to 2011 (before Obamacare):

Every one of these rules is indespensible

Every one of these rules is indespensible

Page counts are indicative of intrusion, but not a complete measure. See this explanation.

“Over the past decade, the federal government has issued almost 38,000 new final rules, according to the draft of the 2011 annual report to Congress on federal regulations by the Office of Management and Budget.” That’s more than 10 per day. As of today, the site Regulations.gov boasted that over the last 90 days 5,955 new regulations were posted. That’s 66 per day. There are another 1,085 in the immediate pipeline. A medical tsunami.

And just how do we plot the pertinacious rise of nanny-ism? Bans of soda pops, plastic bags, water bottles, etc.? Not everything is quantifiable. The weight that crushes you may be unmeasurable, but you’re still just as dead. Brave New World in 5, 4, 3, …

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GDP source and here, population source, budget here, here, and here.

Update David J. Theroux asks we have a read of “Hurray for Washington,” by Mary Theroux.

Comments

The Second & Third Most Depressing Graphs: The Encroachment Of Government — 40 Comments

  1. “There is no one in the United States over the age of 18 who cannot be indicted for some federal crime,” said John Baker, a retired Louisiana State University law professor who has also tried counting the number of new federal crimes created in recent years.

    If true, then make yours count.
    Not quite /sarc

  2. An interesting read. My father once told me to be wary of crime statistics as things that were perfectly legal a few years ago could be illegal today, creating a bunch of criminals out of thin air.

  3. Pingback: The Most Depressing Graph: Per Capita Federal Spending Rises Alarmingly: Update | William M. Briggs

  4. If the US federal government wouldn’t have provided a service, somebody else would have done it. It could have been a local government, a private enterprise, or even a not-for-profit.

    A local government is probably as bad as the federal one, so let’s focus on private enterprise and not-for-profits.

    If private enterprise had wanted to provide the service, it would only have done so when it could get a decent return on their investment. But if the public wouldn’t pay for that service then private enterprise would not start doing it in the first place. Then there’s nobody left to do the work but the government, if the people wanted to somebody to do the work, but were in no mind to pay enough.

    Not-for-profits work by getting volunteers to do the work. Take for example Nuns taking care of the elderly and the sick. With much less people doing that kind of volunteer work, and with increasing demand for that kind of work, somebody has to step in. And that is the government. Caring for the elderly and the sick is now mostly a paid-for job.

  5. Sander,

    “If the US federal government wouldn’t have provided a service, somebody else would have done it.” That’s false. The government often creates its own services. Weighing stations on highways, for example.

    No, there is no way to tell (definitively, empirically) what things would have been like had government stayed at the 2% GDP level. One must argue externally.

    For example, families might have been “forced” to care for their own elderly in absence of government. But then there would have to be strong families. There are some of us who claim this would be a good (though “judgmental”) thing.

  6. Sander van der Wal,

    “Take for example Nuns taking care of the elderly and the sick. With much less people doing that kind of volunteer work, and with increasing demand for that kind of work, somebody has to step in. And that is the government. Caring for the elderly and the sick is now mostly a paid-for job.”

    The government doesn’t just step in in such areas to fill gaps left by charitable services. It actively works to drive existing private charitable services out of those fields.

    http://radio.foxnews.com/toddstarnes/top-stories/health-dept-homeless-cant-eat-deer-meat.html

  7. “Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.” Frederic Bastiat

  8. One more set of numbers for you to consider… Add state and local to federal spending to get total government spending.

  9. We Canadians are well aware of where you are going, all are criminals in the eyes of the just-us system, enforcement of law depends on who you are.
    The gun registry decreed all legal property owners, to be criminal unless they submitted to being registered by the state, once registered your legal protection from unwarranted search and seizure are gone.
    Business must collect taxes for the state, GST, the revenuers can and do seize business accounts on slim pretext, looting what they imagine they are owed.
    Being right and in compliance is no defence and the damage is never repaid.

    Real criminals, who do actual damage to society, have endless rights and privileges protected by law. Taxpayers have none.

    The cost of government exceeds any value it provides.
    I liken it to a cost comparison between living a paranoid, tribal life, guarding my life and property 24/7, building only what me and mine can protect or carry away.
    Or having civilization, which I liken to, an illusion of law and order, in which we have sufficient trust, that we can cooperate in safety.
    Using the energy we would “waste” in paranoia, to build infrastructure that enriches us all.
    Governments only function is to maintain the illusion of civilization.
    They are a morality play.
    Civilization collapses when the cost of government exceeds the benefit of cooperation.
    Currently government takes close to 60% of the return on my labour, the benefits are empty promises, we get healthcare where you wait, wait and wait some more,then you die, retirement wealth will be stolen by government thro inflation, estate taxes, death taxes and seizure of selected assets.
    Do not steal your government hates competition.

  10. Luis will be along shortly to complain about…….something and then tell us that if only we gave the government even more paradise will be at hand.

  11. Briggs, Matt

    And private businesses never pull such a trick. As soon as you have a captive market both private enterprise and government start behaving badly. Or do you mean that private enterprise is the paragon of virtue in a captive market situation and only government is bad?

    Private businesses have long figured that out. When a specific government tries to capture all the value, they move their taxable profits elsewhere. Hence no big corporation (or big rock bands) paying taxes anywhere.

    Most people aren’t doing that (move to a better country), maybe they should start too.

  12. For what its worth, Interest Expense on the outstanding US National Debt is provided at http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

    REGARDING growth of Federal Laws and “There is no one in the United States over the age of 18 who cannot be indicted for some federal crime,” — for a dramatic, but true, illustration see: http://www.youtube.com/watch?v=6wXkI4t7nuc The portion specific to this quote starts at about 5:20; however, the entire video is worth watching.

  13. Sander van der Wal: Non-profits do not have volunteers doing the work. Some the highest paid jobs out there are in non-profit organizations. The term “non-profit” does not mean no paid employees. It’s a tax status. The company that could be paying $200,000 a year to its director and be paying several employees. I have worked for non-profits and I assure you, I did get paid.

  14. Matt, interesting graphs but I am still confused as to why this is better. An explanation would be helpful, otherwise it sems that you are just responding to Luis’ infantile hectoring.

  15. @Sheri

    I know that such not-for-profits exist too, but there are also n-f-p where most of the legwork is being done by volunteers. The trend is though that more and more of that kind of work is paid-for. There are in Holland even courses on how to raise as much money as possible for not-for-profits.

  16. The only complaint I have is that Briggs promised me I was “wrong” and that I would see it “next day”. Probably in this post. However I was mentioning FEDERAL spending, not “overall government” spending. tsc tsc.

  17. Sander van der Wal,

    Without force of government no private business can obtain a truly captive market. Nearly every true monopoly that has ever existed was created by government action.

  18. Luis,

    I agree that this seems like a bit of a bait and switch in that regard, but could you provide some positive arguments for your position? So far all you have is an unsupported assertion.

  19. Luis will be along shortly to complain about…….something and then tell us that if only we gave the government even more paradise will be at hand.

    When did I ever say this? It’s oh so easy to paint the interlocutor as a rabid guy from THE OTHER TEAM, but in so doing be aware that you are equally painting yourself as a rabid follower of the opposite.

    I don’t regard government growth as a good thing per se. But before crying foul, I want to see context. I want to see why America of the 1910s didn’t need its government so much, and why it is so pervasive today. A non-ideological perspective would help, because it would provide us with a more objective curiosity that is more probable to give us real answers.

    There’s also this vibe (and actual words) within these comment boxes that the government “doesn’t create wealth”, and that what it merely does is confiscate it from the real wealth producers. Anyone who believes this would flunk econ 101 in the first day. The reason why the government “confiscates” through taxes is because it is an inherently distributionary / insurance body. You could imagine a government with taxes of zero percent, but then each service they provide you would come with a price. You are trying to get help from the police? Pay upfront. Want medical urgent attention? Gimme tha money first. Education? Don’t make me laugh, just give the tens of thousands of greens.

    So it’s evidently and obviously true that the government creates wealth, since it provides valuable services to the citizens. What may be troubling is the lack of power that a citizen may have against its government, how the lack of price feedbacks can slowly degenerate a particular system, etc. Please, anyone, don’t be the fool one who just regurgitates that the government doesn’t “create wealth”. You just don’t know what the frak you are talking about and unintentionally humilliating yourself.

  20. Luis,

    It’s a trade off, for sure. I’m sure that spending more on, say, road building and maintenance than in 1910 is a good thing. I also suspect that the amount of spending on roads hasn’t tracked the growth in the economy.

    I will concede that Andy used a bit of hyperbole there, but to be fair, your unsupported assertions are about as useful as his statement.

    To be sure, other government spending, such as law enforcement or national defense, can have a positive effect on wealth creation. But it does not follow that more is always better (and there’s an argument about quality vs quantity, too). And it certainly doesn’t follow that it should be some percent of GDP, as you asserted.

    It is generally understood that mutual funds that grow too big lose their advantage, simply because there are only so many opportunities, and eventually their overall capital dominates the opportunities. I suspect we can agree that government spending must follow a similar path of diminished marginal returns. I would say we’re long past that point in many areas where government operates.

    But your unsupported belief in a fixed share of public GDP (at least in the presence of the sort of economic growth we’ve witnessed over the last century) disagrees.

  21. Yes sure. The argument is “how much” and “how well”. But notice the catch, which was spotted already by Keynes (when he made his famous prologue for the book Road to Serfdom), that the question hasn’t turned out to be one of morality for everyone agrees on the basic premise (not too little government nor too much), but where exactly should we draw the line.

    That’s a messier conversation, and to be rigorous, a “down to the leaf” discussion. IOW, it involves politics.

  22. Luis,

    So, are you unwilling or unable to have the discussion? Have you conceded that government spending per capita is at least as important a metric as spending as a percent of GDP?

    You made a broad assertion that brushes all of the details of the politics aside. Note that the original post did not! It explicitly talked about that sort of thing, which you may or may not agree with, but which apparently you cannot argue against.

  23. The wide brush was painted when Briggs showed a 60+ times growth of the US government, as if he was painting just another hockey stick. The statistics of practically any interesting number you pick will behave like the blade of a Hockey Stick in the twentieth century. So for instance, if you wanted to alarm people on how many more muslims (SCARY!!/s) are today vs in 1910, you’d be perfectly able to. Or PHDs. Or number of companies. Or Wealth. Or Cancer.

    That’s the kind of tactics that threw me away.

  24. Louis,

    That may be true in regards to the prior post. However, as this post shows, Federal spending is also increasing relative to GDP. That is NEVER a good thing, because it indicates that the impact of incremental increases in spending are having an impact on GDP that is < 1 and possibly (probably) < 0.

  25. I think you are ignoring the impact of health costs–it is the elephant in the room. On Medical Economics:

    “When you crunch data compiled by McKinsey and other researchers, the big picture looks like this: We’re likely to spend $2.8 trillion this year on health care. That $2.8 trillion is likely to be $750 billion, or 27%, more than we would spend if we spent the same per capita as other developed countries, even after adjusting for the relatively high per capita income in the U.S. vs. those other countries.”

    And no, it is not the fault of medicare or Obamacare.

    Medicare’s total management, administrative and processing expenses are about $3.8 billion for processing more than a billion claims a year worth $550 billion. That’s an overall administrative and management cost of about two-thirds of 1% of the amount of the claims, or less than $3.80 per claim…Aetna spent $6.9 billion on operating expenses (including claims processing, accounting, sales and executive management) in 2012. That’s about $30 for each of the 229 million claims Aetna processed, and it amounts to about 29% of the $23.7 billion Aetna pays out in claims.

    Health costs are a huge part of the problem. See much more here:
    http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/#ixzz2M80pqVUS

  26. Prof Nasif Nahle has done studies on backradiation in his paper
    http://principia-scientific.org/publications/New_Concise_Experiment_on_Backradiation.pdf
    which I cited a year ago in my paper
    http://principia-scientific.org/publications/psi_radiated_energy.pdf

    Nasif is one of several physicists and professors of other disciplines on the team at Principia Scientific International all of whom recognise fallacies in the AGW conjecture.

    You need to see the big picture to understand the relative insignificance of backradiation, as explained towards the end of my latest paper
    http://principia-scientific.org/publications/PROM/PROM-COTTON_Planetary_Core_and_Surface_Temperatures.pdf

    1. The thermal gradient (AKA “effective lapse rate”) is pre-determined by the force of gravity, the weighted mean specific heat of the gases in a planet’s atmosphere (at that altitude) and the degree of intra-molecular radiation which, in the case of Earth, is somewhat dependent on the percentage of water vapour which, as is well known, makes the gradient less steep.

    2. The overall level of the plot is established by the autonomous propensity for there to be radiative equilibrium with incident Solar radiation. The area under the curved plot of outward radiative intensity thus has a propensity to remain constant if the gradient alters. So extra water vapour makes it less steep by lowering the surface end and raising the tropopause end.

    3. The surface temperature can then be calculated by extrapolation of the thermal plot of temperature against altitude in the troposphere. The temperature can be derived using SBL from the values of radiative flux at each altitude from (2). The higher the tropopause, the greater the distance over which the temperature can rise, this explaining why Venus is much hotter than Earth.

    4. The mechanism whereby the thermal plot is maintained involves the absorption of energy originally from the Sun (both in downwelling and upwelling radiation) which is then dispersed in all directions over the thermal plane, in order to maintain thermodynamic equilibrium, in accord with the requirements of the Second Law of Thermodynamics.

    5. The thermal plot continues its upward climb more steeply in the crust (due to lower specific heat) but far less steeply in the hottest regions of the mantle because specific heat increases significantly with increasing temperatures.

    6. Heat creep, as described in (4) allows thermal energy to enter deeply into the subsurface regions and, eventually, to support core temperatures and provide energy which can contribute to that in volcanoes and thermal springs and vents.

    7.The surface warms temporarily during the day and then both radiative and non-radiative processes slow its rate of cooling, but there is a limit to such cooling due to the underlying very stable thermal plot of temperature against altitude or underground depth. This is why the base of the atmosphere does not continue cooling at a fast rate all through the night. The force of gravity redistributes absorbed energy in such a way as to provide a supporting temperature at the boundary of the surface and atmosphere, and even at the boundary of the mantle and core.

  27. Flunk on the first day. Maybe so, but I doubt they would accept your application to attend.
    All you have done is repeat the silliness of others here claiming that what government spends is somehow wealth. It’s not it’s a cost, this elementary mistake leads you to claim that a government confiscating wealth, spending money to do that, somehow creates more wealth as a consequence. It just magics out of the air? These are costs, in many cases acceptable costs but costs they remain. Declaring it self evident does not make it so, valuable services are a cost.

    Now how far away was I with claiming you would tell us we all need to give more money to the government to create a paradise?

  28. Briggs, your posts are giving me nightmares. The US was my escape plan should Canada become intolerable, but I’m starting to reconsider. Where will I run to when it becomes a criminal offence to think contrarian thoughts????

    Just to add to my fellow Canucks groaning– Here in Canada we have language police. They’re mostly in the province of Quebec (though some sneak around various Crown Corps looking for lawsuits). These well paid civil servants patrol the dark recesses of Main street looking for language crimes, issuing fines and orders. Recently an Italian restaurant was fined for using the word ‘pasta’. I kid you not.

  29. Will,

    1-)You realize that in the south of the US there is ever more talk to pass law to force the use of English instead of Spanish.

    2-)Not that I care much about the «loi 101» but there is no problem in using a 2nd language anywhere on a sign in Québec as long as the french version is present and bigger. If your language was threatened you would react much the same way. We are about 7 millions people surrounded by 330 millions english speaking people.

    In the US they feel threatened and they are the majority.

  30. @MattS

    Windows has a captive market. Not because the government enforces the use of Windows, and not because the government forbids the implementation of alternatives. But because switching costs are too high. There were plenty of alternatives, and now the competition is reduced to Apple’s Mac OS X and Linux. Apple has a reasonable, and slightly growing market share. Linux is popular among a few computer enthousiasts.

    It can be argued that Apple grew because they became more compatible with Windows after they started using the Intel x86 processor, enabling people to run both Mac OS X and Windows on a single computer. There are also software solutions to run Windows programs in Linux, by having the binary software interface of Windows available in Linux.

    Both Mac OS X and Linux are cheaper than Windows. And still, few people are switching.

    If anything, the government is prosecuting people who run Windows without paying a license. But the government forcing people to use Windows. No way.

  31. Sander,

    Most people use Linux a lot more than they know: phones and DVRs, for instance. Most web pages they visit are served up using Linux.

    While a court found that Windows was a monopoly, it never was a true monopoly in the way people normally think about them.

    Anyways, MattS said “nearly every true monopoly,” so his weasel wording (in addition to being correct!) doesn’t conflict at all with your Microsoft anecdote for more than one reason.

  32. Sander van der Wal,

    Microsoft isn’t a true monopoly, they do have competitors.

    The fact that they have competitors constrains MS, because even though the costs of switching are quite high, they are NOT insurmountable and if MS becomes obnoxious enough, the cost of staying with MS could get higher than the cost of switching.

    “But the government forcing people to use Windows. No way.” Actually yes they do, although not directly. A number of government websites for access to certain services are set up so they only work with MS IE which only runs on Windows.

  33. Andy, before I get to read anything further from you, please enlighten me on what you think is the definition of “wealth”.

  34. When the courts declared MS had a monopoly, it did have it. They had more than 95% of the consumer market at that period, and abused said power to destroy newcomer Netscape. This is the big reason why 1995~2003 marked probably the darkest period in software development ever.

    Today the notion that MS has competitors is obviously true. I’d say they are winding down very much already. Post pc devices are eating up the pc market and MS is unable to touch (ah!) that market. Google, Amazon and Apple are slowly rendering MS empire obsolete. And in some part this happened due to the court’s decision, that pretty much enabled things like Firefox and Webkit to flourish, independent standards to have access and eventually winning the market (vs proprietary flash, silverlight, and formats like WMA, and so on), allowing companies like Apple to stop being so vulnerable to windows dependability.

  35. Louis,

    The common notion of a monopoly is a single company that controls 100% of a market. By this definition MS is not and never has been a monopoly.

  36. Study my Letter on Diana@Philosophyinaction.com. (Search: Crazy Inbox)

    The so-called “federal government” is not only BANKRUPT, it’s HHead- Over- Heels in Debt, & Operating Way In The Red, & It Has A Huge, & Increasing, Budget Deficit. There’s virtually zero $ for anything whatsoever.

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