U.S. Government Expenditures

Douglass C. North and John Joseph Wallis, "American Government Expenditures: A Historical Perspective" AEA Papers and Proceedings (May, 1982) 33640.

The longterm secular trend of governments in the Western world is to grow not only absolutely, but in the proportion of GNP that government absorbs. Conventional economic explanations of this trend, as cited by the authors, are regarded as little more than traditional conservative brimstone about government giveaways, assuming as they do

a crude predatory theory of the state in which government

is simply a gigantic transfer mechanism for redistributing

To this conventional theory, North and Wallis propose an alternative which argues, essentially, that the relative growth of government is a natural consequence of the technologydriven development of a more complex society. They divide nonmilitary gosvernment expenditures into two great catagories, direct transfers to persons, and "other." The "other," by and large, represents government investments in infrastructure of one sort or another: ports, highways, bridges, police forces, school systems. Statistics from the U.S. and a number of other developed industrial countries over recent decades shows a consistant pattern of growing overall relative share, with increases in both the transfer and "other" (public investment) catagories.

The public investments, in the authors' v

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est lobbies to promote their members' interests. Overt transfer payments can also be seen as an adaptation to a more complex and mobile society. For the sake of mobility we broke up extended families, and made Social Security necessary. By putting women to work in the marketplace, we are ultimately making public child care necessary. It might be fruitful to compare the growth of government transfer payments to the growth of private transfers such as retirement plans, medical insurance, and the like. In this light, the increasing share of transfer payments could perhaps be seen not simply as a reflection of specialinterest power, as North and Wallis do, but as yet another way of providing for the needs of a complex society. Lee J. Alston and Joseph P. Ferrie, "Labor Costs, Paternalism, and Loyalty in Southern Agriculture: A Constraint on the Growth of the Welfare State." Journal of Economic History, 45 (March, 1985), 95117. When the New Deal reform programs, such as Social Security and the early federal welfare programs, were originally introduced, they largely and systematically excluded agricultural workers. The reason for this exclusion centered in the South, still dominated at that time by a r

Category: Government - U