A U-Turn on the Road to Serfdom

Prospects for Reducing the Size of the State

Grover Norquist

• Publisher: London Publishing Partnership
• Year: 2014
• eBook ISBN:
  9780255366694
• Print ISBN:
  9780255366861
• Edition: 1

This book suggests that drastic reforms are required to reverse the ever-increasing size of the state, a trend experienced in most western nations. The report proposes a reassessment of the scale of government to achieve a reduction in taxation and spending.

The modern Leviathan state, its growth and consequences

David B. Smith

In his Hayek lecture, Grover Norquist talked about turning back on the road to serfdom. This chapter considers how far modern states have travelled down that road and examines the consequences in terms of prosperity forgone. The socialisation of the state, about which Grover Norquist talked, preceded the financial crash – and may have partly caused it – but then reached new heights in its wake. It is an open question whether it is possible to turn back. However, it would be enormously beneficial for economic performance and social welfare if we could.

Any attempt to quantify the economic footprint of the state is bedevilled by numerous data difficulties (see Smith 2006). However, the broad trends are sufficiently marked to suggest that the increased role of government was probably the main structural development of the 20th and 21st centuries. This can be seen from Table 1, which uses Tanzi and Schuknecht (2000) for the historical figures, updated using the December 2013 OECD Economic Outlook. Although there are some noticeable inconsistencies between the two sources for individual countries, these appear to be largely offsetting when looking at the average figures for the twelve developed nations for which a continuous record is available (see bottom line).

Table 1Ratios of general government expenditure, including transfers, to money GDP at market prices (%)

...

	1870	1913	1920	1937	1960	1980	2000	2010	2013
Australia	18.3	16.5	19.3	14.8	21.2	34.1	33.9	36.2	35.4
Austria	10.5	17.0	14.7	20.6	35.7	48.1	51.8	52.8	51.8
Belgium	–	13.8	–	21.8	30.3	58.6	49.1	52.5	54.2
Canada	–	–	16.7	25.0	28.6	38.8	40.5	43.3	41.4
France	12.6	17.0	27.6	29.0	34.6	46.1	51.6	56.6	57.0
Germany	10.0	14.8	25.0	34.1	32.4	47.9	45.1	48.0	44.5
Italy	13.7	17.1	30.1	31.1	30.1	42.1	45.8	50.4	51.4
Ireland	–	–	–	–	28.0	48.9	31.2	65.5	42.7
Japan	8.8	8.3	14.8	25.4	17.5	32.0	38.5	40.7	42.9
Netherlands	9.1	9.0	13.5	19.0	33.7	55.2	44.1	51.3	49.2
New Zealand	–	–	24.6	25.3	26.9

Table of contents

• The authors
• Foreword
• Acknowledgements
• Summary
• A U-turn on the road to serfdom: prospects for reducing the size of the state
• Questions and discussion
• The modern Leviathan state, its growth and consequences
• Taxpayers for fiscal decentralisation
• Fostering a European ‘leave us alone’ coalition
• About the IEA