Tuesday, March 29, 2011

Time to diet ...

... Bloated nation states. (Hat tip, Vikram Johri.)

... there are also two structural causes of big government. First, productivity in the state sector, especially in fields such as education and health, has lagged behind the private sector. And second, there has been a huge increase in "social transfers," especially benefits for the middle classes and the elderly.

To lose weight, governments have to do two things: learn how to do more with less, which means modernizing the state, and cut back on what they offer, which means tackling the social transfers. Both are inevitable, but the first offers the best chance of immediate gains.

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