In this clip Dan Mitchell of The Centre for Freedom and Prosperity talks about the Rahn Curve, and it is the spending equivalent of the Laffer curve (which is about taxation). If government gets too big it can have the effect of reducing prosperity, figuring out the ideal level is difficult as many affecting factors come into play, however, the ideal tends to be between 15% & 25%, in the USA current spending is c. 40% – so will it be any surprise to see crowding out or reduced productive sector activity?
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Well the problem as I see it is the public sector. It’s far too big, most of it is waste – think quangos – and it also threatens the private sector. Think about it, most people in the private sector would gladly take a job in the public sector because of the benefits. I know people who are well educated, who work in the public sector that do nothing other than fill in forms, answer phones and attend meetings. These people have engineering, science, math degrees, phds etc. It’s very wasteful.