What Congress Knew

From the document. Public domain work of the US Congress, "THE SIZE AND FUNCTIONS OF GOVERNMENT AND
ECONOMIC GROWTH", 1998

With all this talk of Keynes, and stimulus, and this supposed "great debate," I wanted to take a moment to look at what Congress actually does know.

"The Size and Functions of Government and Economic Growth" was written by three economists, James Gwartney, Randall Holcombe, and Robert Lawson, all closely tied to Florida State, and presented before the Joint Economic Committee April 1998. Using a great survey of all OECD countries and their trends with regards to time in terms of the size of government and the rate of economic growth, they observed a major decline in the ability of economies to grow quickly as the size of government increased, and a major decline in private reinvestment in the economy.

At the time they also accredited government size with helping prevent major slowdowns and bring stability, though recent economic events put serious doubt on that hypothesis. More though, they also observed that America has not seen any truly great gains in prosperity since the early 60's, with the economy gradually edging down to a mediocre level of growth that can barely keep pace with population and really only improves the well-being of the top 10%. Poverty rates have remained unaltered since 1978.

As part of their introduction, they also propose several mechanisms by which economic growth slows in the face of government: "First, the higher taxes and/or additional borrowing required to finance government expenditures exert a negative effect on the economy. As government takes more and more of the earnings of workers, their incentive to invest, to take risks, and to undertake productivity-enhancing activities, decreases."If people, who aren't business owners, don't purchase cars, how can they go vast distances to work at better jobs that make better use of their time to produce for the economy (and in the end, as a result, are able and willing to pay them more.) If farmers don't purchase tractors, you end up with not enough food.

"Second, as government grows relative to the market sector, diminishing returns will be
confronted." Hoover Dam, good. Solar panels on your roof so you can genertate 3 lightbulbs worth of electricity, not so good.

"Finally, the political process is much less dynamic than the market process." Indeed. Our system was specifically designed by the Founding Fathers to NOT be dynamic. Why? Because something that's dynamic can tear away at your rights and freedoms, whereas something thats not dynamic can at best gnaw at them. A quickly changing society is a society where no one knows precisely where they stand, where people are imprisoned without good cause, and where nothing is sacred. That's why we've set up two houses of congress, a presidency that can block congress and a constitution that limits congress.

But first, they point out that their assessment of the actual size of government expenditures is likely over generous: "If government expenditures were measured in constant purchasing power units or on a per capita basis, the increases in the size of government would be substantially greater than those presented in Exhibit 1." In other words, relative to what the money actually buys, its much higher.

Jim Saxton, chair of the Joint Economics Committee and the one who called for the report, is a blue state Republican from New Jersey. The Northeastern United States have not been characterized by their extreme Republicans, and Jim Saxton was elected from a district of suburban Philadelphia, New Jerseys 3rd, including Cherry Hill, a major "edge city," and Willingboro, one of the original Levittown-style suburbs.

Dr. James Gwartney, Professor of Economics and Policy Studies at Florida State University, "holds the Gus A. Stavros Eminent Scholar Chair at Florida State University, where he directs the Stavros Center for the Advancement of Free Enterprise and Economic Education. He is the coauthor of Economics: Private and Public Choice, (South-Western Press, 2008), a widely used principles of economics text that is now in its 12th edition. He is also the co-author of Common Sense Economics: What Everyone Should Know About Wealth and Prosperity (St. Martin's Press, 2005), a primer on economics and personal finance designed for the interested lay person."Glancing briefly at Amazon.com reviews for both books, I noticed that even his most ardent detractors seemed to admit he had a good grasp of the economics. It is also worth noting that getting 13 editions of a textbook published (and professors do shop around for textbooks even if students do not) is not easy in a world where textbooks are often the main moneymaker for professors.

Dr. Randall Holcombe has written extremely prolifickingly, with twelve books and 100 articles to his name. "His primary areas of research are public finance and the economic analysis of public policy issues."He still teaches at Florida State University, where he is the "DeVoe Moore Professor of Economics."

Dr. Robert Lawson, at Capital University Columbus, Ohio, was also a student of Florida State before coming to teach at Capital. A quick glance at his Curriculum Vitae reveals a man driven by data and studies of what actually happens in real states and nations, and also an open-minded creative thinker who will more then readily drag comic strips in to the classroom.

All three of these professors work together on a regular basis, and you can often find their names on the authorship of the same texts. Although tied together well, their success has been borne out in publications, empirical evidence, and the simple fact that a moderate Republican from New Jersey would be interested in hearing them. In addition, the sheer wealth of information the draw on to reach their conclusions is a credit to them, as any scientific man must admit.