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The idea that the government has been declining for 40 years is a myth


The author, Morgan Stanley Investment Management’s global expert, is the author of ‘The Ten Commandments of Good Practices’

The common denominator is that US President Joe Biden is it’s over the “era of local governments” and the capitalist market capitalism that began with Ronald Reagan and Margaret Thatcher in the 1980s. But that era is just a myth.

Since 1980, Using the government has stabilized, and may have risen slightly as a market share in the US, UK and other developed countries. Weaknesses have come from a strange way, in good years and bad. Government debt in developed countries has grown – in the US to more than a hundred of GDP last year. Government is more important and intervening than ever before.

Economic growth in governments goes beyond shortcomings and debt. Use of US currency, including Medicaid, Medicare and social security, rose sharply from less than 10% to 17 percent of GDP between 1980 and late 2020. The healthcare world has grown exponentially.

So does the governing government. Spending money US regulatory agencies rose under every president after Reagan. The program of right federal book Legislation grew slowly, before Donald Trump took office. The same system saves the file of UK.

Saving money at the company has become a legitimate way. Once reserved for single companies, financial assistance is provided to all companies during the crisis of savings and loans in the 80s and 90s. After 2008, they were transferred to major banks and car manufacturers. In the midst of the epidemic, special funds have been donated to each listed company.

In developed countries, governments have set aside large sums of money as part of GDP for a series of crises. In the US, financial stimulus reached the second world war following 4% of GDP after the dotcom bust, 7% after the economic crisis, and 13% last year.

It is also difficult to maintain the myth that central banks are not part of the central government. They are attached at the waist. Governments cannot afford to be short of debt and debt without the assistance of a central bank. And central banks have grown exponentially, both to save money and to buy in the stock market. I estimate that last year’s combined revenue and stimulus accounted for 28% of GDP in the US, with 40% in the developed economy approx.

So why does the myth of the local government grow, when this does not agree with it?

The program of story is described as a history of ideology, ranging from law enforcement, tax cuts and other anti-government policies under Reagan and Thatcher. Their centrist followers, from Tony Blair and Bill Clinton to Barack Obama, are being followed as followers of the market’s unconventional traditions, which helped to spread “neoliberal” ideas around the world. Using a number of areas in which political ideas have not been developed, commentators create a solid image of public service.

But the idea of ​​a free market did not diminish the official ship, other than to hide other state-owned companies. Most of them were just talking. Many Republicans agree with Reagan’s view that “government is the problem,” but their main answer has been tax cuts, not the like. Since 1980 every Republican president has committed atrocities, every year, and all Democrats, except Clinton.

The belief in the return of governments, leaving markets to thrive, is also affected by fleeing trees and bond prices. Worth $ 12tn in 1980, global stocks and bonds are now around $ 370tn. But this rise could not be a reason to return to the hands of governments, such as retrenchments, rather than government subsidies, especially in the form of cash payments and simple payments to central banks.

Finally, the idea of ​​a free market changed the countries of the former socialist states of China, India and Eastern Europe, where the government now occupies a smaller economy than 40 years ago. This, from developed countries, probably encouraged the misconception that governments are returning everywhere. Biden’s progressive followers are gone compliments finally a small government, but it did not happen in the US.

The debate over where Biden is leading America and the world should start with an understanding of where he is coming from. Its goals – a few billion dollars in packaging, new legislation, and more – are clearly stated to be the greatest achievements of any president for decades. But it is not showing an end. It shows the recent growth of major governments.


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