Wednesday, January 30, 2008

Big Government Is Bad For Your Wallet

'Big government is bad for economic growth.'

No shit, Sherlock, i hear you cry.

But this isn't my view, nor one of a neo-liberal free market think tank.

It's from that respected institution and dogged inflation-fighter, the European Central Bank, which has come to this conclusion all by itself. It is papers like this that will help spread the gospel.

The paper concludes that each additional 1% of government spending reduces growth by 0.13%.

One interesting finding. The taxes that have the least harmful effects on growth are income taxes. Those that hinder growth the most are consumption taxes and government subsidies.

Something to chew on.

via UK libertarian and freakonomics-style blogger, Chris Dillow.