Understanding United States Government Growth: An Empirical Analysis of the Postwar Era

By William D. Berry; David Lowery | Go to book overview

6
GROWTH IN THE SCOPE OF GOVERNMENT PURCHASES

INTRODUCTION

That much of the nominal growth in the public sector in the United States is due to increases in the cost of public sector goods and services relative to those of the economy as a whole in no way lessens the need to develop an explanation of the growth or decline in government's real share of GDP. The freedom and efficiency issues addressed in Chapter 1 remain, even if the magnitude of real government expansion is not as great as originally supposed. In developing such an explanation, we start by drawing the critical distinction between two fundamentally different types of government activity: transfer payments to individuals and direct purchases of goods and services by government.

In making transfer payments, government is collecting money from taxpayers and redistributing it directly to individuals. In making purchases, government buys labor and capital resources and uses them to produce goods and services. Although these two types of activity may, in some instances, be functional substitutes for one another, their differences are probably sufficient to require separate explanations to account for their patterns of change in the postwar period.

First of all, the incentives for government employees concerning transfers may be very different from those concerning purchases. For instance, according to the excessive government view, public sector employees may be motivated by the goal of higher wages and other benefits like more staff to supervise and more office space ( Niskanen 1971; Tullock 1977). Because such benefits involve increases in

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Understanding United States Government Growth: An Empirical Analysis of the Postwar Era
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • List of Tables ix
  • List of Figures xi
  • Preface xiii
  • I GOVERNMENT GROWTH: MEASUREMENT, CONSEQUENCES AND CAUSES 1
  • I the Problem of Government Growth 3
  • 2: MEASURING THE SIZE AND GROWTH OF GOVERNMENT 15
  • II: GOVERNMENT GROWTH 37
  • 3: EXPLANATIONS OF GOVERNMENT GROWTH 39
  • 4: TESTING THE EXPLANATIONS 65
  • III A DISAGGREGATED ANALYSIS OF GOVERNMENT GRONWH 95
  • 5: GROWTH IN THE COST OF GOVERNMENT 97
  • 6: GROWTH IN THE SCOPE OF GOVERNMENT PURCHASES 114
  • 7: GROWTH IN THE SCOPE OF GOVERNMENT TRANSFERS 156
  • IV TOWARD A GREATER UNDERSTANDING OF GOVERNMENT GROWTH 179
  • 8: GOVERNMENT GROWTH 181
  • Bibliography 191
  • Index 207
  • ABOUT THE AUTHORS 213
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