Wednesday, 2 October 2013

Peak Government

Interesting post over on ZeroHedge looking at the question:

Have We Reached Peak Government? [External link]

Have we reached Peak Government? That is, a structural point beyond which government can no longer grow sustainably?


So the question of Peak Government is ultimately a question of Peak Debt: how much money can the government borrow to sustain its current spending? Can public and private debt expand at rates four or five times that of the underlying economy? If so, for how long?

If we are not yet at Peak Debt, we are getting close, and that means we are also getting close to Peak Government.

Taming the leviathan is a complex problem. Does it make sense to talk about peak government? Certainly those in China and previously in Stalanist Russia might have something to say on how long governments can keep growing. What happens when we reach or pass peak government? Does the world collapse into anarchy?

Does it make sense to talk about sustainable growth in government - I guess this is a legitimate question. If increased tax revenues can support additional government expenditures then growth of government is fine assuming they manage to do something vaguely productive.

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