Thursday, May 07, 2009

Does Government Create Economic Growth

I heard a Republican Party spokesman say that we know that government does not create economic growth. How did that erroneous information ever get accepted within a major American political party?

If we go back in history, American agriculture was the motor for the nations economic growth for most of its history, and as the frontier expanded the government settled the land through land registration systems. They the agricultural research and extension services provided the innovations that improved agricultural productivity.

The government pioneered the development of the infrastructure. Try to imagine the productivity of American society without the highway system. Think about the way the government provided rights of way to railroads and power lines. We don't think about it much, but urban water and sewerage systems How much did the national highway system created under the Eisenhower administration contribute to the economic growth of the country in the second half of the 20th century?

As I recall, the first government scientific organization was the geological survey. How much growth did it stimulate by providing the basis for the exploitation of mineral resources -- gold, silver, copper, coal, oil, etc.?

Think of Franklin as a social innovator. How much growth in the economy was created in his day by putting people to work in libraries, fire departments and schools as the public sector under his leadership and that of other founding fathers became a major source of service innovations.

Perhaps the military and police don't contribute to economic growth, except in the cases of spin offs or willingness of the public to increase spending on such services when they become more necessary. But who would seek to abolish them?

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