Friday, April 13, 2012

A Thought about public spending

Source: The Economist
If more health care is included in public spending in European countries than in the United States because their people use public health services and many of ours use private services, then the lines in the graph above don't really measure the same thing. Moreover, since life expectancy of people in many of the  European countries is greater than that in the United States, they may be buying more or better health services. On the other hand, the United States is clearly buying more military goods and services as a percentage of GDP than our European allies. The graph compares different "market baskets" in different countries.

The data is also government spending as a portion of GDP. The Great Recession, global in scale, both required government stimulus spending in 2007-8 and reduced GDP in those years.

The question is when does the spending as a portion of GDP go down in the United States -- when does our priority shift from stimulus to retiring debt?

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