Governments grow, but the specifics from recent U.S. history are interesting. Thomas Garret, Andrew Kozak and Russell Rhine of the St. Louis Fed have just published "Institutions and Government Growth:
A Comparison of the 1890s and 1930s." Here is their abstract:
Statistics on the size and growth of the U.S. federal government, along with the rhetoric of President Franklin Roosevelt, seem to indicate that the Great Depression was the event that started the dramatic growth in government spending and intervention in the private sector that has continued to the present day. Through a comparison of the economic conditions of the 1890s and the 1930s, we argue that post-1930 government growth in the United States is not the direct result of the Great Depression, but rather is a result of institutional, legal, and societal changes that began in the late 1800s.
The trends cited are familiar and powerful. Politicians are loath not to compete on the basis of promises and favors to voters. In the U.S., we get big-government Democrats competing with big-government Republicans. Is there any room for optimism re a lighter touch on the morning after the health care vote? There probably is. Here is the opening of Thomas Friedman's column in yesterday's NY Times ("America's Real Dream Team"
Went to a big Washington dinner last week. You know the kind: Large hall; black ties; long dresses. But this was no ordinary dinner. There were 40 guests of honor. So here’s my Sunday news quiz: I’ll give you the names of most of the honorees, and you tell me what dinner I was at. Ready?
Linda Zhou, Alice Wei Zhao, Lori Ying, Angela Yu-Yun Yeung, Lynnelle Lin Ye, Kevin Young Xu, Benjamin Chang Sun, Jane Yoonhae Suh, Katheryn Cheng Shi, Sunanda Sharma, Sarine Gayaneh Shahmirian, Arjun Ranganath Puranik, Raman Venkat Nelakant, Akhil Mathew, Paul Masih Das, David Chienyun Liu, Elisa Bisi Lin, Yifan Li, Lanair Amaad Lett, Ruoyi Jiang, Otana Agape Jakpor, Peter Danming Hu, Yale Wang Fan, Yuval Yaacov Calev, Levent Alpoge, John Vincenzo Capodilupo and Namrata Anand.
No, sorry, it was not a dinner of the China-India Friendship League. Give up?
O.K. All these kids are American high school students. They were the majority of the 40 finalists in the 2010 Intel Science Talent Search, which, through a national contest, identifies and honors the top math and science high school students in America, based on their solutions to scientific problems. The awards dinner was Tuesday, and, as you can see from the above list, most finalists hailed from immigrant families, largely from Asia.
We still get a steady infusion of people who cherish and understand an open economy. To be sure, not all of them are immune to rent-seeking, but it's great to see them enrich the talent pool and bet on the possibility of upward social mobility.