February 18, 2004

Government % of GDP: Misleading International Comparisons

Matthew Yglesias is backing a misleading measure of how large the US government is in comparison to other countries. The US has an exceedingly unusual system in that it is federalized and that the constituting states in that federation are sovereign and have significant taxing and spending roles that impact everyday life.

So when he says that the current spending level in the US is only 18%, he's misstating the reality of government spending in the US by quite a lot as this is only the federal spending level and does not include states, counties, or municipalities who both take and spend a great deal of the national income.

A little tip, if a major party in a 1st world nation unifies around a statistic that sounds completely mind bogglingly stupid, check carefully. Chances are that you've misunderstood what's going on.

Posted by TMLutas at February 18, 2004 12:54 PM