On Dec 13, 2011, at 4:05 AM, James Heartfield wrote:
> The characterisation of contemporary capitalism as ‘neo-liberalism’ seems particularly unfortunate to me. On the long trend state spending rose (absolutely and as a share of output) all through the twentieth century. A small state might be important for free market ideology, but capitalist economies have all tended to rely on larger and larger state sectors.
Not the U.S. Federal spending has been remarkably flat for a long time. There was a pop because of the Great Recession - a combination of automatic increases like unemployment insurance and food stamps as well as bailout and stimulus spending - but looking at the CBO's cyclically adjusted series tells a different story. Cyclically adjusted spending (i.e., at some version of "full employment") was 21.4% of GDP in 1968. It zoomed to 22.5% in 1985, fell back to 18.5% in 2001 (the last Clinton budget - and a lot of the decline was in military spending as a share of GDP), then rose back to 20.3% in 2006 (the Bush military buildup in large part). This year it's 22.6% - where it was in 1985.
State & local gov spending was 14.2% of GDP in 1975, fell back to 12.4% in 1984, then rose to 14.7% in 1991. It rose some more, to 15.3% in 2003, fell back to 14.8% just before the recession hit in 2007. It's now 15.3%, just where it was in 2003.
The big rise in state & local gov spending happened in the 1960s. For federal spending, there was a rise in (non-cyclically adjusted) spending from around 16% of GDP in the early 1950s to around 20% in the early 1970s. Until the Great Recession, it's pretty much stayed there.
Doug