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Study: Smaller government equals better economy

Posted: June 7, 2012 at 3:00 pm   /   by

Apropos of our earlier posts on Keynesianism/Obamanomics’ failure to produce jobs or economic growth, even though it claims that government spending is essential to doing so . . .

We discover from a study of OECD nations that the opposite is the case:

Econometric analysis of advanced [Organisation for Economic Cooperation and Development] countries for the period 1965-2010 finds that a higher tax to [Gross Domestic Product] ratio has a statistically significant, negative effect on growth. For example, an increase in the tax to GDP ratio of 10 percentage points is found to lower annual per capita GDP growth by 1.2 percentage points. […]

“Between 2003 and 2012, real GDP growth was 3.1% a year for small government countries (i.e. where both government outlays and receipts were on average below 40% of GDP for the years 1999 to 2009), compared to 2.0% for big government countries.

There are also the data from Estonia. Hit hard by the Great Recession, the instituted REAL austerity measures, and now they’re the only European economy that is really booming. This has started a Twitter flaming incident between the Estonian president, who is proud of his country’s achievements, and Paul Krugman, the Keynesian avatar.

Not that data ever stops them. The statist project is undying.They’re sure that they’re right, and they’re sure that you’re wrong.

“You must stand clear, or be trodden underfoot.”

Christopher Cook

Christopher Cook

Managing Editor at Western Free Press
Christopher Cook is a writer, editor, and political commentator. He is the president of Castleraine, Inc., a consulting firm providing a diverse array of services to corporate, public policy, and not-for-profit clients.

Ardently devoted to the cause of human freedom, he has worked at the confluence of politics, activism, and public policy for more than a decade. He co-wrote a ten-part series of video shorts on economics, and has film credits as a researcher on 11 political documentaries, including Citizens United's notorious film on Hillary Clinton that became the subject of a landmark Supreme Court decision. He is the founder of several activist endeavors, including (now a part of Western Free Press) and He is currently the managing editor of and principal contributor to
Christopher Cook


  1. […] revolution. The lower spending surely played a positive role, though, especially given what economic data have long shown about the connection between lower government spending and economic […]