Earlier this month I chatted with with fellow economist Morgan Reynolds on his Reynolds Reveal . Issues ranged from slow recovery to debt and deficits and empirical work with a good theoretical foundation by Gwarnty, Lawson, and Holcombe showing how government spending in excess 15% of GDP retards economic growth (see here). Vedder and Gallaway also address Government size and economic growth.
Reynolds summary of the hour :
Episode #009 – Reynolds Reveal - Reynolds discussed the industrial accident at Nuclear One near his home in Arkansas; the March employment/unemployment report released the previous Friday; and another Paul Krugman column in the NYT opposing ‘liquidation’ via recession and pushing more and more federal spending and money printing to gin up economic growth. Talk about repeated failure! Guest economist John Cochran of Metropolitan State University in Denver Colorado patiently discussed the many problems of the massive interventions which harm economic expansion. In particular, recent economic statistical studies show government spending consistently impairs economic growth when government’s share of GDP exceeds 18 percent. During the Clinton era federal spending was about 18 percent of GDP but currently is in the range of 23-24 percent. Cochran pointed out that the key problem is not so much deficit spending as total spending far in excess of optimal, although he believes optimal is even lower, probably in the range of ‘tithing,’ or about 10 percent of GDP.
A fun afternoon thanks to modern technology. Morgan was on Alabama gulf coast in a moter home enjoying spring weather and I was in the comfort of my own home in the Denver area talking and sipping a nice IPA while a blizzaed raged outside.
