The Future of Government Expenditure in Advanced Economies
FINANCIAL TIMES BEST ECONOMICS BOOKS 2020
Advanced nations are headed for a new era of bigger government, with government expenditure set to increase enormously over the next three decades. In all advanced economies, health expenditure will be driven irresistibly upward by the cost of precision medicine and other new technologies, as well as by the need to repair weaknesses highlighted by the coronavirus pandemic. Governments will also be compelled to spend big on fighting global warming, fixing ailing infrastructure and providing adequate aged care for a rapidly graying populations. The combined effect of these and other spending pressures threatens to drive budget deficits and government debt through the roof. Substantial tax increases will be necessary, most of all in the low-tax United States. Pruning welfare spending will also be high on the agenda in countries with the most comprehensive welfare states. Printing money - as proposed by advocates of modern monetary theory - is not a solution, but a sure route to disaster. Faced with this reality, the political right must abandon pipedreams of small government. The left, on the other hand, needs to recognize that there is no room or need for costly projects like a universal basic income. Mankind is not facing the threat of mass technological unemployment, and government spending needs to be focused on addressing real problems rather than imaginary ones.
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