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Archive for July 14th, 2011

I don’t care one way or the other about the gay marriage debate, for the simple reason that I’ve never been convinced it is the job of the state to sanction marriages.

So you won’t be surprised that I find Steve Chapman’s column about de facto polygamy rather persuasive.

When it comes to sexual relationships and cohabitation among consenting adults, Utah takes a permissive approach. If a guy wants to shack up with a lady, that’s fine. If he wants to shack up with several, no problem. He can father children by different roommates, with no fear of the law. But if he marries one woman and represents three others as his “spiritual wives,” like Kody Brown? Then he’s committed a felony. Not because of the stuff that goes on behind closed doors. It’s the public act of claiming to be part of a lifelong “plural marriage” that raises the specter of jail. …So Brown went to court claiming that his constitutional rights have been violated in various ways. Though it may come as a surprise to hear, he’s got a perfectly reasonable argument. Brown and his lawyer, George Washington University professor Jonathan Turley, don’t say the state must sanction such arrangements in law. Nor did Brown try to get multiple marriage licenses, in defiance of the state ban on polygamy. His case is about freedom, not state recognition. Unlike gay couples who say they should be allowed to legally wed, Brown isn’t asking the state to officially accommodate his chosen form of matrimony. He’s just asking to be let the hell alone. Other people, after all, are exempt from such control. Turley says Brown and his women “would not be prosecuted if they claimed no religious obligation and merely had casual or purely sexual associations.” He notes, “Monogamists are allowed an infinite number of sexual partners, and consequently have the right to bear children with multiple partners, so long as they do not claim to be committed to such partners in a union or family.” The law doesn’t prevent any man from living with several women, having sex with them and siring their offspring. This behavior is a problem only when a man claims to be permanently wedded to the women — only, that is, when he behaves more responsibly than a tomcat. …If Brown wants to live with five women and call them his girlfriends, his shorties, his harem, the Seattle Storm or the 101st Airborne, it is of no earthly concern to the rest of us. And if he wants to call them his wives, the state of Utah should say, “Knock yourself out, dude.” That, or nothing.

I will admit that I don’t like the idea of children being born into that situation, but I’m also not happy about children being born to single mothers. What really matters, though, is that I certainly wouldn’t want the government to interfere in such matters, absent real proof of abuse.

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The United States has been on a decade-long spending binge. Thanks to the profligate policies of both Bush and Obama, the burden of federal spending has climbed to about 25 percent of economic output, up from 18.2 percent of GDP when Bill Clinton left office.

The political class tells us that more government is good for the economy since it an “investment” and/or a “stimulus.”

The academic research, however, tells a different story. Here are some brief excerpts from a recent study by two Swedish economists, including a critically important observation about the impact of bigger government on economic performance.

…most recent studies typically find a negative correlation between total government size and economic growth. …the most convincing studies are those most recently published. …In general, research has come very close to a consensus that in rich countries there is a negative correlation between total government size and growth. It appears fair to say that an increase in total government size of ten percentage points in tax revenue or expenditure as a share of GDP is on average associated with an annual lower growth rate of between one-half and one percentage point.

Let’s focus on the last sentence of the excerpt and contemplate the implications. The research cited above tells us that annual growth is 0.5 percentage point-1.0 percentage point lower if the burden of government rises by 10 percentage points of GDP. Well, the burden of federal spending has jumped by more than 5 percentage points of GDP during the Bush-Obama years, indicating that annual growth in America is now 0.25 percentage point-0.5 percentage point lower than it otherwise would be.

Now let’s take the best-case scenario, and assume that annual growth has only dropped by 0.25 percentage points, and consider what that means. It may not sound like much, but even small differences in growth rates become very important over time. For an average household over a 25-year period, the loss of 0.25 percentage points of growth means annual income will rise, but the total increase will be about $5,000 smaller by the 25th year.

The budgetary implications of growth also are rather important. According to the Congressional Budget Office, the economy’s performance has a large impact on tax receipts (more growth means higher incomes and more taxpayers) and a small effect on government spending (more growth means fewer people at the public trough). CBO even publishes a “sensitivity table” with specific estimates (Table B-1).

If we once again use the best-case scenario and assume the Bush-Obama spending binge has reduced annual growth by only 0.25 percentage points, the CBO numbers show this means more than $750 billion of additional red ink. This is something to keep in mind as the White House argues that job-killing class-warfare tax hikes will somehow improve the budget situation.

Let’s now return to the academic research. The authors included a very helpful table showing the results of recent studies on the relationship between the size of government and economic performance. Click on the image for a full-size look at how the majority of scholarly research this century confirms that big government is bad for prosperity.

For all intents and purposes, all this research shows that developed nations are on the downward-sloping portion of the Rahn Curve. Named after my Cato colleague Richard Rahn and explained in the video below, the Rahn Curve is sort of a spending version of the Laffer Curve.

Richard Rahn

It shows that growth is maximized by small governments that focus on core “public goods” like rule of law and protection of property rights. But when governments expand beyond a certain growth-maximizing level (the research says about 20 percent of GDP, by I explain in the video why the right number is probably much smaller), the result is slower growth and less prosperity.

With the exception of high-growth Hong Kong and Singapore, all developed nation have public sectors that consume at least 30 percent of economic output. This means that government spending is undermining prosperity all around the world. And since the burden of government spending is close to 40 percent of GDP in the United States…well, you can fill in the blanks.

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