Thursday, September 22, 2011

Reality Check: The Era of Big Government Actually Ended in the 1970s

Karl Smith published a really interesting post last week on the evisceration of the middle class, as part of the larger discussion around the larger discussion of how new Census data show just how screwed the American middle class is.

Among the charts Smith highlighted was the following one, which caught my eye:


What that chart shows is how the ratio of government workers to private workers has fallen from more than 1:3 in the 1970s to less than 1:4 now.

During that same period of time, however, the public's demand for government services has continued to grow. How do you get by doing more work with fewer workers? To a small extent, with efficiency gains, but for the most part, the US government's answer has been the laughably inefficient contracting out of a myriad of government functions to be performed by the private sector. I'll have more to say about government contracting sometime soon - but I wanted to highlight the fact that, as the share of government workers has declined, the federal budget (and the federal contracting budget) have continued to grow.

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