Government Getting Bigger

Larry Summers in the Financial Times:

For the next three months the US will debate the merits of growing versus shrinking government. But for the next three decades it will confront the reality that major structural changes in the economy will compel an increase in the public sector’s fraction of the total economy unless there is a substantial scaling down in the functions that the federal government has long performed. How government can best prepare for the pressures that will come, and how greater revenues can be mobilised without damaging the economy, are the great economic questions for the next generation.

Reihan Salam with a follow up:

One serious potential concern is that when we focus exclusively on direct expenditures, we encourage the growth of government’s power via other less visible channels, a theme of Raghuram Rajan’s provocative Fault Lines.