Small Government or Good Government?

James Kwak has a great discussion on the role of government over at Baseline Scenario. He argues that the Heritage Foundation’s latest analysis, which concludes that the most neoliberal states have experienced the highest level of economic growth, is misguided. Kwak’s analysis is, I think, quite compelling. He suggests that the Heritage Index, which weights ten “freedoms” (business, trade, fiscal, government, monetary, investment, financial, property, labor, and freedom from corruption) confuses less government with good government. This, he suggests, is an all-too-common mistake in many analyses. While we should be focused on good government (particularly freedom from corruption), policy tends far too often to focus instead on reducing the size of government, which is not at all the same thing. Kwak’s analysis is definitely worth a read.

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