Big Business Isn’t Investing in People Anymore, So Big Government Has To

May 8, 2013

Productive investments and social spending are essential to a healthy advanced society. Yet US president Barack Obama’s proposal to cut Social Security benefits and the bipartisan idea that social programs are “crowding out” investment set up a false choice between the two.

If we look at the federal budget in isolation, it appears that the government is growing in size. In the context of the US economy, however, the government is playing a role that large corporations have abandoned. The private sector has shed responsibility for both productive investments in areas like research and training and in providing social benefits to workers. To compensate, the government needs to be bigger than before. We cannot set an arbitrary limit on government spending without looking at the broader historical picture.

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