Private sector shrinkage and the growth of industrialized economies: Reply

Further tests and thoughts on the OECD data lead me to conclude that, if anything, my 1986 paper underestimated the magnitude of the inverse relation between economic growth and government size. If one takes the nominal-based measure of government scale, as advised by Saunders, the significance levels, coefficient magnitudes and goodness of fits improve over what I found with my initial investigation. I would suggest that Saunders reconsider his reluctance to believe that the size of the public sector is unrelated to economic growth in OECD countries over this time period.One additional thought appears relevant to the current policy debate concerning budget deficits and economic performance within the major industrialized economies. The empirical work displayed here and in my 1986 paper suggests serious problems associated with the various proposals urging governments to raise taxes and/or ease fiscal policy. Elsewhere, I have suggested that available empirical evidence implies that plans to increase taxes as a way out of budget deficits are plans that carry the potential for raising government spending and possibly future deficits as well. Coupled with the evidence presented here, we should also recognize the potential of tax increases to raise the level of government participation in a country and, accordingly, exert inverse influences on its future economic performance as well. As suggested in my 1986 paper, the empirical evidence may suggest the following irony: While political participants may crave larger and larger non-market resource allocations, their future ability to satisfy that craving may very well be severely constrained by the satisfaction of that same appetite.     

What the doctor should do

Domestic violence is an epidemic, but physicians say it's not their problem. The A.M.A. disagrees and wants to put them in an uncomfortable new role.     

Urban growth in India: demographic and sociocultural prospects

The numerical and qualitative aspects of the growth of the Indians urban population are discussed with the benefit of data from the last 4 censuses. Thinkers exemplified by M.K. Gandhi believe that urban growth erodes Indian culture, while opponents argue that India's traditional way of life deserves to be obliterated. The "mechanics" of erosion of Indian culture is discussed under 5 headings: its locus, speed, direction, type of population shifts, and types of cities affected by growth. The village, which is the principal locus of Indian culture, is the locus affected by urbanization. The quantitative estimate of urbanization is extremely rapid: between 1951 and 1988, the urban population grew from 62 to 217 million. In this period rural numbers grew from 295 to 618 million. Because of the hugh natural increase of the rural population, the proportion of the urban population grew only from 17.3% to 23.3%. The direction of change is described as a process or cultural accretion or "interpenetration" rather than replacement of tradition by urban culture. Populations shifts account for a large amount of urban increase, a net rise in urban sector of 15 million/decade. While the 4 largest cities received the most immigrants, growing at 3.16%, the intermediate 6 cities with populations 1 million in 1981 grew even faster, at 3.48%. It is likely that India's population after the 1991 census is complete will be 910 million, with 27% urban.