Just a quick picture. On the right, it’s an item of faith that the crisis in Europe represents a failure of the welfare state. So what is the correlation between the size of government and recent economic performance?
None at all, as far as I can see.
Big Government And The Crisis
Nor I. There really isn't any. The countries in that chart are most of the European Union countries, plus the U.S., Canada, Israel, New Zealand, and Australia.
Growth may be affected by the size of government at some point, but there's a pretty wide variety of government spending to gross domestic product (GDP) ratios there (just by eyeballing the chart, it looks like the range is 31 to 52 percent), and a very large range of differences in economic performance.
I'm sure that won't stop a lot of so-called economics experts from trying to see a pattern, though. Maybe they'll see Elvis or the Virgin Mary, too.