Government In Retreat
Wednesday, May 01, 1991
by Richard B. McKenzie & Dwight R. Lee
Technological changes are increasing the mobility of labor and capital around the world. Because of this mobility, governments no longer have a fixed supply of productive resources to tax and regulate. Instead, governments are in active competition with each other to make their countries attractive to workers and investors who have increasing freedom of choice about when they produce, save and invest. Because the most effective way to compete for capital and labor is to reduce the burden of government, government spending is no longer growing relative to the size of the economy in most developed countries.
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