1964 Cost per capita in 1964 dollars
$2 Bil/3,413,864 =
$586/person
2014 Cost per capita in 2014 dollars
$57.5 Bil/5,379,139 =
$10,689/person
1964 Cost per capita in 2014 dollars
($586/18)110=
$3,580/person
Change is cost
$10,689/$3580 = 2.99 times
State and Local Spend
FRED GDP DEF
MN Population History
And here are some responses and questions.
"Therefore "local / state government" costs 3X what it did in 1964. Since much of the additional cost goes to education, special education and health/human services, are we getting 3X the value?" G2AThoughts?
"So, what do you think the State could do for its people with the same level of spending as 50 years ago? Annual expenditures of $19.257B. Ready. Set. Go." Joel
"All of the things that government did 50 years ago, when everything was just great. I think it's just like our school district. We still produce the same number of national merit scholars as we did back when we spent half as much. Anyone want to bet that MN has done not quite as well?" J
Since I was born in 1966, some of you will need to help me learn what life was like back then.
ReplyDeleteAs always facts with sources are preferred.
The Dow Jones Industrial Average is 22 times higher today than it was in 1964. Turns out America has been a good investment.
ReplyDelete--Hiram
Boiler plate response...
ReplyDelete"Here is some more qualitative rationale that one of the Pauls reminded me of.
The USA is overall the best and most unique country in the world. We are wealthy and powerful and willing to use that to help others all around the world. We have destroyed aggressive nations and then helped to rebuild them. Millions of citizens from around the world would love to come live here and die trying, even though many of our own citizens take it for granted or complain that it still is not good enough for them.
And we did that with a governmental system that cost 33% or less of our GDP.
With that in mind why do you think we should screw with the most successful country in the world? Rationale and cost anaysis expected." G2A
Can we go too far and spend too much via government?
ReplyDeleteDiminishing Returns?
The question is sometimes phrased as "how much [government spending or taxation] is enough?" My answer has always been that "there is no end to the amount of good that can be done with somebody else's money" and therefore, [liberal] government's natural inclination is to grow and spend with total disregard for what things cost and what the value produced (or destroyed) is. For example, a school district can spend twice as much without raising student achievement by even 1%. And some have.
ReplyDeleteThat is why I am concerned when Liberals say they can not give a hard target for government spending as a percent of GDP, and their rationale is that we need to spend what is required to fulfill the role.
ReplyDeleteIt indicates that they don't understand that the role and inefficiencies will grow to spend whatever money is provided.
It would be like my giving the engineers an unlimited budget to create an undefined product. The engineers could spend billions making the best coolest product. They are not bad for doing this, it is in their nature to experiment, improve, perfect, etc. The only problem is that it could bankrupt the company.
Why documented requirements and budgets matter...
I had a manager once who said that "there comes a time in the life of every project where you have to shoot the engineers and start production." In government, that is the equivalent of electing "extremist" Republicans to government power. There are two two-year periods in MN (post-1960) history when spending did not increase radically. In both cases, Republicans were in charge.
ReplyDeletehow much [government spending or taxation] is enough?
ReplyDeleteDepends on what you want to buy, I suppose.
--Hiram
Can we go too far and spend too much via government?
ReplyDeleteSure. I just finished watching "The Roosevelts", which is available on Roku until September 28th, which among other things, made the point tangentially at least, that huge amounts of deficit government spending can work out just fine.
--Hiram
That is why I am concerned when Liberals say they can not give a hard target for government spending as a percent of GDP, and their rationale is that we need to spend what is required to fulfill the role.
ReplyDeleteThat's because hard targets aren't realistic or meaningful. To a parent of a child with a life threatening illness, how much medical care is enough? What hard target should the parent, or society impose?
--Hiram
Something to keep in mind. If we measure the size of government by how much government spends, money spent on care for that child with the life threatening illness makes government bigger. Care, by they way, which might not have been available back in 1964 when government was much cheaper. So what do we do? Hire a death panel with authority to decide the child has received "enough" care, thereby reducing the size of government?
ReplyDelete--Hiram
... "The Roosevelts", which is available on Roku until September 28th, which among other things, made the point tangentially at least, that huge amounts of deficit government spending can work out just fine.
ReplyDeleteOnly propaganda can make a 10-year-long depression sustained by government incompetence seem "just fine," and that's what this mini-series is.
Hiram,
ReplyDeleteI hate to break it to you, but even the socialized medicine programs have limits on what they will spend to save a life. From what I can tell, it is based on the patients age, prognosis and other factors.
Remember the story from my friend who lived in Italy, his land lady was diagnosed with some form of cancer and they sent her a check for ~$50,000 and told her to enjoy her last months of life...
even the socialized medicine programs have limits on what they will spend to save a life.
ReplyDeleteSo at some point, they kick sick children out of hospitals? And parents are satisfied with that knowing their kids got "enough" life saving care?
--Hiram
A reader noted in a different way that things were not very good for minorities in 1964. Though I am unsure if improving civil rights drove any financial costs?
ReplyDeleteI would have thought that should have been an excellent improvement with little or no on going governmental costs. Thoughts?
The biggest expensive changes I can think of that have happened since 1964 are:
- public education is legally required to spend big bucks on children with special needs.
- massive growth in medicaid, medicare, food programs, and other entitlements. Government took the place of family and charities in paying for the care of low income citizens.
- more children went further in public K-12 and more went to public institutions of higher learning.
- significant increase in regulations, monitoring and enforcement. (ie land, water, air, emissions, spills, safety, etc)
Other than "inefficiencies of government" and the above. Can you think of anything else that has changed significantly to account for the tripling in costs?
I assume the MN budget split over time looks something like this link.
"They kick sick children out of hospitals?"
ReplyDeleteI am not sure what happens in Europe, but in America some charity helps the children. We do love kids.
Food for Thought
ReplyDeleteSo did I miss something, or this a pretty complete list of what additional value we have gotten for three times the cost?
ReplyDelete- public education is legally required to spend big bucks on children with special needs.
- massive growth in medicaid, medicare, food programs, and other entitlements. Government took the place of family and charities in paying for the care of low income citizens.
- more children went further in public K-12 and more went to public institutions of higher learning.
- significant increase in regulations, monitoring and enforcement. (ie land, water, air, emissions, spills, safety, etc)
It may be enough to justify the additional cost. I just want to make sure I am not missing any other new services or roles. 50 years is a long time.
Thoughts?
ReplyDeleteI am not sure what happens in Europe, but in America some charity helps the children.
I actually don't think it happens here either. We simply stick the bill to someone else. Nobody believes in "enough" when it's their interests on the line.
--Hiram
"Nobody believes in "enough" when it's their interests on the line."
ReplyDeleteNow there is a sentence we can both agree on.
I always wonder what would happen-- how many people would not need the help government hands out-- if government didn't just hand out these goodies, no strings attached?
ReplyDeletejerry-
ReplyDeleteare you talking about Big Business?
Anon,
ReplyDeletePlease be more specific.
We all get tax breaks of one sort or another. The tax code has been morphed to encourage certain behaviors and discourage others.
Which money or services are given to businesses for free?
Is this something new since 1964 that is driving up the cost of government?
Now I know the government cuts checks to citizens for Medicaid, Medicare, Food Stamps, Heating Assistance, ACA subsidies, Housing Assistance, Social Security Retirement, SS Disability, Job Training, etc and absolutely nothing is expected in return.
ReplyDeleteWhere does government cut checks to businesses without expecting something in return?
We keep getting side tracked...
ReplyDeleteSo did I miss something, or this a pretty complete list of what additional value we have gotten for three times the cost?
- public education is legally required to spend big bucks on children with special needs.
- massive growth in medicaid, medicare, food programs, and other entitlements. Government took the place of family and charities in paying for the care of low income citizens.
- more children went further in public K-12 and more went to public institutions of higher learning.
- significant increase in regulations, monitoring and enforcement. (ie land, water, air, emissions, spills, safety, etc)
It may be enough to justify the additional cost. I just want to make sure I am not missing any other new services or roles. 50 years is a long time.
Thoughts?
I thought about adding "Light Rail", but they had big transportation expenses back then.
I just need to note here that "tax breaks" are NOT a form of government spending! Reduced taxation simply allows you to keep more of your money, and spend it on what you want and need, rather than having it forcefully extracted from your wallet and spent on what some politician or bureaucrat thinks is needed.
ReplyDeleteI also believe that any money spent on individual entitlements should NOT be counted as being "for the common good," because the war on poverty is over and poverty won. After some $26 trillion, we have the same percentage of people in poverty as we did before.
I don't think you can count the additional spending on public education, either, unless that you can show that the total amount of education delivered, as measured by academic knowledge acquired, has increased proportionally. The fact that the current generation is less able in history, spelling and grammar, and in many cases math and science, would tend to argue against that proposition. Inflation-adjusted spending has at least doubled on a per pupil basis. Has student achievement doubled?
I agree that most business tax incentives are not money for nothing. However sometime Liberals seem to think companies get traditional welfare payments. I am not sure why. I think most of those, if they exist, went to the Green Energy companies in the form of loans. (some of which we did not get back)
ReplyDeleteI was puzzled where the ACA healthcare subsidy, earned income tax credit, child tax credit, etc fit into this discussion. Money for nothing, or incentive to encourage certain behaviors?
I am indifferent right now as to whether the additional activities and expenditures were good or bad for the common good. I am just interested in what the gov't does / spends now vs what they did / spent then.
ReplyDeleteAs always what is your source regarding this OPINION???
"the current generation is less able in history, spelling and grammar, and in many cases math and science,"
Finally, since probably 35% of the education budget goes to special needs kids today. Who paid for their care and nurturing in 1964?
ReplyDelete"Who paid for their care and nurturing in 1964?"
ReplyDeleteTheir parents, if they could afford it. But the reality is that before the reforms of the 1960s and 1970s, most kids with special needs didn't go to school at all.
I haven't had anything to say on this topic because I am skeptical that spending is 3X higher than it was 50 years ago. Does this imply that our tax rates are 3X higher?
ReplyDeleteI would be curious to see how spending has increased using price of government as the measuring tool. The only price of govt comparisons that I have seen only go back to 1991. If we compare spending from 2014 to 1991 our current POG is lower.
About special ed- The largest numbers of kids receiving special education qualify with learning disabilities and behavior disorders. I think these kids were in school 50 years, but were not receiving support. Some of the EBD kids are very costly to educate, especially if they attend a separate EBD facility.
A simple internet search yields:
ReplyDeletehttp://www.heritage.org/research/reports/2008/09/does-spending-more-on-education-improve-academic-achievement.
Lots of other sources saying similar. I like the anecdotal evidence that says you best not publish grammar and spelling errors to senior citizens educated in the 40s and 50s; they'll nail you every time.
Heritage Does Spending More Help
ReplyDeleteNCES Report Card
ReplyDeleteNAEP Long Term Analysis
ReplyDeleteNCES Long Term Analysis
ReplyDeleteEPI Education Cost Analysis
ReplyDeleteI think your nostalgia tendency is kicking in.
ReplyDeleteCollege Board Trends
NCES 120 Years of Education
ReplyDeleteAfter browsing these, I think the Heritage folks are playing games again.
ReplyDeleteLaurie,
ReplyDeleteFrom what I understand, the POG is kind of a funny measure.
It would be like saying that you got a 5% raise, therefore your mortgage payment should increase by 5%.
Since the benefits and features of government really are somewhat fixed. (ie no new features, performances, etc) The POG cost should be dropping as technology improves efficiency, just like most other services.
The 3X measure I calculated adjusted for population and inflation.
It is not relative to what people in the state earn or are worth. Do you think government cost should go up just because we earn more?
And yes we are funding it some way. I would assume higher property taxes, sales taxes, gas taxes, cigarette taxes, income tax rates, fees, etc.
MN Tax History in Detail
ReplyDeleteMN Tax History Short Version
Apparently we didn't even have a sales tax until 1967...
"I think your nostalgia tendency is kicking in." How many of today's college graduates spell and write as well as HS graduates of 1950? And have the standards changed? Few of us could pass a math test from 1920.
ReplyDeleteThank you for all of the links, but please, could you offer an assessment of them? If they support my contention, I don't need to delve into the details.
Laurie is partly right. As a percentage of income, MN taxes have not increased nearly as outrageously as has state spending, because incomes generally go up over time (unless Obama is in the WH).
ReplyDeleteHowever, when was the last time you saw tax rates go DOWN as a percent of total income? Sure, total tax collections suffer in times of recession, but politicians never seem to think that the government can "tighten the belt." For example, at the federal level, the "autopilot spending" is so high that a 1% actual reduction in spending (rather than the automatic increase built in) every year for 5 years would balance the budget. In Minnesota, the "Zero based budget" plan never got past the DFL majority. Or, as Reagan said, "Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!"
"After browsing these, I think the Heritage folks are playing games again."
ReplyDeleteYou forgot the "IMHO." I happen to think that facts are facts. And though you can draw your own conclusions however you like, they ought to be supported by the facts. Here it seems pretty conclusive.
You have got to be kidding...
ReplyDeleteThey didn't account for any changes in:
- student body demographics
- a higher percentage of children in the system
- special education mandates
- other
And according the NCES documents outcomes are improving, especially in the area of minorities and other groups that were historical doing worse.
The Heritage folks tried to compare apples and water melons...
Maybe you should review the EPI and NCES Long Term trends link. The college board link also explains clearly the huge changes that have occurred.
And your justification doesn't account for possible changes in the metrics used-- the "dumbing down" of the tests. With or without that, the recent gains in minority achievement don't even begin to justify the doubling of cost.
ReplyDelete