An appropriate measure of government's involvement in economic activity is?

Question

I would like to know if the appropriate measure of government 's involvement in the economic activity would be

* the volume of government subsidies.

*The total government spending.

*The share of government spending in total spending in the economy.

*The growth of government spending.

Answer 1

All of them are appropriate measurements. Subsidies collide with the operation of a free market and should be abolished; but where a nation must compete with another nation that subsidizes, tarrifs should be put in place.

Government spending is a function of government and the growth of it may correspond, appropriately, with the growth of the overall economy.

But another indication you didn't mention is inflation.

"Inflation” is defined in the dictionary as “undue expansion or increase of the currency of a country, esp. by the issuing of paper money not redeemable in specie” (Random House Dictionary). It is interesting to note that the word “inflated” is defined as “distended with air or gas; swollen."

“Moral Inflation,” The Ayn Rand Letter, III, 12, 1.

"Inflation is not caused by the actions of private citizens, but by the government: by an artificial expansion of the money supply required to support deficit spending. No private embezzlers or bank robbers in history have ever plundered people’s savings on a scale comparable to the plunder perpetrated by the fiscal policies of statist governments."

“Who Will Protect Us from Our Protectors?”

The Objectivist Newsletter, May 1962, 18

"The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold."

Alan Greenspan, “Gold and Economic Freedom,”

Capitalism: The Unknown Ideal

Gold is, of course, legal again to own in many nations, but when Greenspan wrote that, President Nixon had banned private ownership.