A Budget Size in a Democracy: A Review of the Arguments

Abstract

There is no lack of opinion whether the public sector in the United States is too large or too small and there may even be a few who would argue that the present public-private mix is the correct one. While different individuals inevitably have different opinions given their underlying preferences and economic, political, and social positions, one can examine the systematic forces at work in the U.S. political and economic system to determine if they bias the mix of public versus private spending from what the average voter-consumer desires. Such examinations were pioneered by Pigou, Galbraith, Downs, Buchanan, and Tullock, among others. In this review their analyses are critically compared and extended especially with respect to what bench mark for “correct” budget size each author takes as relevant in his discussion. The question of possible systematic biases in the composition of public spending as well as in the public-private mix is addressed.