Article content

Many, if not all, policy debates ultimately boil down to a single fundamental question: Is the city, province or country, and more specifically its residents, better off having more or less of their income? Advocates for larger government argue that people are better off having less of their own money so that government can collectively provide some service, or transfer income, or do some other good. Those arguing for smaller government suggest that individuals and families are better placed to make decisions for themselves by having more of their own money.

While we have fairly clear political delineations on this issue — the NDP and Liberals typically prefer more government and the Conservatives less, generally — what does the actual data tell us about the costs and benefits of more or less government?

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Under Chrétien’s Liberals, government was reasonably sized. Now look how big it’s gotten Back to video

There is a substantial body of research examining the economic and social implications of having different sizes of government. A 2014 book on this issue by Lakehead University economist Livio Di Matteo, for instance, found that economic growth in industrialized countries — including Canada — was maximized when government spending (and therefore taxation) was roughly 26 per cent of the economy. In other words, industrialized economies grew the strongest when governments limited their role in the economy to basically one-fourth of all economic activity. For context, current estimates are that Canadian government spending (at all levels) in 2018 will reach 40 per cent of the economy, or more than 50-per-cent larger than the optimal level for economic growth.