Why Do Governments Find It So Hard To Control Public Expenditure?

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will spend a higher proportion of national product
through government. As Wagner's reasons for increased public expenditure tend
to be centralised around industrialisation and its associated effects it is not
surprising to find that he thought the density of urban living would increase
social frictions to such an extent that the government would be called in to
handle it. That is to say, urban living would result in the need for enhanced
police protection and other forms of government regulation. Wagner also
believed that with growing industry certain investments would require so much
capital that the state would have to provide it. He thought there would also be
public goods that may not be in the interests of an entrepreneur to provide.

There are counter arguments to Wagner's suggestions, the first of these
is that it could be argued that increased density would provide opportunities
for economies of scale. Thus, the proximity of people to one another could
result in ...

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major crises expand the
public tolerance for increased levels of taxation. An argument against this
hypothesis is that why did expenditure continue to rise in the 1960's when there
was no displacement effect.

Another attempt at explaining rising public expenditure occurs under the
political system approach which proposes that pressures from within the
political system itself is responsible. Anthony Downs suggests that public
spending should be seen as a function of party competition, in which each party
pursues policies it thinks the public wants. The government will seek to set
spending and tax levels at a point which will give them the greatest support.
They will therefore ...

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