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17 - The Public Sector

Published online by Cambridge University Press:  28 March 2008

By
W. Brownlee
Edited by
Stanley L. Engerman  and
Robert E. Gallman
W. Brownlee
Affiliation:
University of California, Santa Barbara
Stanley L. Engerman
Affiliation:
University of Rochester, New York
Robert E. Gallman
Affiliation:
University of North Carolina, Chapel Hill
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Summary

The growth of the public sector — that portion of the economy controlled by government — represents one of the most remarkable features of the economic history of the twentieth century. Growth has been relative as well as absolute. Despite the swift expansion of the American economy during nearly all of the century, the public sector has tended to grow more rapidly. This trend of public sector growth emerges regardless of the measure of government activity employed, and it holds for all levels of government.

Illustrative of the great shift in economic structure is the trend of all government expenditures —the sum of purchases of goods and services and transfer payments — at all levels of government. Prior to World War I, the government spent at a level approximately 7 percent to 8 percent of gross national product (GNP); by the 1970s government spending had reached nearly 40 percent of GNP.

The stunning increase took place in a largely discontinuous fashion; it was primarily the cumulative result of several rather discrete transitions (see Table 17.1). Each transition accompanied a major emergency in national life — a great war (including the Cold War) and/or severe economic depression. The emergencies appear to have had an “upward ratchet” effect, in that after the crisis, government spending stabilized at levels substantially higher than those that prevailed before the crisis. World War I was the first such crisis of the twentieth century, and it produced a sharp increase in the relative level of government spending, which held after the conclusion of hostilities.

Type
Chapter
Information
The Cambridge Economic History of the United States , pp. 1013 - 1060
Publisher: Cambridge University Press
Print publication year: 2000

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  • The Public Sector
  • Edited by Stanley L. Engerman, University of Rochester, New York, Robert E. Gallman, University of North Carolina, Chapel Hill
  • Book: The Cambridge Economic History of the United States
  • Online publication: 28 March 2008
  • Chapter DOI: https://doi.org/10.1017/CHOL9780521553087.018
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  • The Public Sector
  • Edited by Stanley L. Engerman, University of Rochester, New York, Robert E. Gallman, University of North Carolina, Chapel Hill
  • Book: The Cambridge Economic History of the United States
  • Online publication: 28 March 2008
  • Chapter DOI: https://doi.org/10.1017/CHOL9780521553087.018
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • The Public Sector
  • Edited by Stanley L. Engerman, University of Rochester, New York, Robert E. Gallman, University of North Carolina, Chapel Hill
  • Book: The Cambridge Economic History of the United States
  • Online publication: 28 March 2008
  • Chapter DOI: https://doi.org/10.1017/CHOL9780521553087.018
Available formats
×