10 Reasons to Love the Free Market
5. The free market reduces government size and wasteful spending
According to research from the World Bank, large amounts of government spending, especially amounts exceeding 40% of GDP, are detrimental to economic growth, even after controlling for other relevant variables and ruling out the possibility of reverse causality. In Europe, a 10 percentage point increase in initial government size leads to a reduction in annual growth by 0.6–0.9 percentage points. This is especially important because per capita GDP growth in most European countries is no more than 1%.
The opposite is also true. The less the government interferes in economic affairs and nationalizes private enterprise, the faster the economy grows. The welfare state reduces growth, but the low taxes and private investment increase it.
