The spending of the U.S federal government in 1900 was 500 million dollars. Spending for the current fiscal year will be in excess of 4 trillion dollars. An 800 fold increase. Spending statistics are important indicators of the massive growth of the U.S federal government. You are to research the reasons for the growth of the government over the last century. You will need to explore reasons related to military responsibilities, changes in economic philosophy, political reasons both domestic and international, social and cultural changes.
It should include personal commentary and opinion.
INTRODUCTION
The capitalist economic model is based on the concept of free-market; the forces of demand and supply determine both price and output. For that particular reason, the capitalist economic system is also considered a system based on freedom. However, the closer study of the capitalist system reveals that the forces of demand and supply are not as robust and decisive as they are perceived. Different studies on the functioning of the capitalist system have proved that a typical or classic capitalist system is not only inherently flawed but also it is highly prone to manipulation. Also, a classic/pure capitalist system is also exploitative, as it facilitates the accumulation of wealth by the corporate class (Stanforth) (Marx discussed this nature of capitalism is great detail in his book Das Kapital) (Martinez). Furthermore, capitalism produces extraordinary periods of economic activity in intervals, which suggests that capitalism is also inherently flawed. One such example is The Great Depression of 1929, which the capitalist world failed to address with the use of monetary policy (Hetzel). (Note: to realize different economic objectives or to address economic challenges, the classical capitalist system only has monetary options.)
As the classic capitalist system only had monetary strategies and instruments to address the challenges, which failed during the Great Depression; therefore, the capitalist system was revisited and amended (introduction of the fiscal instrument). The adoption of the Keynesian economic model increased the role of government in a free-market economy. For instance, the government could not spend in the economy, in the form of infrastructure projects-healthcare-education, to realize various socioeconomic and political-economic objectives (Hetzel).
U.S. SPENDING OVER THE YEARS
Before we discuss the dramatic increase in government spending, it is essential to discuss why a government spends. Governments devise and implement fiscal strategies for two core reasons: 1) employment, 2) economic growth. Both these objectives and interconnected, which means that when one of these objectives is achieved, the other objective is achieved naturally. For instance, when the economy grows, the industrial activities intensify, which increases the demand for labor. Its rightward shifts in demand for labor increases both real wages (in the short run) and output. Similarly, when employment increases, say because of the spending on infrastructure projects, the size of consumption increases (consumption is considered the engine of economic growth). The increase in consumption increases the general price level, which acts as an incentive for industries (Boyes and Melvin). (Note: Generally, governments abstain from spending; however, it employs an expansionary fiscal policy, when the economy is in perils.)
The systematic study of the size of government makes it apparent that American governments are spending more not only because of core economic concerns but also because of political-social reasons. In recent years, the role of government has increased, as it is not only proving free education at the highschool level, but also it also now partially acknowledges health care as a right. Also, the government is now spending money on numerous community programs to resolve different social issues that have proven to be persistent. This information aids us in understanding how the size of government and government spending has increased over the years.
As per statistics, the spending of US government, in the year 1900, was only 500 million dollars; however, in the current fiscal year, the spending would be around four (4) trillion dollars. As per calculations, the increase is 800 folds (apparently); however, when studying this figure after adjustment for inflation, it does not look this big. Therefore, to understand how much the size of spending and government has increased, it is imperative to emphasize real figures.
There is no denying the fact that government spending has increased many folds and there are different causes of this increase. In the next section of this academic exercise, we will identify different causes and explore them. It will aid us in understanding how the size of government has increased over the years (Martinez).
CAUSES
Change in Political-economic philosophy: The capitalist system, which was based on classical ideas, failed to address the challenges of the modern economic system. We have witnessed, during the Great Recession, that monetary policy is not able to address major economic challenges alone. Also, the state acknowledged the different rights of its citizens. For instance, the government acknowledged that it is the state’s responsibility to prove free high school education to all the children from any background. Similarly, it acknowledged that it must provide healthcare facilities (partially) to the citizens. Also, the US government has also allocated financial resources to numerous social projects, which indicates the shunning of previous political-economic philosophy based on classical economics (Hetzel).
Wars: United States is fighting wars in different parts of the world since the end of World War II. Generally, the reason of waging war, in different parts around the world, is that the United States emphasizes its hard power (military might) to protect and further its strategic interests. Also, for the Pentagon, War has become a lucrative business, which is independent of winning and losing. Military Industrial Complex has played a major role in engaging the United States in war theaters around the world. As per some projections, based on evidence, the United States has spent more than $5.6 trillion on the different wars since 9/11. This spending by the federal government increases the size of both government and government spending (Ranter).
Foreign Aid: To protect strategic interests, the United States does not solely rely on its hard power or military might; it also emphasizes its soft power in the form of aid. For instance, the United States gives billions of dollars in aid and assistance to not only countries, such as Israel-Egypt-Pakistan, but also to international organizations, such as the United Nations (Hetzel).
OPINION
The figures about the spending must be adjusted for inflation before emphasizing them for different studies. Also, it must be acknowledged that the role of state and the obligations have increased. For instance, the contemporary state has acknowledged several rights of citizens, which has increased the size of the spending. For instance, the unemployment allowance is granted to those who actively seek employment but do not find any.
I believe that the size of the spending is extraordinarily large, and it can be reduced by emphasizing unnecessary spending, such as spending on wars and nation-building abroad. In the last seventeen years, the United States has spent more than $5 trillion on wars, which has impaired the United States’ position in the regions where these wars are being fought.
CONCLUSION
In the end, it can be concluded that it is evident that the size of government has increased; however, the increase in the size of government and spending has genuine causes. For instance, the inherent contradictions in the capitalist system give relevance and legitimacy to government intervention in the economy, which generally increases in the size of both the government and its spending.
Gathered by the evidence, we can infer that some of the spendings, such as spending on the war machine and wars have no justification. The United States has the largest and most modern military in the world. It spends many folds more than the countries on the second and third position, but despite the fact, the United States continues to spend on arms and wars. It is time to rationalize spending, so that spending may positively affect the economy and citizens. The government must acknowledge that as the size of government increases, its capacity to perform optimally also reduces significantly. Also, fiscal spending has many leakages, and it tends to destroy a significant portion of the allocated financial resources. Therefore, it is imperative to rationalize the spending.
Work Cited
Boyes, William and Michael Melvin. Macroeconomics. 10. Cengage Learning, 2015. e-book.
Hetzel, Robert L. The Great Recession: Market Failure Or Policy Failure? Cambridge University Press, 2012. E-book.
Martinez, Mark Anthony. The Myth of the Free Market: The Role of the State in a Capitalist Economy. Kumarian Pres, 2009.
Ranter, Paul. “U.S. Spent $5.6 Trillion on Wars Since 9/11, More Than Three Times What Pentagon Estimates.” Big Think. Big Think, 10 November 2017. Web. 3 October 2018. https://bigthink.com/paul-ratner/the-us-spent-56-trillion-on-war-since-911.
Stanforth, Livvy. “Racism and Capitalism: Systems of Exploitation in a “Broken” Food System.” SDFSA, SDFSA, 26 December 2017. Web. 3 October 2018. http://www.sdfsa.org/blog/2017/12/26/racism-and-capitalism-systems-of-exploitation-in-a-broken-food-system.
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