Director’s Law of public expenditure and the survival of the modern welfare state

Utopia - you are standing in it!

Sam Peltzman pointed out that most of modern public spending is supported by the median voter –  the ‘swinging’ voter. Governments at the start of the 20th century were a post office and a military. At the end of the 20th century, governments are a post office, a larger military and a very large welfare state.

Studies starting from Peltzman in 1980 showed that governments grew in line with the growth in the size and homogeneity of the middle class that was organised and politically articulate enough to implement a version of Director’s Law. George Stigler published an article on this law because Aaron Director published next to nothing for reasons no one understands. Director founded law and economics through teaching at the University of Chicago law school.

Director’s Law of public expenditure is that public expenditure is used primary for the benefit of the middle class, and is financed…

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