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GrowingPublic
SocialSpendingandEconomicGrowth
SincetheEighteenthCentury
GrowingPublicexploresthelinksbetweeneconomicgrowthandsocial
policiesthatredistributeincome.Taxesandtransfershavebeendebated
forcenturies,butonlynowcanwegetaclearviewofthewholeevolu-
tionofsocialspending.Whatkeptprosperingnationsfromusingtaxes
for social programs until the end of the nineteenth century? Why did
taxes and spending then grow so much, and what are the prospects
forsocialspendinginthiscentury?WhydidNorthAmericabecomea
leaderinpubliceducationinsomewaysandnotothers?Lindertfinds
answers in the economic history and logic of political voice, popula-
tionaging,andincomegrowth.Contrarytotraditionalbeliefs,thenet
national costs of government social programs are virtually zero. This
booknotonlyshowsthatnoDarwinianmechanismhaspunishedthe
welfarestates,but,ituseshistorytoexplainwhythissurprisingresult
makessense.Contrarytotheintuitionofmanyeconomistsandtheide-
ology of many politicians, social spending has contributed to, rather
thaninhibited,economicgrowth.
Peter H. Lindert is Distinguished Professor of Economics at the Uni-
versity of California, Davis, and a research associate of the National
Bureau of Economic Research. His writings have touched on a wide
rangeofeconomicandhistoricaltopicsrelatingtoEurope,theUnited
States,China,Indonesia,andtheglobaleconomy.Histextbooksinin-
ternationaleconomicshavebeentranslatedintoeightotherlanguages.
AdvancepraiseforGrowingPublic
“Peter Lindert has written a dazzling book. He takes on one of the
grandtopicsofeconomics–theriseofsocialspending–andoffersusa
remarkablecombinationofnewdata,historicalinsight,politicalanaly-
sis,andeconomicassessment.Amazingly,Lindertcomesupwithfresh,
convincing, and important insights on issues that have been debated
fordecades.TwoofLindert’smajorconclusionsarethatthespreadof
democracy has historically played a pivotal role in the rise of social
expenditures; and that social spending has not gravely weakened eco-
nomicincentivesandlong-termeconomicgrowth,despitethedrumbeat
ofcriticismsfromfree-marketdevotees.IndeedLindertconcludesthat
‘thenetnationalcostsofsocialtransfers,andofthetaxesthatfinance
them,areessentiallyzero.’Thispowerfulbookwillbewidelyreadand
debatedformanyyearstocome.”
– Jeffrey D. Sachs, Director, The Earth Institute at Columbia
University
“Whatdeterminessocialspending,alsoknownaspubliceducation,also
knownassocialsecurity,alsoknownastakingfromtherichandgiving
tothepoor?Thisquestionisthesubjectofmuchtheoreticalandempir-
icalspeculationandsomemoderatelydetailedpreviouswork.Yetthis
magnificent summa by Peter Lindert blows away the field. He probes
thehistoricalandcomparativeriseofsocialspendingintoday’sOECD
countriesandderivesmanynewinsightsintotheclassicthemesofsocial
spendingandelitebehavior,democracy,inequality,religion,andethnic
divisions.Hedrawsouttheimplicationsofhiscarefulanalysisforthe
futureoftheThirdWorldandFirstalike.Amust-readforanyoneinter-
estedinbiggovernment,politicaleconomy,helpingthepoor,orsimply
thefateofhumansocieties.”
–WilliamEasterly,NewYorkUniversity
“Peter Lindert has given us a treatise on the economic and political
forces driving social spending and of the effects of the welfare state
thatsweepsovertime,overnations,andoverdisciplines.Itissimulta-
neouslycomparative–political–economichistory,demography,applied
econometrics, political theory, and political economy. While few will
agreewithalloftheoften-surprisinganswershegivestothemostfun-
damental questions regarding the existence and the effects of public
social welfare policies, no one will suggest that they are not bold and
provocative.GrowingPublicisamostreadableandinsightfuland,yes,
irreverent volume that will be discussed by all concerned with these
front-pageissues.”
– Robert Haveman, John Bascom Emeritus Professor of Economics
andPublicAffairs,UniversityofWisconsin-Madison
“GrowingPublicofferseconomichistorians,policyanalysts,develop-
ment gurus, and the general public – all of whom have reason to be
deeply concerned about the growth implications of fiscal policy – the
mostcomprehensivehistoricalandeconometricexaminationofthees-
sential value of public expenditures I have seen anywhere. His lens of
inquiryencompasseseverythingfromearlymodernEuropeancharita-
ble activities to the apex of the late-twentieth-century welfare state,
fromthe‘OldPoorLaw’totheriseofpublicschooling,fromold-age
pensionsinthewesttosocialtransfersinthedevelopingworld.Bythe
conclusionofthistour,thereaderisleftwithaclearviewofaworldin
which public expenditures on human welfare not only do no harm to
nationalgrowthtrajectories,butoneinwhichinvestmentintheinfras-
tructure of human capital formation is itself growth-enhancing. This
core finding of Lindert’s exhaustive research will appear radical, per-
hapsevenheretical,toagenerationtrainedinneo-classicaleconomics,
buthearrivesatitbyemployingthebestofthetheoryandmethodology
ofthatdiscipline.Assuchitwillbehardtorefute.”
–AnneE.C.McCants,AssociateProfessorofHistory,Massachusetts
InstituteofTechnology
“What determines how much governments spend on health, welfare,
education, and social security? What effect does this social spending
haveoneconomicgrowth?PeterLindertgivesnewanswerstothesebig
questions, in a lucid and engagingly written book that ranges across
the globe and from the eighteenth century up to the current day. His
surprisingfindingisthatsocialspendingdoesnotslowgrowth,atleast
inwesterndemocracies,andhisgemofabookwillbeessentialreading
for historians, economists, political scientists, and modern-day policy
makers.”
– Philip T. Hoffman, Richard and Barbara Rosenberg Professor of
HistoryandSocialScience,CaliforniaInstituteofTechnology
Growing Public
Social Spending and Economic Growth
Since the Eighteenth Century
Volume 1
The Story
PETER H. LINDERT
UniversityofCalifornia,Davis
cambridge university press
Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo
Cambridge University Press
The Edinburgh Building, Cambridge cb2 2ru, UK
Published in the United States of America by Cambridge University Press, New York
www.cambridge.org
Information on this title: www.cambridge.org/9780521821742
© Peter H. Lindert 2004
This publication is in copyright. Subject to statutory exception and to the provision of
relevant collective licensing agreements, no reproduction of any part may take place
without the written permission of Cambridge University Press.
First published in print format 2004
isbn-13 978-0-511-16512-2 eBook (EBL)
isbn-10 0-511-16512-9
eBook (EBL)
isbn-13 978-0-521-82174-2 hardback
isbn-10 0-521-82174-6 hardback
isbn-13 978-0-521-52916-7 paperback
isbn-10 0-521-52916-6 paperback
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To Lin, Kathy, Alex, and Nick
