Wagner's law

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The Wagner's Law (or Law of growing government spending ) assumes that the growth of government spending and public sector shares not only proportional, but faster than gross national product successes. It is named after the economist Adolph Wagner , who formulated it.

General

Outside of jurisprudence (formal law ) one speaks of a law in the sciences when general statements that apply worldwide are derived from a theory , independent of location, time and culture . In economics , law is the name given to such statements about relationships that can be assumed to be secured by empirical evidence . They are based on incomplete induction or on (premature) generalization , so that they would rather be referred to as “preliminary assumption” or hypothesis . Statements about regularities are an essential part of theories.

The law of increasing government spending was developed by the economist Adolph Wagner in 1892 and named it "Law of the increasing expansion of public and especially government activity". It represents an attempt to explain the internationally observable sustainable growth in the government share. This can be observed in the increasing real expenditure ratios and government expenditure ratios. Wagner explained the continuous growth of the state through the ever better fulfillment of the activities of the public sector as well as through new public tasks . With a development from a purely orderly state to a welfare state , state activity increases.

content

Wagner wrote that among progressive "civilized peoples ... there is a regular expansion of state activities and all public activities carried out by the self-governing bodies alongside the state". From this he deduced the "law of the growing expansion of financial needs, both of the state and as a rule ... also of the self-governing body with appropriate decentralization of the administration and proper organization of self-government". He saw state authority with its internal and external security ( justice , military , police , administration or foreign service ) and cultural sovereignty and welfare function ( schools , health care , social welfare ) as the cause , which can be seen in the transition from the state of order to the welfare state.

According to Wagner's law, there is a connection between economic growth and government spending in the form that, in the long term and on average with rising per capita income, government spending increases disproportionately. Other causes such as war financing in the Peacock-Wiseman hypothesis or the laws on the growth of bureaucracy have intensified the trend towards increasing government spending. According to the Peacock-Wiseman hypothesis, the state can enforce higher taxes and spending in times of crisis, especially in times of war. After the citizens have got used to this, taxes and expenses do not fall back to their starting level after the end of the crisis, similar to the pawl effect .

A higher government quota occurred during or after recessions , economic or financial crises and is also to be expected in the future. Economic growth , social cuts and austerity policies , on the other hand, all contribute to lowering government quotas.

Today's causes

In 2006, the economist Berthold U. Wigger compiled the current causes of increasing government spending. If state services are understood as superior goods , then the demand for them increases as income rises. Citizens are unable to see through the consequences of high government spending and choose governments that offer expensive spending programs ( fiscal illusion ). These spending programs are financed by additional government debt , so that financial burdens are shifted to future generations ( intergenerational shifting of burdens ). By urbanization state has the higher spending on cities (deny Brechtian law ). Services are becoming more expensive relative to industrial production because technical progress in the service sector is less than in industry . Since the state mainly offers services, the expenses for this increase ( cost sickness ). As a result of aging, demographic change is leading to increased government spending on old-age pensions , alleviating old-age poverty and increasing health and nursing care costs . Efforts to limit the government quota are in particular the European Fiscal Pact or the debt brake .

Criticism and importance

Wagner's “law” is based on individual observations which he generalized without compelling evidence; he used analytical methods only in part, and existing postulates were based on the Catholic Socialism he advocated . In addition, there is no argument that can be used to prove a relative expansion of government spending as mandatory or at least highly probable.

Numerous empirical studies have since confirmed Wagner's theses to a large extent, but under certain restrictive conditions. This is true not only if one compares the post-war period with the situation around the turn of the century or even earlier, but also for the development after 1950. His prognoses can now be seen as empirically verified.

Empirical example of Germany

Although the number of those employed in the public sector in Germany doubled between 1960 (3.1 million) and 1994 (6.3 million), part of this increase is due to the GDR's accession to the Federal Republic of Germany 2 million state officials added to the West German workforce. Even after the authorities had been resolved in 1994, this was still to be assumed, since the municipal administration in the new federal states in particular was considerably overstaffed compared to western Germany. In 1996 there were between 41.8 and 58.0 employees for every 1,000 inhabitants in the western German federal states, while in the new federal states there were between 57.6 and 64.8 employees (exception Berlin: West: 82.1; East: 57 , 6). By 1998, however, there was a decrease in the workforce of the public service to 5.07 million employees. This reduction in the workforce, especially after 1994, is mainly due to privatizations at all levels of the state structure, above all to the privatization of railways and post offices, with which around 1 million employees in 1994/95 are from the official statistics (but not from the federal government's asset liability ) retired. Privatization and restrictive fiscal policy meant that the workforce in 1998 was almost the same level as it was before reunification (4.9 million in 1990). In view of the concentration of the public service on a few areas of responsibility, it can be assumed that Wagner's law on constantly increasing government spending did not apply to its personnel consequences during this period. It must be countered, however, that the deliberate understaffing of the public service does not lead to a refutation of Wagner's law, since the state's actual need for personnel has increased; According to the Supreme Court of Auditors, 1900 officials were lacking in Bavaria alone (as of 2012).

literature

  • Hans-Ulrich Derlien: The changing public service. In: Public Administration . Volume 54, 2001, pp. 322-328.
  • Adolph Wagner: Foundations of Political Economy. Part I: Fundamentals of Economics. 3. Edition. CF Winter'sche Verlagshandlung, Leipzig 1893.
  • Norbert Andel: Finance. Mohr Siebeck, 1988. (books.google.de)

See also

Individual evidence

  1. ↑ Alfred Kuß: Marketing Theory: An Introduction. 2013, p. 85 f. (books.google.de)
  2. ^ Adolph Wagner: Foundation of the political economy. 1892, p. 893 ff.
  3. ^ Adolph Wagner: Foundation of the political economy. 1892, p. 893.
  4. ^ Adolph Wagner: Finance. 1883, p. 76.
  5. ^ Adolph Wagner: Foundation of the political economy. 1892, p. 888.
  6. ^ Peter Oberender: Perspectives of underdeveloped countries. 1981, p. 107.
  7. ^ Alan T. Peacock , Jack Wiseman: The Growth of Public Expenditure in the United Kingdom. 1967, p. 42 ff.
  8. ↑ Marc Hansmann: Before the third national bankruptcy? 2012, p. 37. (books.google.de)
  9. ^ Berthold U. Wigger: Fundamentals of public finance. 2006, p. 9 ff. (Books.google.de)
  10. ^ Charles B. Blankart : Public Finances in Democracy. 2011, p. 173 ff.
  11. ^ Willi Albers (ed.): Concise dictionary of economics: (HdWW). Volume 1, 1977, p. 351 ff. (Books.google.de)
  12. ^ Willi Albers (ed.): Concise dictionary of economics: (HdWW). Volume 1, 1977, p. 352.
  13. ^ Peter Oberender: Perspectives of underdeveloped countries. 1981, p. 107.
  14. ^ Norbert Andel: Finance. 1998, p. 191 f. (books.google.de)
  15. ^ Thomas Döring: Public Finances and Behavioral Economics. 2015, p. 115. (books.google.de)