Stop suffering Reduce the size of the state?

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Let us be held for a moment the already overwhelming issue of the illegitimate means by which the opposition aspires to legitimate power: coup d’état, murder, mass murder of elected or pro-elected officials, foreign intervention, destruction of the the country’s economy.

To decide whether the end justifies the means, let us focus on what it plans to do once power is taken.

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If we look for coincidences between the atomized opposition, we will find perhaps one: the reduction of public spending and the size of the state.

This is the representative of the Nation, which is in turn a cultural reality: a set of shared values, and the will to unite to ensure its enduring.

The State apparatus monopolizes repression considered legitimate, governs defence, legislate, judges, administers public goods and services.

In our country it takes on tasks in which the private sector has not been particularly successful: education, health, popular housing, food.

The State promotes and maintains road traffic, health services, the exploitation of the main natural resources.

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The controversy over the part of the social product that the state must assume and the ideal size of it is actually a debate about the economy. Neoliberal ideologues pretend that the smaller size of the state, the greater the development. But in developed countries, the state protects, stimulates and sometimes finances the economy, and consumes much higher GDP magnitudes than those appropriated by the public sectors of the least developed countries.

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To verify this, see the statistics collected by the World Bank Team on “Final consumption expenditure of the general government (% of GDP)”. By 1960, the global average is 13.7% of GDP; by 2015, it is 17.1% of GDP.

The share of states in GDP has only grown. For example, we include data from some countries for 2015: Germany 19.4%, United States 14.3%, Finland 24.6%, France 23.9%, Israel 22.3%, Italy 19.0%, Japan 20.4%, Mexico 12.3%, Russia 19.1%, Venezuela 12.01%.

Also, according to the same source, the proportion of GDP consumed by the State is broadly proportional to the degree of development.

In high-income, more developed countries, the State generally consumes 18.2% of GDP. In the least developed countries (according to THE UN classification), it consumes on average just 11.9%.

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Thus, the economic size of the State, even calculated very restrictively, tends to grow over time and roughly proportional to the degree of development, almost twice as much in high-income countries as in less developed countries; and is about one-fifth of all global GDP.

We must take into account once again that the above magnitudes relate to the “Final Consumption Expense of the General Government”, i.e. the annual erogations of the government, but do not include the vast resources of the State, nor do the erogations that it makes through entities under its direct or indirect control, such as autonomous institutes, state enterprises, joint ventures, public foundations and others.

Taking into account all of the above factors, it would be reasonable to estimate that the State occupies about 40% of the GDP of developed countries. And public spending, we’ll see, is about that magnitude.

The state superstructure is not an ornament, superfluous decoration or a residue: it consumes, retains, produces and redistributes a considerable part of the social production.

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On this preponderance of public spending in developed countries compared to that of Latin American and Caribbean countries, it is appropriate to cite in length the report of the Organization for Trade and Economic Development Overview of Governments Latin America and the Caribbean 2017 (Oecd, Paris).

That document states; “The state is much smaller on average in the Latin American and Caribbean region than in the countries of the Organization for Trade and Economic Development.

Public spending averages 31% of GDP in LAC countries, compared to 41.5% in OECD countries; however, the difference is narrowing. Between 2007 and 2014, expenditure increased by 4.7 percentage points in the LAC region, compared to a 2.5 p.p. increase in the OECD.

In 2014, LAC governments spent about 8.7% of GDP on social benefits (e.g. education, health and pensions), while this figure was 16.9% in the OECD area.

In turn, for the same year LAC countries used fewer people as a percentage of total employment (12.4% in LAC and 21.6% in OECD countries).

In 2014, government investment as a percentage of GDP reached 2.6% in LAC countries compared to an OECD average of 3.2%.

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These figures are eloquent. As we saw, public spending reaches 31% of GDP on average in LAC countries, compared to 41.5% in OECD countries: they are more than ten points apart.

The most developed countries are generally those in which the state occupies a greater share of GDP. The state’s superstructural apparatus alone then occupies more than 40% of GDP in the most developed countries.

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How can countries in Latin America and the Caribbean then be required to reduce the size of the State to develop, when the size of the State is much higher in developed countries? And yet there is no opponent, there is no neoliberal heater whose program does not include as an article of faith the reduction of the size of the state, the reduction of public spending, the privatization of everything, when, as we have seen, the developed countries do the opposite . According to Marx, ignorance has never served anyone at all.

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