In 1929, the sum total of all private wages paid out was 5.2 times the sum total of all-levels government spending. In other words, private workers were allocating 5.2 times as many resources as the government did.
This decentralized allocation ensures that resources will get allocated toward their best uses. 130 million private sector workers will collectively make better decisions than, say, a 9-member economic panel of genius-level experts could ever do.
Even after drifting away from the free enterprise system by adopting FDR’s New Deal, private worker wages were more than twice what all levels of government spent:
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In 1948, wages of private workers represented 42.4% of GDP, while the sum of federal and state and local government spending came to just 21.0% of GDP.
Because private workers still had over twice the influence as the government, resources could still be put to best uses. US society could still be called a “free society.”
But then something happened. FDR’s unilateral changes to the economic structure of the United States of America had set up a precedent for future growth of government.
By 2010, things got really bad:
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Private workers no longer had more than twice the influence of the government. In fact, private wages were only 34.4% of GDP, while all-levels government spending was 40.3% of GDP. Government had 17% more influence than the total of private workers.
For the first time in the history of the USA, several years with government spending more than private worker wages ensued. It wasn’t until 2017, 2018, and 2019, that worker wages crept up higher than government spending.
But then “2020” happened.
Evidence suggests that the USA is no longer a free society, and that if we want to return to an era of broad prosperity, we’ll have to become more free than today. It’s the best we could do.
“Proof” of such freedom will exist if private wages are more than twice the sum of all-levels government spending, as they were for more than a century-and-a-half.
The worst we can do would be to have a “Great Reset” where evermore concentration of wealth and power (into the hands of elites) occurs.
A reasonable goal (sustainable goverment spending; after 5 years of progressive cuts):
Set this year’s federal budget to 20% of last year’s private wages paid out. Set next year’s federal budget to 20% of this year’s private wages paid out. Etc.
Set this year’s 50 state/local budgets individually to 30% of last year’s private wages paid out (by each state instead of nationally). Set next year’s state/local budgets to 30% of this year’s private wages paid out. Etc.
Example (if the 5 years of cuts had been announced in 2016):
2021 private wages paid out were $8.76 trillion, therefore capping the federal budget for 2022 at $1.752 trillion, and collectively capping each of the state/local budgets to an aggregate of $2.628 trillion, divided by 50 states (average state budget of $52.56 billion).
Resource
U.S. Bureau of Economic Analysis, Gross Domestic Product [GDPA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/GDPA
U.S. Bureau of Economic Analysis, Federal Government Current Expenditures [AFEXPND], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/AFEXPND
U.S. Bureau of Economic Analysis, State and Local Government Current Expenditures [ASLEXPND], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/ASLEXPND
U.S. Bureau of Economic Analysis, Wage and salary accruals: Domestic private industries [A4103C0A144NBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A4103C0A144NBEA