State spending battles on public sector bad, private sector good was the credo of the 1980s as governments tried, often unsuccessfully, to trim public spending. In the 1990s their task will be harder still. (Economics Focus)

Economist (US), The, March, 1991

Public sector bad, private sector good was the credo of the 1980s as governments tried, often unsuccessfully, to trim public spending. In the 1990s their task w- ill be harder still

THE increase in public spending in OECD countries during the 1970s--from an average of 31.5% of GDP in 1970 to 37% in 1979-came to a halt in the 1980s as the public sector got a bad name. Economists told governments that they should guard against excessive government borrowing and the microeconomic distortions caused by government spending. And governments in almost every industrial economy talked about rolling back the boundaries of the state to make more room for the private sector.

The governments' bark, however, was much worse than their bite. According to a recent...

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