Isn’t it telling that the four European countries with the highest government spending as a share of GDP, Finland (~57%), France (~56%), Belgium (~51%), and Germany (~50%), have all underperformed the OECD average in real GDP per capita growth since 2019? From 2019 to 2024, cumulative real GDP per capita growth was roughly: • OECD average: 6.4% • Average for Belgium, France, Germany, Finland: 1,4% These countries have high human capital, solid institutions, and (until recently) competitive industries. Yet those that tax and spend the most have delivered the weakest living-standards growth. A large state does not just redistribute, it shapes incentives. High marginal tax rates, extensive regulation, and a growing share of the economy absorbed by public transfers and public-sector employment reduce returns to innovation, risk-taking, and private investment. Resources that could fund new firms, R&D, or capital deepening are instead directed toward entitlements and administrative overhead. Over time, this appears as slower productivity growth, the ultimate driver of prosperity. Germany’s industrial model and Finland’s high-trust Nordic system once masked some of these effects. Energy shocks, demographic aging, and the sheer scale of the public sector have made them harder to ignore. France and Belgium have lived with this pattern longer, financed by debt accumulation. The pattern is consistent across advanced economies: beyond a certain point, bigger government throttles the dynamism that raises incomes for everyone. A large state makes countries poorer relative to others, you cannot tax yourself into prosperity.
— Michael A. Arouet (@MichaelAArouet) October 20, 2026
Tuesday, October 20, 2026
Isn’t it telling that the four European countries with the highest government spending as a share of GDP, Finland (~57%), France (~56%), Belgium (~51%), and Germany (~50%), have all underperformed the OECD average in real GDP per capita growth since 2019?
