Free Lunch Please

The other week we asked the question, is Denmark the awesomest economy on earth?

Denmark has a huge welfare state so everyone is taken care of, but it also has some of the world's highest taxes which would tend to slow economic growth.

Andy Pennock a grad student at the University of North Carolina wrote in:

In this week's podcast you guys talked a lot about the tradeoff between taxes and growth in welfare states and asserted that the tradeoff built up over time. Students of the welfare state would challenge the assertion that this tradeoff empirically exists, not just in Denmark but as an overall trend.

I think you should interview Peter Lindert at UC-Davis. He's an economic historian (perhaps THE economic historian) that welfare state scholars look to. His book Growing Public: Social Spending and Economic Growth Since the Eighteenth Century asserts that there is not a tradeoff between economic growth and taxes. He says there really is such a thing as a free lunch. Seriously, check him and his book out. He's tremendously respected in the field and his life's work is exactly this question.

Thanks for the suggestion Andy. I have Lindert's book on my desk, and we'll be interviewing him next month.

BONUS READING: Excerpts from Lindert's book and a review.

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