Effects of a Nation’s Population Size

choi

Goldilocks Nationalism; The size and homogeneity of a country’s population has a big bearing on its economic policies. Economist, Sep 27, 2014.
www.economist.com/news/finance-a ... earing-its-economic

Quote:

"The steady shrinking of the world’s political units raises the question of what the ideal size would be from an economic perspective. * * * a country’s population, economists believe, has a big impact on all sorts of policies, from the level of government spending to its openness to trade.

"Borders, no matter how porous, also choke off trade.

Note:
(a) "A 19th-century British prime minister [Robert Gascoyne-Cecil] is reported to have complained to a French ambassador [to Britain  in 1897], 'If you were not such persistent protectionists, you would not find us so keen to annex territories!'”

(b) "More recently Mr [Roman] Wacziarg [of the University of California, Los Angeles], Klaus Desmet of Southern Methodist University and Ignacio Ortuño-Ortín of University Carlos III in Spain studied the relationship between ethno-linguistic diversity and several economic variables. In general, they reckon, less diverse economies engage in more redistribution and greater provision of public goods such as education and infrastructure. In highly homogenous Denmark, government spending runs to nearly 60% of GDP. More diverse America allocates just 39% of GDP to government; in polyglot Singapore the figure is just 14% (see chart)."
(i) For University Carlos III, see Charles III University of Madrid
en.wikipedia.org/wiki/Charles_III_University_of_Madrid
(Spanish: Universidad Carlos III de Madrid; Its name refers to Charles III of Spain [1716 – 1788; King of Spain 1759-1788]; Established 1989; public)
(ii) The first sentence of THIS quotation, together with the bibliography (labeled as “Sources“ in the online version, that does not show up in print version), coincides with the “Source” within the chart. That is,  

Klaus Desmet, Ignacio Ortuño-Ortín, and Romain Wacziarg, The Political Economy of Linguistic Cleavages. Journal of Development Economics, 2012.
www.eco.uc3m.es/~desmet/papers/cleavages.pdf
(A) Having read the paper, I conclude that the paper contributes to the x-axis ONLY ("Ethnolinguistic diversity index") but NOT the y-axis ("Government spending, % of GDP 2012"). Perhaps because the latter is readily available.
(B) In (A), I say “contributes to,” because the paper deals with the effects (including section “3.2 Redistribution”) of linguistic diversity (alone; without consideration of “ethnic diversity” not to mention both). Particularly revealing is footnote 13 of that section:

“13  Our paper uses linguistic heterogeneity rather than ethnic differences, so by our
measures the US would look quite more homogeneous than if we focused on ethnicity.
This would affect our results in the direction of making it less likely to find any effect of
diversity on redistribution.

(iii) What surprises me is Taiwan, whose government traced its root to China (and its alliance with Soviet Union) is considered (by me at least) to harbor/retain plenty of socialism (in government administration and people's thinking). According to the chart, however, Taiwan's "government spending [as a percentage] of GDP, 2012" was merely ~21%, which is small. No wonder Taiwan does not cut personal income tax--Taiwan did reduce rate of inheritance tax (in 2009) and corporate tax (in 2010), That is because both personal tax and government spending are quite low already (caution: the tax rate for top income bracket in Taiwan is 40%, about the same as that of federal income tax (39.6%)  in US).

choi

(1) There is a Wikipedia page called:

Government spending
en.wikipedia.org/wiki/Government_spending
(government spending or expenditure)

, whose source is

(2)
(a) Explore the Data. 2014 Index of Economic Freedom, Heritage Foundation and Wall Street Journal, Jan 14, 2014.
www.heritage.org/index/explore?view=by-variables

In this subset of data ("2014 MACRO-ECONOMIC DATA"), the last two columns are

………………tax burden % GDP ……..government expenditure % GDP …...(country ranking for economic freedom as a whole)
China ……….19.0 ……………………..23.9 ……………………………………137
Hong Kong ....14.2 …………………….18.5 ……………………………………....1
Japan ……….27.6 …………………....42.0 ……………………………………...25
Taiwan ……..,.8.8 …………………….22.6 ……………………………………..17
US …………...25.1 ………………..….41.6  ……………………………………..12

(b) In the same URL, at the top horizontal bar click the tap “ABOUT THE INDEX.” in the new Web page, go to
Frequently Asked Questions for question No 3: How do you measure economic freedom?

The answer is: "We measure economic freedom based on 10 quantitative and qualitative factors, grouped into four broad categories, or pillars, of economic freedom: * * * 2. Limited Government (fiscal freedom, government spending)."

Click “Limited government.” The heading “Government spending” states:

“No attempt has been made to identify an optimal level of government expenditures. The ideal level will vary from country to country, depending on factors ranging from culture to geography to level of development. However, volumes of research have shown that excessive government spending that causes chronic budget deficits and the accumulation of sovereign debt is one of the most serious drags on economic dynamism.

“In most cases, general government expenditure data include all levels of government such as federal, state, and local.

* So, in (2)(a), the “government expenditure % GDP” is 41% for US, That is expenditure at all levels of government in US (federal, state and local). CIA World Factbook provides the expenditure of FEDERAL government in

References:: Definitions and Notes
www.cia.gov/library/publications ... s/notesanddefs.html
(“Budget”: revenues and expenditures (in US dollars, not % of GDP))

choi

(3) Michael Schuyler, A Short History of Government Taxing and Spending in the United States. Tex Foundation, Feb 19, 2014 (Fiscal Fact No 415).
taxfoundation.org/article/short-history-government-taxing-and-spending-united-states

headings:

"Federal Government Expenditures Have Increased from under 3 Percent of the Economy [read: GDP] in 1900 to 24 Percent of the Economy in 2012[:] * * * Until the 1930s, the federal government was extremely small compared to the present [subheading]. The federal government once concentrated on a few tasks, such as providing for the national defense, administering a relatively small set of federal laws, and operating a national mail service. Although not shown on the chart or table, the federal government raised most of its money from customs duties and excise taxes up until 1917 [The Sixteenth Amendment was adopted on Feb 3, 1913, allowing collection of federal income tax; US entered World War I in 1917].

"Until 1940, state and local government were responsible for most government spending and collected most government revenues, except during major wars

* Please view Charts 2 to 4.