Note Herbert Stein’s law: “If something cannot go on forever, it will stop.”
The “some segment” part is crucial, because today’s welfare has ceased to be limited to that of the public generally, or to the welfare of any group that has a serious claim to special deserts. Instead, it is the welfare of some special interest that is able to capture the policy process. This may require a cover story, a fig leaf of pro bono publico justification, but these stories grow increasingly thin as the number of subsidies multiplies. They are credible only to a rationally ignorant public that is too busy tending to its own affairs to dig down even an inch. The governmental expansion created by these forces is awesome. In 1902, U.S. federal, state, and local governments spent less than 7 percent of the Gross National Product. Most (3.5 percent) occurred at the local level. States spent 0.76 percent, and the federal government controlled 2.71 percent. Now, total federal, state, and local government spending in the United States is about 42 percent. An unknown share is mandated by laws and regulations, many of which are triggered by special interests rather than by any serious public considerations. Good estimates are hard to come by, but probably at least another 15 percent of GDP goes into this maw.