Public Spending Tendencies in Democracies

Key Insight

Democratic governments generally incur higher public expenditures than absolute monarchies, a trait shared with all free states. While despotism ruins by preventing production more than by seizing wealth, liberty generates more wealth than it consumes. The crucial comparison is among free peoples, specifically how democracy influences state finances, noting that societies always contain wealthy, well-off, and poor classes, each with distinct instincts toward public spending.

When the wealthy or middle classes govern, public expenditures tend to be more economical, as they feel the burden of taxes on their fortunes. However, when the lowest class, which constitutes the majority, exclusively makes the laws, public expenditures are likely to increase. This is because most voters, owning no taxable property, perceive state spending as only benefiting them without harm. Those with limited property can easily apportion taxes to fall on the rich, effectively exempting themselves from significant contributions.

Beyond class-based motivations, democracy's 'improving spirit' and 'permanent fever' for innovation also drive up costs, as improvements, especially for the poor, are seldom free. Unlike aristocracies, which prioritize maintaining the status quo, democracies actively seek general betterment across 'a thousand different purposes.' Moreover, public expenditures increase with civilization as people become aware of more needs requiring state resources. While democracy often attempts economy, it struggles due to a lack of 'art of thrift,' with frequent changes in views and agents leading to poorly managed or unfinished projects, resulting in disproportionate spending or wasted funds, making it 'not cheap government.'