Jacob Funk Kirkegaard, senior fellow at the Peterson Institute for International Economic: “One of the most contentious issues in contemporary politics revolves around the optimal size of the government in society, the services that government provides the public, and the revenue raised to finance these services. Advanced economies differ over the aggregate scope of general government spending. Parts of Scandinavia devote 60 percent of GDP to the public sector, whereas government spending accounts for only around a third of GDP in South Korea and Switzerland. Such disparities reflect differing societal preferences over whether particular services, such as education and health care, should be provided in the public or the private sector. Advanced economies’ contrasting choices in the scope and organization of social safety nets add another dimension to cross-country divergences in spending levels and the extent of resource redistribution among income groups. Despite the general understanding that these divergences exist, surprisingly little information is available providing accurate comparisons of various levels of governments’ measures and spending. When evaluating countries’ spending efficacy and outcomes, care must be taken to include all sources in society that account for resources devoted towards social purposes. The complexity of advanced economies’ welfare states often masks the true costs of government activities. Excessive emphasis is ypically devoted to information about direct government social expenditures that is readily available and politically controversial. Meanwhile, many widely publicized analyses overlook the various ways that modern tax systems and private spending affect the level of social spending in different societies. This omission is especially relevant to cross-country comparisons, which are used by political leaders to attempt to sway the public debate. This Policy Brief provides evidence showing that much of the conventional wisdom concerning social spending is faulty, especially in the United States. Taking the full effects of tax systems and social spending from both private and public sources into account, the United States is seen to be devoting more resources toward social purposes than is generally acknowledged. In fact, only the French spend more than Americans, while the alleged welfare-addicted Scandinavians and Europeans spend less on average. Th is Policy Brief argues further that the important issue in terms of social spending in the United States is not how many resources are devoted to these purposes but how and for whose benefit the money is spent. High aggregate social spending in the United States has a very low impact on overall income inequality and healthcare outcomes, whether measured in a broad or narrow fashion. Adopting some best practices from other countries in health care could thus led to substantial efficiency gains, not to mention better health outcomes.”