One fascinating phenomenon is that when government grows so large and its interest groups so powerful, it threatens to crowd out the private sector. This is a concern in Israel, where a new economic plan that tries to limit government spending is meeting stiff opposition from the trade union movement, the Histadrut.
Over the last four decades, New York City has become the most heavily taxed city in America. And as a result, Gotham has not added a single net new private-sector job over that period of time, while local government jobs have grown by more than 20% -- 90,000 positions.
In her comments on this article, 'Jane Galt' writes that it illustrates that the Laffer Curve is more likely to be relevant to cities than to the Federal government. For Discussion. Is there a "tipping point" at which government becomes too big to restrain?