In The Millionaire Next Door vs. the Politician in Washington, Arnold Kling cites Nobel laureate Robert William Fogel’s work and contrasts the attitudes of Prodigious Accumulators of Wealth (PAWs) and Power-Intoxicated Washington (PIWs):
In 1875, food/clothing/shelter accounted for 74 percent of total consumption (including leisure). In 1995, they accounted for just 13 percent of total consumption. For material goods, productivity tends to grow faster than demand, so that a smaller fraction of resources is devoted to them. We see that in the ever-declining proportion of the work force engaged in agriculture, mining, and manufacturing.On the other hand, the demand for leisure tends to rise with income, and demand grows faster than productivity in health care and education. Fundamentally, leisure-time activities, education, and health care are the sectors of the economy you want to gravitate toward if you want to go where spending is going to increase.
Politicians, along with their allies who value paternalism and redistribution, understand the trends, too. Many on the left are willing to allow the market to operate in the ever-declining portion of the economy that produces material goods. However, they insist that education, health care, and retirement are too important and complex to be left to the private sector. The Washington power-lusters are as savvy as any businessman in gravitating toward the growth industries.