The first part of this study reported on the growth of public expenditure in the past century and the reasons for that growth. It was shown that the growth was particularly pronounced after about 1960. In this period many countries expanded their previously limited social protection systems and some converted them into the welfare states of today. The period 1960–80 was especially the time when government was most trusted to be able to solve many social and economic problems.

In the second part of this study, comprising three chapters, the important question of what benefits accrued to the populations of the industrial countries as a consequence of the growth of public spending will be addressed. Presumably, governments tax their citizens to be able to carry out public programs that should increase the well-being of their citizens. Unless this occurs, there seems to be little point in reducing individual economic freedom through higher taxes in order to raise public spending. We will discuss the evidence available that bears on the question of whether the growth in public spending did in fact bring about a higher level of social welfare.