There is plenty of evidence for that, that economists have documented for nearly a century.

For example, there is a very strong negative correlation between government spending, as a percentage of GDP, and economic growth:

https://web.archive.org/web/20170821004405/http://ime.bg/upl...

And no markets will not "stop working". They'll work less effectively.

>>If my understanding of the system seems highly simplistic, it may be because I wrote an HN comment two sentences long as opposed to a book.

Every one's understanding of nation/global scale systems is overly simplistic, which is why it's impossible to predict what the market will do. In the absence of near-perfect knowedge, it's better to not interfere with spontaneously emergent bottom-up phenomena, like prices, or the market, via far-reaching cookie cutter rules.

EDIT:

With respect to below, I can't respond with a new comment due to comment rate-limiting, so I'll respond here:

It's not an opinion. They show the data, from 81 countries, over a span of decades, and show a pervasive correlation. The evidence speaks for itself.

This liberal think tank was instituted in a country that experienced 50 years of central economic planning, based on economically illiterate left-wing conspiracy-theories/economic-fallacies, so maybe they have legitimate cause to promote markets.

But go ahead and look down on them with your snarky derision.

>>Not really? There are other countries than the US which have had a significantly larger government (as well as higher taxes), or so called mixed-economies, that did just fine or even great?

Which countries? The data shows a strong negative correlation between government size and economic growth, within a dataset of 81 countries.

Look at Europe: the rise of social welfare spending as a percentage of GDP since the mid 1960s corresponded with stagnation in productivity and wage growth, just like occurred in the US.

>>As a side point, there's a discussion to be had regarding economic growth and GDP.

Per capita GDP growth, i.e. rising productivity, is the primary cause of improvements in quality of life. If ever you've lived in a country with low per capita GDP, and seen how ordinary people have to struggle so much more to afford to meet basic needs, you'd see why.

It's absolutely not the only factor impacting quality of life, it's true. GDP statistics are also not a perfect measure of productivity. But it's a very very good measure, of a very important contributor to quality of life, and if a particular way of organizing an economy is associated with this measure increasing at a slower rate, that is extremely important.

Economic growth rates, over longer periods of time, have a massive impact, because they have an exponential effect. A country with a per capita GDP growth rate of 4% will see double the income growth of a country with a per capita GDP growth rate of 2%, after only 35 years.

EDIT 2:

>>Which countries would you pick yourself as counter-evidence?

Norway, but it discovered oil in the 1970s, and was one of the top oil exporters in the world for decades with a population of only 4.5 million.

But anecdotes are not as important as large datasets, and large datasets show a strong correlation between small government (relative to GDP) and high economic growth rates.

>>feigned care of the poor

It's always good to assume that the person you're interacting with might be debating in good faith, and know things you don't. But I agree with the rest of that statement: it's anecdotal, just like the counter-examples you're searching for.

>>A GDP growth of 2-3% per year is also deeply unsustainable, doubling the economy every few decades can't continue.

It is sustainable for many many decades to come given returns from rising efficiency, and harvesting resources outside of earth, which are several orders of magnitude more plentiful than resources available on Earth.

Your pessimistic outlook reminds me of this:

"It is only in the backward countries of the world that increased production is still an important object: in those most advanced, what is economically needed is a better distribution"

-John Stuart Mill, Principles of Political Economy, 1848, said at a time when the per capita GDP of the UK was the same as Kenya's today, i.e. 20X less.