Crowding out
Etymology
A 20th-century economics term using the plain image of a crowd pushing others out of a fixed space. Applied first to capital markets — government borrowing raising interest rates and squeezing out private borrowers — it later spread to describe public services displacing private ones.
noun phrase · /KROW-ding owt/
The displacement of private activity by expanded public activity competing for the same limited resources.
What it names
A specific, contestable economic mechanism — that government borrowing or provision can shrink private investment or effort — central to fiscal-policy debates.
Example
Critics warned the huge bond issue would crowd out private lending by driving up the cost of borrowing.
Related idea
Crowding out is displacement through competition for scarce resources; a perverse incentive is a rule that motivates the opposite of its intent — the first is a side effect of scale, the second a flaw in design.
See also