Can a small target be easier to hit?
One of the occasional frustrations of debating policy is that it can be difficult to convey your views concisely and precisely. In the case of libertarianism one difficulty is defining exactly what you mean by “size of government”. After all government is not some 1-dimensional continuum you can just slide up or down, every specific policy is different from every other and sometimes it’s not even clear whether a policy would increase or decrease government, since it depends on what you mean by size.
So what does it mean to call a government large or small? I can think of several dimensions across which we could measure a government’s size:
- Scope: The number of activities a government intervenes in. The more areas the government considers a private matter (such as when the USA didn’t establish an official church, a major departure from normal practice at that time), the smaller government is by this measure.
- Intensity: How prescriptive government is in its regulatory action. Consider climate change – a government could (in increasing order of intensity) ask people to use less energy (perhaps with spiffy “Whip Climate Change Now!” buttons), use carbon taxes / cap & trade, use non-tradeable permits to constrain carbon emissions, or impose comprehensive regulations banning or restricting carbon-intensive activities.
- Fiscal Burden: How much government spends, and thereby costs its taxpayers. Both average and marginal tax rates should be considered, so this should probably be thought of as two related measures.
These measures will generally move in the same direction, but different policies will affect these measures to a different extent. And while fiscal burden gets most of the attention, it’s scope and intensity that concern me the most. When Milton Friedman measured the size of government, he didn’t use spending or tax rates (measures of fiscal burden), but rather pages in the Federal Register, a measure that picks up size and scope.
So we have a fun new way to define size of government (it is so fun, shut up!), what does this do for us in practice? Consider one argument against shrinking government I hear every so often: If you shrink government then the accountability of government will decrease, making corruption and bad government all the more likely. A dynamic like this could even result in a downward spiral where dysfunction and deregulation feed on each other resulting in the dreaded Somalia Scenario.
I can see where the proponents of this argument are coming from, but it depends on which dimension of government size you are considering. The argument makes most sense when looking at the fiscal burden of government, if you set out to shrink how much government costs then it’s easy to see how monitoring agencies might be cut back (back office functions often get cut in a budget squeeze because they represent activities that don’t interact with the public), policy functions might be reduced (rushed policy analysts tend to produce lower quality advice which can adversely affect the quality of government policy) and salaries of vulnerable officials might be cut (under the right conditions this can promote corruption). Done badly, cutting government spending per se could erode institutional quality in government.
But what if we look at scope of government instead? When you reduce scope of government you’re not putting a bit of a squeeze on every agency, but instead eliminating whole agencies, or at least functions within agencies. This avoids the problems I listed above, and in many ways reducing the scope of government can improve accountability. The fewer government activities there are, the less it costs to monitor them, making monitoring agencies an easier sell fiscally. Also the fewer government agencies there are for journalists to watch the easier it is for them to spot irregularities. Smaller scope of government makes it easier for voters too. When you decide which candidate to vote for in an election you have to balance all the candidate’s policy positions and decide which candidate has the beast collection of policies on net, it’s a bit like if when you went to the supermarket you had to buy one two trolleys full of groceries, instead of being able to put whatever you want into your trolley (in economics, this is called bundling). The more things government does, the larger and more unwieldy the bundle of policies gets. As each bundle gets larger, the less likely it is that a given voter will find the bundles very appealing (politicians will aim their policy bundle for broad interest, making them tolerable to a lot of people instead of desirable to a few, plus the more items in the bundle the greater the chance you will dislike something in the bundle). The narrower the scope of government, the easier it will be to find a political candidate you like.
Shrinking government is like any policy proposal, its merit depends a lot on implementation, and whether it is implemented badly or well will depend on a myriad of picky little details that can fall beneath the notice of casual observers. An important reminder that in policy how you do something can be as important (or more) as what you do.