Why the size of government matters

[DixieBelle]

Why the Size of Government Matters: In his inaugural address, President Obama said that "The question we ask today is not whether our government is too big or too small, but whether it works." This is a commonly heard argument in response to concerns about the growth of government. Who could possibly be against government when it "works"? Why not instead consider each proposed expansion of the state on a case by case basis, supporting those that "work" and opposing any that don't?

Taken seriously, this argument leads to the rejection of any systematic constraints on government power. Why should we have a general presumption against government regulation of speech or religion? Why not instead support censorship when it "works" by improving the marketplace of ideas, and oppose it when it doesn't? Think of all the misleading speech and religious charlatans that government regulation could potentially save us from! The answer, of course, is that government regulation of speech and religion has systematic dangers that are not unique to any one particular regulation. Given those systematic flaws, it makes sense to have a general presumption against it.

The same holds true for government intervention more generally, including in the economy. It too has systematic flaws that justify a presumption against it. Three of those flaws are particularly relevant to current policy debates.

First, government officials have poor incentives relative to the private sector. Because the resources they spend are not their own money, they are more likely to waste them or divert them to favored interest groups. These poor incentives are visible in almost every major government spending bill, where large amounts of money are spent on porkbarrel projects and the like. The current stimulus bill is no exception, with its handouts for a variety of interest groups.

Second, as I have often emphasized in my academic work and on this blog, the quality of government policy is severely compromised by widespread voter ignorance. The majority of voters know very little about public policy and make poor use of the information they do have. Voter ignorance and irrationality are perfectly rational, because the chance that any one voter's knowledge will make a difference is infinitesmally small. Still, they routinely result in voters supporting flawed policies and doing a poor job of evaluating the performance of elected officials. For example, they blame politicians for bad weather, and routinely support protectionism despite the overwhelming evidence against it. The dangers of voter ignorance are likely to increase as government grows. The bigger government gets, the more of it there is for voters to monitor, and the more difficult it will be for them to have even a superficial knowledge of all its functions.

Third, even relatively well-informed voters and well-intentioned government officials will often lack the information they need to allocate resources more effectively than the market would in their place. As F.A. Hayek argued in his classic essay, "The Use of Knowledge in Society," government planners lacks the kind of information that the price system routinely provides to market participants. Thus, they usually have no way of knowing whether the projects they want to spend tax money on will yield benefits that outweigh their costs.

These systematic shortcomings of government are particularly dangerous in times of crisis, like the present. Given widespread voter ignorance and their own perverse incentives, government officials often use crises to justify harmful expansions of government power by selling them as emergency measures - even if they have little or no real connection to the emergency in question. This is why White House Chief of Staff Rahm Emanuel says that "[y]ou never want a serious crisis to go to waste" because it is "an opportunity to do things you could not do before."

CON'T at link http://volokh.com/archives/archive_2009_01_25-2009_01_31.shtml#1233381066

[john c calhoun]

well obama's got his work cut out for him...

since GWB's increased the size of government more than anyone since LBJ, I'm not  sure how nobama can top that... ..??

chain gangs ??

federalized dog catchers ??

[Redstatecka]

well obama's got his work cut out for him...

since GWB's increased the size of government more than anyone since LBJ, I'm not  sure how nobama can top that... ..??

chain gangs ??

federalized dog catchers ??

How about work-farms for those who find it necessary to blame President Bush for everything?

Yep, government grew under him and the Republicans. But seems along the way there was a lot of Democrat input into the enlarging of government.

And seems that Obama Porkulus's wildly misnamed "stimulus" package is one big fat political porker with Obama's favorite lipstick on it.

BTW: By the way, with regard to stimulating the economy, when Republicans controlled Congress while Bush was president, stocks averaged 14.1% return.

But when Democrats took over Congress, back when gasoline was about $1.50 a gallon and hadn't shyrocketed to last fall's nearly $5 per gallon, stocks averaged a loss of 8.9%. That number was for the beginning of 2008 or so.

So, if Obama and the Democrats, liberals and leftists influence government the same way, I'd say trouble is definitely ahead.

If they understood what they were doing, they would cut not just personal taxes, which should mean less government spending, but also the corporate taxes -- at 35 percent, among the world's highest -- substantially and also cut capital-gains taxes.

But, then, that would require them to understand capitalism and economics, and what such cuts would likely do to actually energize the economy.

Oh, yeah: There are the functional equivalent of chain gangs in some states already. So maybe Obama will create his Storm Troopers -- sorry, civilian national servce corps -- while he's decreasing the DoD's budget?

Whatever he does, and I do not expect it to benefit the country, he's got a real chance to set aside politics and bring some unity to America.

That said, before he and the Dems do that, I expect frogs to sprout wings first to keep from bumping their behinds on the ground when they jump around.

[DixieBelle]

Redstatecka-

What Uncle Johnny fails to realize is that what you wrote above is much more frightening than anything Bush or the GOP did to the govt.