It should be no surprise that I tend to favor shrinking government. My base line is some form of minimum government that protects individuals but does nothing or little to help people (other than protecting them). Without going into details, I’ll simply note that I think governments are now far more powerful, with far more tasks allotted to them, than they should be. I think this of all levels of government—international governance institutions, nation-state governments, state/province governments, and municipal governments. (Also note that when I talk of “size” I really mean to discuss the tasks governments take on; I think legitimate governments have few tasks but I accept that these tasks may take a variety of employees and resources paid for with taxes.)
Given that basic libertarian view, I think we should not have grown government as much as we have until this point and I believe we should work to ensure it does not grow more. Indeed, I think we should work to shrink government.
Growing government means altering all sorts of things that change incentives for each of us. For an obvious example, when a job working for a government becomes a possibility, it will be attractive for some people who will seek that sort of position rather than a position working for a business, for a charity, or as an entrepreneur working for themselves—perhaps starting up a new endeavor that would benefit all of humanity. There are lots of other examples. Should an office supply firm seek a contract to provide goods to local businesses or government bodies? Should I get a book from an online seller or from the local, government owned, library? Should I seek a grant from the NEH or the Templeton Foundation? Should I send my child to a state school or a private school? The fact of government activity alters incentives, thereby changing what is available to all of us. Some of that may be good; overall, I suspect it’s not. (I won’t defend that claim here; I don’t think it matters here if I’m wrong.)
Unfortunately, there are many—including a prominent business person who wants to be president—who believe that what follows from the above is straightforwardly that we must shrink government quickly. Perhaps we should fire a million government workers, for example. Perhaps we should stop paying debts the government has illegitimately taken on, for another (see my last post).
The problem with that conclusion is simple: shrinking government changes the incentives people face as much as growing government does. It may well be, as I suspect, that the new incentive structure will have better affects, but there will be affects. Quick movements in either direction will have quick affects. Destabilizing affects. Firing a million employees, no matter the source, will push something close to a million people to look for new jobs. What will happen to salaries of those they compete with? Stopping payment on government debts will leave the debtors without money they legitimately expect; they will have to reduce their payments to others, perhaps employees, perhaps firms they have debts to, perhaps charitable donations. Stopping retirement benefits to former government employees (or social security recipients) will leave people without resources for their old age that they came to legitimately expect, thus condemning them to live far worse off lives than they could have. These are not small things. (They are—to state what should be obvious—also clearly not part of genuine conservative political thinking.)
Nothing said here suggests (to me anyway) that we ought not shrink government. I think we ought to. We simply ought to do it carefully. One obvious start is to reduce the number of government employees by attrition. That is, we can have a moratorium, (or partial moratorium) on replacing government employees that retire or leave government employ for other positions. (We’d need to give serious thought thought to which positions ought never to be eliminated and which ought to be eliminated but later.) In this way we can slowly reduce—which is to say, improve—our government without having destabilizing effects.
Note: In a pair of papers on corporations I lay out a view suggesting that without large government involvement in the economy, we would have slower economic growth. The above is meant to be consistent with that view. The papers are available here and here.