Comments on: What is Big Government?

By: Jason McCullough

Jason McCullough — Mon, 20 Dec 2004 15:51:00 +0000

Please. We all know the answer is “the proper way to measure big government is to add up the cost of all the things I don’t like.”

By: McClain

McClain — Mon, 20 Dec 2004 11:13:00 +0000

Spy cams and secret police aren’t free.
So the intrusiveness of the state is tied to its finances.
But making the hanged man pay for the rope is merely adding insult to injury.
I’m not so worried about the government getting a good deal on its spy cams.
I just don’t want any *!@?#@$%!&* government spy cams in my house, knowh’I'msain?

By: jack

jack — Sun, 19 Dec 2004 21:41:00 +0000

A strawman argument. Big government really has nothing to do with how much money it collects/spends. Big governemnt is a government that interferes in it’s citizens business. I believe that 99% of the laws we have on the books today are laws that are meant to undo/redo the harm caused by previous attempts at regulating business. They all fail for obvious reasons. But the governemnt gets “bigger”, I.E., more invasive. You could just as easily have a government that collects hardly anything in taxes but regulates every second of a person’s day. To me, that government is much bigger than one that takes a lot in taxes. Look at the Communist model. It wasn’t so much the fact that they “owned” all the people and dollars in the economy. It was more the fact that they constantly spied on and regulated their citizens that made the government “big”. And hated.

By: loyopp

loyopp — Sun, 19 Dec 2004 19:28:00 +0000

Sure, I know one of the federal agencies well from the inside, which shall remain nameless. The number of attorneys on staff writing regulations has changed very little in the last 20 years. However, as of either the second Reagan or Bush the Elder’s administration (perhaps someone can correct me), the agency (and all agencies) was required to complete a study of economic costs and benefits for each regulation. Adding that extra cost slowed the pace of production of new regulations notably. Notice the size of the staff is constant, so the cost of the agency is more or less unchanged, but the amount of regulation (the “size” in that sense) varies. All I’m saying is even when you control for the size of the budget, there will still be variation in the intrusiveness of government. The attitude toward enforcement of regulations varies as well.

On a different note, I notice I read the original post incorrectly. I thought we were talking about a government that collects everyone’s income, and gives 98% of that aggregate income back in equal shares to everyone. I see now that Will Wilkinson meant you get 98% of your *own* income back. In the former case, nobody works (as I mentioned in an earlier comment), in the latter case, as gerry g pointed out, everyone works, though they work a bit less than in the absence of the 2% tax.

By: Bernard

Bernard — Sun, 19 Dec 2004 16:48:00 +0000

loy, could I have an example?

On my point, I think a good example would be in policing. Policing a law which is generally accepted (and therefore, I’m going to say, less intrusive) is much less costly than policing one which is controversial (prohibition being the obvious example). The more individuals feel that breaking the law is a matter of personal liberty the harder it needs to be enforced to make it effective, and therefore the more costly.

I can’t immediately think of an example of a regulation which would be seriously illibertarian but not cost very much to enforce.

By: loyopp

loyopp — Sat, 18 Dec 2004 14:38:00 +0000

Bernard,
Granted, they likely are correlated, but I suspect the correlation is a weak one. Spending on the bureaucracy doesn’t vary a whole lot as administrations come and go. There is a *lot* of inertia in the size of the staff. However, the rate at which the bureaucracy produces regulations varies a great deal. This I’ve seen first hand from the inside — anecdotal evidence, but evidence nonetheless. It’s an empirical question that would be interesting to pursue.

By: Kenny Easwaran

Kenny Easwaran — Sat, 18 Dec 2004 04:00:00 +0000

Oddly enough, I think my intuition says that the government in this example is big – perhaps even bigger than the current US government. It has power to tax at arbitrary rates, and fully 50% of its effective spending is transaction costs.

By: gerry g

gerry g — Fri, 17 Dec 2004 20:38:00 +0000

Andrew Roth:
Actually you would not get the Laffer curve effect in this example. Since I know I will end up with 98% of what I earn, I have a huge incentive to work. In a way, this may help highlight just how weird the example is. But there may be a useful practical angle. Suppose I allowed for charitable donations to not just be tax deductions, but also REPLACE my taxes. That way, when I work overtime I can say I am actually working for my favorite charity. In that setting you would again get a much weaker disincentive effect from taxation. Of course, the reason is that I have reclaimed a big measure of control over my earnings (I can’t consume them, but can direct them to my favored charity, which is a great deal more than I can say for tax dollars).

By: Bernard

Bernard — Fri, 17 Dec 2004 10:15:00 +0000

That was phrased poorly. What I meant to say was that although measuring government spending does not perfectly capture intrusiveness, a government which is more intrusive will necessarily spend more because the less popular a regulation the harder and costlier it is to enforce. Because the negative effect of intrusive regulation is harder to measure measuring size by reference to spending is a decent approximation.

By: Bernard

Bernard — Fri, 17 Dec 2004 10:08:00 +0000

loyopp,

agree’d that intrusive regulations are a part of the size of government. However, any effective regulation relies on spending to enforce it, whether through a new oversight body or the expanding of powers for existing ones. Therefore while size is not a definitive indication of intrusiveness there is a rough correlation between the two.

By: loyopp

loyopp — Fri, 17 Dec 2004 08:15:00 +0000

Good point made in the post. Economists who look at aggregate government size (as opposed to those who focus on redistribution) do in fact net out transfer programs.

However, the “big government” concept used in American politics also refers to a couple of other things not captured in the thought experiment. First, there is the pervasiveness of government regulation, which to many people is measure of restriction on liberty. Even if the government spent nothing on the program, people would still object to the government telling them they have to wear a seatbelt, can’t fly an ultralight without a license, and many other things. Increasing pervasiveness of regulation is, of itself, a bad thing to many people’s minds.

A second kind of “bigness” of government is the magnitude of the distortionary effect of the taxes and regulation. If the government is collecting the 100% tax you mentioned via an income tax, revenues will quickly drop to zero, since nobody will work, and the size of the government, measured in terms of spending, is zero. The size measured as the inefficiency caused by government, might well be 100% of what people would have earned, had the tax rate been zero.

By: David Andersen

David Andersen — Thu, 16 Dec 2004 23:28:00 +0000

“One thing I don’t think it can be is the amount of taxing and spending.”

As others have said, it’s a pretty good proxy, especially in the real world.

I think your example is intriguing but not realistic. Why would it ever happen? What would be the point? If the government only needs 1%, why take 100%?

What if, however, the government was one dictator with a handful of devoted followers and he demanded 1% of the nation’s GDP or he would nuke us all into oblivion? (I’m not saying this is a realistic scenario either, but probably more probable than the Department of Fireworks scenario.

I’m in agreement with Jason Ligon I think. The size of government is inversely proportional to an individual’s ability to act without the threat of coercive force.

By: David Andersen

David Andersen — Thu, 16 Dec 2004 23:27:00 +0000

“One thing I don’t think it can be is the amount of taxing and spending.”

As others have said, it’s a pretty good proxy, especially in the real world.

I think your example is intriguing but not realistic. Why would it ever happen? What would be the point? If the government only needs 1%, why take 100%?

I’m in agreement with Jason Ligon I think. The size of government is inversely proportional to an individual’s ability to act without the threat of coercive force.

By: Andrew Roth

Andrew Roth — Thu, 16 Dec 2004 21:48:00 +0000

Don’t forget the Laffer Curve. A 100% tax rate would yield the government ZERO in tax revenue. No one would work. Or if they did, they would barter. I would fix your broken sink if you teach my kid. How do you tax that?

By: BF

BF — Thu, 16 Dec 2004 17:36:00 +0000

I don’t think it can be right to think of “too big” and “too small” simply in terms of electoral preferences. Electorates can have ill-formed or inconsistent preferences, so you’re not going to get a determinate answer this way.

I generally agree with you, and would probably say that “bigness” can probably be measured in terms of market distortion of how consumption prefrences are effected.

On the other hand, intuitively it seems like disregarding citizen’s electoral preferences for government is a bit like saying consumer prefrences don’t matter for markets. Citizens are consumers of government, so what if they want a lot of it? Is there a rightness or wrongness judgement corresponding to this “big” or “small” argument?