Our large, interventionist
regulatory-welfare-education-police state scares me, but I think a big
regulatory-welfare-education-police state that waxes and wanes at random scares
me even more.
I favor smaller government, but I don’t necessarily favor
the way it’s getting done. Brinkmanship over budget deficits and funding is
leading to very sudden shut-downs of government agencies. It’s happening in a
big way in Illinois, and it’s looming at the federal level, too. I’d prefer to
see a slow, deliberate phasing out of bad programs that don’t pass a
cost-benefit analysis. Some government programs are so destructive and wicked
that they should be ended immediately, but others are benign (even if expensive
in $$$ terms). The benign ones could be slowly phased out so that people have
more time to adjust to changing circumstances.
While a government shut-down that happens abruptly really is
disruptive, people are wrong to bemoan the disappearance of some of these
programs. The assumption is that if the government doesn’t do it, it won’t be
done at all. That assumption is wrong for many of the things government does.
Government hires people to perform a service, and collects money from the
(supposed) beneficiaries of that service. Person A performs a service for
Person B, with the government serving as an intermediary. There is no reason to
assume that A and B can’t find each other without the government’s help.
Schools can still find students, and vice versa, without government acting as
an intermediary. Someone can build a road between points X and Y, for any such
cases where a road between X and Y is useful, and the users of the road can pay
the cost through tolls. Alternatively, businesses can build roads in
anticipation of increased traffic to their storefronts. Government provides few
true “public goods,” those non-excludable non-rivalrous goods that free markets
are (again supposedly) unable to supply. If a government program shuts down and
Person A and Person B stop exchanging services and payments, it probably means
that the value of those services aren’t actually worth what’s being paid for
them. It probably means that Person B values the services of Person A at *less*
than what A is currently getting paid. That’s a program that really should come
to an end. If we move more of society’s resources into the private sphere where
exchange is voluntary, then we could expect only those exchanges where the
service is worth the price to continue.
Of course there are exceptions, and I’m willing to entertain
the idea that *some* government programs provide true “public goods.” It’s
possible that some government programs are cost-justified but wouldn’t happen
in a free market because of externalities and public goods considerations. But
that’s all the more reason to start trimming, and start trimming *now*. Cut out
those programs that aren’t obviously solving public goods problems. That way
the ones that *are* don’t get cut every time there’s a budget stand-off. I
happen to think we can get away with having a minuscule government, perhaps 5%
of its current size, or even 0%. (I’m far more confident about the 5% than the
0%, but I’m comfortably agnostic about the exact location of the optimum level,
at which point further cutting would suck more than it helped.) But suppose I
*did* want a larger government. If I truly believed we needed a large
interventionist state to solve externality problems, I would be very pissed off
at all the wasteful government spending that made those necessary government
programs unaffordable. I’m disturbed by
the near complete absence of fiscal hawks on the left, who should be saying,
“Let’s be good stewards of taxpayer dollars. Let’s preserve the moral
legitimacy of the state. Let’s push back against public sector interest groups
that take more than their fair share. Let’s even trim some ‘nice to have’
government programs in favor of the ‘need to have’ government programs.”
Whatever your goals are, and whatever you think is the optimum size of
government, there are finite resources to be managed and allocated. We can’t do
away with trade-offs.
These next few years will be interesting. Budget standoffs
are looming in a big way, in my state (Illinois) and also at the national
level. I think some people will realize that they actually can get on with
their lives without government when the need arises. Some people will go
through a painful adjustment process, but they’ll get back on their feet once
they realize those government dollars aren’t coming back. Some people will be
thrown out of their state jobs (or state-subsidized jobs), but assuming they
have useful skills they will find employment elsewhere. Some folks will figure
out that they can actually get by just fine without their subsidies, and in
fact those subsidies may have been holding them back. Even if the budget cuts
never in fact materialize, the prospect of big budget cuts will inspire some
people to switch to more secure work (I know for a fact that some people are
doing this already). This isn’t my preferred approach to cutting government,
but I think it’s the logical outcome of an irrational political system. A
rational electorate that asked only for cost-justified programs and disciplined
budgets would not see this kind of instability. What we actually have are
irrational mobs demanding always more for their coalition, making unreasonable
demands and adopting a stance of unwillingness to compromise. It’s a good way
of getting what you want, if you don’t really care about the rest of society or
even your own long-term interests.
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