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100 ?’s for Gov’t: Should government be large or small?

April 6, 2013

This is Question 46 from “100 Questions for Government” series

As America’s politicians argue back and forth about what they believe and who’s to blame for stuff they can’t control, there are often accusations and representations about who’s for or against “big government”. Interestingly enough, I’m yet to find anyone who endorses “big government” as a foundation for anything particularly useful. It appears the debate between “big” and “little” can be simplified to two key questions:

1)   What proportion of economic activity should the administration represent?

2)   What should government stick its nose into and what should it leave alone?

Both of these enquiries will be examined in different ways elsewhere in this book, but their combination does merit some exploration in its own right.

Of course, the correct proportion of GDP[1] for government spending versus private sector is influenced by the nature of your political system (e.g. capitalist, communist, dictatorship, etc.) which is primarily influenced by history, and if you’re in a democracy, how your voters feel about how government should interfere in their lives (see the second question above).

Depending on how sticky you feel your government’s nose should be, your opinion of the correct size of government can vary significantly. In 2010, the three lowest percentages of GDP were Burma (8.0%), Turkmenistan (12.3%),  and Guatamala (13.7%) while the three highest were Kiribati (114.6%), Zimbabwe (97.8%) and Timor-Leste (97%)– not really a ringing endorsement of either end of the spectrum. Scandinavian countries, often listed as the best places to live had percentages between 49.5% and 57.8% while Australia and Canada, two other perennial lifestyle favorites, logged in at 34.3% and 39.7% respectively[2].

In the same year, the United States snuck in at 38.9% reinforcing the theory that raw numbers probably don’t tell us anything at all. The numbers only become pertinent when you consider the services offered by the various governments (presumably with the approval of their citizens). Factors to consider would include:

1)   The inability of the US system to provide world leading education with any consistency

2)   The extraordinary burden the US health system places on its economy without delivering the standard of health care achieved by other developed nations

3)   The large amount of money the US spends on maintaining its military supremacy

4)   Economies of scale

5)   How different countries make money

The list could go on for some time but the reality remains the same – each country’s economic and political landscape is so different, determining whether its government is “big” or “small” has to be done in the context of its efficiency of delivery and the services its constituents require.

As I haven’t heard any politicians arguing for an inefficient regime, the argument seems to be about what’s included – if government gets involved in a lot, it’s “big”, if it does less, it moves towards small. No one wants big government just for its size, but some people believe in citizens receiving more fundamental deliverables while others believe there should be less.

Initial Opinion:

There is no dispute – everyone wants “right-sized” government, there just seems to be some contention about what that actually looks like. We know that it is efficient, but what it regulates and delivers for its people seems to be the source of some heated discussion.

The right size of government for your country is your decision alone, but don’t confuse “big” with wasteful – no one’s arguing for that.

[1] Gross Domestic Product – the total size of a country’s economy

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