Will Wilkinson - Latest Comments in What is Big Government?

Re: What is Big Government?

Jason McCullough — Mon, 20 Dec 2004 10:51:42 -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."

Re: What is Big Government?

McClain — Mon, 20 Dec 2004 06:13:42 -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?

Re: What is Big Government?

jack — Sun, 19 Dec 2004 16:41:49 -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.

Re: What is Big Government?

loyopp — Sun, 19 Dec 2004 14:28:09 -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.

Re: What is Big Government?

Bernard — Sun, 19 Dec 2004 11:48:41 -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.

Re: What is Big Government?

loyopp — Sat, 18 Dec 2004 09:38:25 -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.

Re: What is Big Government?

Kenny Easwaran — Fri, 17 Dec 2004 23:00:25 -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.

Re: What is Big Government?

gerry g — Fri, 17 Dec 2004 15:38:20 -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).

Re: What is Big Government?

Bernard — Fri, 17 Dec 2004 05:15:29 -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.

Re: What is Big Government?

Bernard — Fri, 17 Dec 2004 05:08:44 -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.

Re: What is Big Government?

loyopp — Fri, 17 Dec 2004 03:15:51 -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.

Re: What is Big Government?

David Andersen — Thu, 16 Dec 2004 18:28:30 -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.

Re: What is Big Government?

David Andersen — Thu, 16 Dec 2004 18:27:12 -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.

Re: What is Big Government?

Andrew Roth — Thu, 16 Dec 2004 16:48:17 -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?

Re: What is Big Government?

BF — Thu, 16 Dec 2004 12:36:25 -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?

Re: What is Big Government?

Jason Ligon — Thu, 16 Dec 2004 11:54:50 -0000

We need an index that approximates loss of discretion at the individual level. A government that takes my house and gives me an equal market value of oranges is pretty intrusive, even with an assumed zero transaction cost.

In general, can we say that the cost of government is the opportunity cost of the actions it takes, and that, if we understand cost that way, cost is the meaningful metric instead of size?

Re: What is Big Government?

Will Wilkinson — Thu, 16 Dec 2004 08:44:17 -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.

Re: What is Big Government?

BF — Thu, 16 Dec 2004 08:14:43 -0000

the answer might depend on the political system. in a democracy, we might say that a government is too "big" if some combination of the following:

the amount that it spends on all programs/extracts in taxes is greater than the level that is considered reasonable by a majority of eligible voters. Or, from the demand end, the cost of the government (sum of all programs) that the majority supports. conversely with small.

also, there are institutional rights that are unique to the state. a government that is more intrusive than what a majority would support, then government is "too big." not intrusive enough (i could imagine such a thing), and it would be too small.

so i guess according to my logic, there can't be a "big" or a "small"--just a "too big" and "too small." It could also be too big and too small at the same time, since government is made up of a myriad of departments and programs, some of which at any one time will be bigger, and others smaller, than what a majority would support.

because of the sorites argument (mentioned above), big and small need an anchor to give meaning.

Re: What is Big Government?

Frank McGahon — Thu, 16 Dec 2004 00:46:51 -0000

This thought experiment is a bit of a conjuring trick. If it is the case that the Government 'gives back' exactly 98% to each person of the 100% it 'takes" then the 100% tax is just an accounting fiction and the correct tax rate is 2% making it small government - you can do what you like with the 98% "rebate". If it is the case that the 98% given back is some sort of redistributed average and is meant to include any "benefit" provided by the government whether the individual wants that benefit back or not then it's big government - you don't have the freedom to do what you like with the 98%

Re: What is Big Government?

Ana Rita — Thu, 16 Dec 2004 00:01:23 -0000

Indeed I have to agree that classifying the size of a government according to the amount it taxes or spends (in GDP terms, for instance) is fallacious. In spite of this, it is important to measure the size to understand some impacts – advantages and drawbacks – whether in causing inefficiencies (the inevitable deadweight loss) or in lessening them (e.g., internalising externalities).

If any of those measures is used, I think spending is definitely better, although not adequate. In fact, it can only be seen as a proxy to have a rough instrument to assess government strategies and goals from a time series viewpoint.
Portuguese government spending, for instance, has registered a strong increase in government size which has revealed itself to be negative for economy and mainly because it was not sustainable. In my opinion this is the main question – sustainability of public spending and, of course, public debt; hence, the spending issue should not be neglected.

This notwithstanding, for the same amount of spending, an infinite number of policy choices can be made and this is probably the question here. So, in my opinion, size should be measured not only in spending terms but also in terms of public administrations (number of employees) relative to some indicators (representing quality) for each sector.

Well, this is already a big comment, but so many things are still to be said!

Re: What is Big Government?

Matt McIntosh — Wed, 15 Dec 2004 17:54:02 -0000

I usually think of it in terms of how invasive the government is in people's lives and how much it distorts/restricts their choices. The imaginary government you outlined would be a "small" one because it allows people a heck of a lot of freedom.

That said, the whole big vs. small government argument is a misframed one. A more relevent and less ideologically-charged frame that I prefer to use is efficient vs. inefficient government.

Re: What is Big Government?

Will Wilkinson — Wed, 15 Dec 2004 17:43:42 -0000

80" = giant. Everybody knows that, right?

Re: What is Big Government?

Micha Ghertner — Wed, 15 Dec 2004 17:40:32 -0000

This is a sorites paradox. What is a midget? What is a giant? On a scale of shortness to tallness, at which points do people stop being one and start being the other?

Re: What is Big Government?

bob mcmanus — Wed, 15 Dec 2004 15:39:59 -0000

A very interesting post for a libertarian web site. I have been thinking about it unproductively all day. If a government is simply a pass-through distributive mechanism....for instance, defense functions could be viewed as paying soldiers/soldiers and buying arms...then the size of government could be the non-productive(non-passthrough) overhead. But it is often a function of government itself to provide jobs (ask the Pharoahs), and it is not as if government jobs bury payroll in a hole in the ground. Tho Congress sometimes looks like it.

Re: What is Big Government?

Gareth — Wed, 15 Dec 2004 15:26:41 -0000

At first blush, I'd say the size of government is equal to its cost (gross, not net of benefits, or else big government is anlytically the same as bad government). Cost is always relative to something, so you would have to either take some realworld example as your base line (say, the US in 1880) or maybe some anarcho-capitalist or libertarian utopia.