Ryan's Follies: Limited Government, Liberty, and Effective Government

More Ryan's follies from his answer [1] to the President's 2011 SOTU. These are about that old Republican hypocritical favorite, “small government.”

”So I’d like to share with you the principles that guide us. They are anchored in the wisdom of the founders; in the spirit of the Declaration of Independence; and in the words of the American Constitution.

They have to do with the importance of limited government; and with the blessing of self-government. . . .

We believe, as our founders did, that “the pursuit of happiness” depends upon individual liberty; and individual liberty requires limited government.”

I find myself in general agreement with this position; but I think it raises a very big issue, and that issue is: in exactly what ways ought the Government to be limited? Unfortunately, the Constitution doesn't tell us that in a completely clear way. It leaves it up to us to figure it out. It isn't so much that individual liberty requires limited government; but that it requires government that is limited in the right ways. So let's see what Congressman Ryan thinks about this issue.

”Limited government also means effective government. When government takes on too many tasks, it usually doesn’t do any of them very well. It’s no coincidence that trust in government is at an all-time low now that the size of government is at an all-time high.”

Well, suddenly we've moved away from “liberty” to talking about effective government, trust, and the size of government. OK. Let's talk about that!

There are a lot of factors that determine the effectiveness of Government. It's pretty clear that Government won't be effective if it's badly led and managed. So, since 1981 we've seen that Government wasn't very effective in many of its functions when managed by Ronald Reagan and the two Bushes. I wonder why. Could it be that these Republican Presidents wanted Government to be ineffective in the various areas of Government activity established by legislation they disapproved of?

It's also clear, that Government won't be effective if the people chosen to lead it by our presidents intend for it to perform poorly. So, when presidents have appointed Secretaries of Labor who were anti-labor, it's not surprising that the Labor Department performed poorly. Nor is it surprising that when they appointed people to head the FCC, or the Equal Employment Opportunity Commission that the work of these agencies suffered. And how about their record of appointments to the SEC, or the Treasury or the Fed. If presidents appoint people to these agencies that look the other way, and refuse to regulate accounting control fraud, then you get accounting control fraud run rampant. Or take the EPA, the Republicans keep appointing EPA Directors who are opposed to environmental regulation. Clearly, they are there to stop the Government from performing not, to manage its enforcing the law.

As to the Government having too many tasks to do anything very well, it's quite clear that the size of the Government is not as important as the size of the units of Government performing the tasks they need to perform, and as the communications among units that need to coordinate to perform tasks well. Also, whether units perform well is a function of the resources available to them to perform particular tasks.

For years Republicans and, to a lesser degree, Democrats, as well,have been trying to shrink the Government (because small government is better, don'cha know?), so that much of its work, has to be contracted out to the private sector. Of course, this introduces incentive problems in doing the contracted out government work, and also communication problems, between the private contractors and the government supervisors, which interfere with both efficiency and effectiveness.

After 30 years of this, there is no evidence that the policy of shrinking Government's permanent civil service employees, and contracting out government work to the private sector has been either less expensive for the Government, or more effective than Government operations of the 1950s and 1960s, which used many more civil service employees, and fewer private contractors to perform Government's work. In fact, it's likely that contracting out has been far more expensive and less effective than the old way of doing things, because private contractors have a tendency to stretch out work, and continue it as long as they can, so that their billings are extended.

In any event, the size of the Government doesn't necessarily correlate with effective performance. We can see this by comparing national governments across the World. Many nations spent more, and some far more, as a percentage of GDP [2] than the 34.6% the United States spent on Federal, State, and local Government in 2007; for example: France; Sweden, Denmark, Sweden, Belgium, Norway, The Netherlands, Austria, Finland, the UK, Germany, Canada, New Zealand, Australia, and Switzerland. Arguably all of these Governments performed more effectively than the US Government in that year. But, even if you don't believe that, it's hard to deny that they performed at least as well.

On the other hand, many nations that spent more on Government as a percent of GDP than the US, performed much more poorly than we did. My point is that there is no clear, strong, correlation between nations whose Governments are obviously effective, and nations with a particular size of Government, and certainly there is no empirical evidence that smaller Governments work better than larger ones.

Finally, the size of Government, viewed in terms of Government spending as a percent of GDP, is not at an all time high relative to the rest of the economy. It was larger in WWII for one thing. For another, its recent increase is due to the effects of the recession and additional Government expenditures made to combat it. Nor does this increase take into account Government spending at the State and local levels. At these levels, Government spending has been cut drastically inhibiting economic recovery by introducing fiscal drag, exactly when we needed the Government sector to step up and inject funding into the private sector.

Trust in the Government may be at or near an all time low, but that is due to the failures of the Bush and Obama Administrations, the crash of 2008, the Federal bailout of the banks without a corresponding bailout of Main Street, and the actions of a Congress paralyzed by deficit hawkism and small government ideology. That is, the Federal Government hasn't performed very well, in large part due to the role of the Republicans, including Congressman Ryan, in opposing the passage of Government spending sufficient to create full employment, and in supporting the continued bailout of the banks, the payment of undeserved bonuses to FIRE sector personnel. And also in taking Federal spending hostage through paralyzing the Federal budget process and using the debt ceiling to force spending cuts, and block income tax increases on the wealthy, and in opposing investigations of the mortgage and accounting control frauds that have put so many out of their homes.

This lack of trust, isn't due to too much Government action, except perhaps in the areas of trans-vaginal ultrasound procedures and onerous voter ID laws, and won't be fixed by Mr. Ryan's preferred policies of ineffective, or no regulation of the FIRE sector and fiscal austerity. On the other hand, it may well be fixed by:

-- an effective Federal Job Guarantee program,

-- a Federal Revenue Sharing program restoring and saving state and local government jobs,

-- a full payroll tax holiday for employers and employees including Federal reimbursement of the Social Security account,

-- ending the wars in the Middle East completely,

-- passing an enhanced Medicare for All bill,

-- forgiving student loan debt,

-- prosecuting accounting control frauds in the FIRE sector, and

-- doubling Social Security benefits.

In other words, if the Government starts doing some things that actually benefit the majority of the population, then it's very likely that people will trust it a lot more. That's not rocket science, is it?

(Cross-posted from Correntewire.com [3].)