In his commentary at Investor’s Business Daily James Dorn says something I agree with:
Tax reform is necessary to make America great again
and something I’m skeptical about:
so are effective limits on the size and scope of government
The reason for my skepticism is in an equation:
GDP = C + BI + G + (X – I)
or in words gross domestic product is equal to consumer spending plus business investment plus government spending plus net exports. Our economy is not the economy of the 1980s. We make far less of what we consume than we did then and import a lot more. Big businesses depend for their profits much more on their overseas operations than they used to.
There’s another even more crucial question. Should the objective of policy be to increase GDP? Or should it be to increase median income? I don’t see any practical way of effecting either objective without government playing a role.
I also hasten to point out that neither major political party is much interested in limiting the size and scope of government. They just want to spend the money having the government do different things.
Limited government proponents seem unaware the perception of government size is entirely arbitrary. We aren’t debating a clear-cut differentiation between too-big and just-right, we’re debating difference of degree and moral vision of how to build a better society.
And so we end up chasing our own tails.
I’m less concerned about the size of government and more concerned about what it is doing which may just be a different way of saying the same thing you did.
In my experience, when you ask someone what they mean, in practical terms, by reducing government, it almost always boils down to lower taxes, not lower government services.
You, Ben and Dave, seem to be arguing that it’s just an empirical question as to whether larger or smaller government is warranted. I would note that during a 50 year span of increasing government draw on resources and influence we have not had a commensurate growth in wages or output, and sit on the precipice of undeliverable government “services.” See pensions, education and health care.
Andy – we must run in different circles. Most smaller government people I know would like lower taxes, but feel we desperately need lower government involvement. It is primarily Democrats who never saw a government ” service” they didn’t want to institute or expand. Now, politicians of both stripes, they are a different matter. Power hungry, and no balls, er, leadership.
Drew, I’m arguing that size of government is the wrong question. The right questions are:
Who do we want to be?
What are opportunity and justice and do we want it to make their provision to all a priority?
What is our vision of a better society? Is it to be more ethical? If so, what are our ethics?
When these questions are answered we can then judge whether government, through its size and operation, are contributing to our goals or interfering with them.
Guarneri,
I’m certain we run in different circles.
Let me put it another way, I’ve met very few people who want to limit government programs and regulations which benefit them. In other words, limited government isn’t actually a first principle for most people who say they want limited government.
Question:
If you advocate a change that you believe will be for the greater good, but will disadvantage you personally, what does that suggest? Is it a mark of honesty or integrity or just self-flagellation?
There’s a relevant rabbinic saying: “If a woman comes from a far country and tells you she’s divorced, believe her.”
Also, in addition to your list, Ben, I think there needs to be a recognition that government always and everywhere operates by the use of force. The use of force is not justified for every objective. Even good objectives.
It should be noted that this is a hard money equation. With a credit backed monetary system, you can increase G boundlessly. Furthermore, G does not differentiate between productive and unproductive. Paying for 100 more IRS, FBI, or FDA employees does not produce any tangible goods or services. (There are intangible ones, but it encompases a more nuanced discussion. Usually, I would leave off the “tangible” qualifier, but I do not want to hear about the “One Dumb-assed Scotsman” argument.)
The formulation does not capture the costs of credit creation. For producers of goods and services, the raw materials used to create their products need to be replenished by more raw materials. Using accounting to increase the raw materials does not produce more goods.
Financial products are different. Leveraging money can be produce more output than the raw materials used. If physics worked like the finance industry, total energy/matter could be increased. (I know that there are problems with quantum mechanics and the 1st law of thermodynamics.)
With a credit backed monetary and financial system, GDP grows through credit creation, and as individual debt is eliminated (paid-off or written off), it must be replaced somewhere in the system. As such, GDP is actually increased by increasing the credit supply. (Money and credit are like matter and energy, and one can be transformed into the other.)
Increasing government spending to replace decreasing private spending is only possible within a credit backed monetary and financial systems. With hard money, government spending is done at the expense of private spending. With credit backed money, all the relationships between the variables are meaningless.
Ben,
I try to look at it in terms of prioritizing principles. I think that’s critically important because in reality principles often come in conflict and one should, IMO, have some sense of which ones are most important. I also think a lot hinges on scope and proximity of the disadvantage.
Another way to frame your question is this: “If you advocate a change that you believe will be against the greater good, but will advantage you personally, what does that suggest?”
At the end of the day I tend to think most people delude themselves into thinking that what they want also aligns with the greater good.
I think that in the case of elected officials, eventually they completely conflate their own benefit with the greater good.
Andy,
Let’s say I’m in a perfectly legal business that is rewarding to me personally. The policies I think should be enacted will put me out of business and I will lose those rewards, but I advocate for them anyway because I think they’re the right thing.
Am I being selfish or selfless?
Ben,
I’d probably say selfless, but I would wonder why someone would start a business they think should be legislated away.
Ben
The world is and has been full of men of zeal, with good intentions. Very rarely have they been achieved through a large government. More frequently the power of a large government is hijacked by the few that can, for their own benefit. You imply that the desire for some great society brought to us by government is good and achieved just by the existence of that government. I simply would ask you to look at the fraction of government expenditures actually spent to help “the poor.” I would suggest its more just a big recycling operation with taxes in and distribution out primarily to the middle and upper middle class, and rules and funding that find their way to the politically connected. Just look at the bank bailouts. It suits politicians sitting at the poker table well.
I prefer a government that provides for the national defense, a system of law and equal justice, modest regulation and a modest safety net. I’ll bet it could be provided at something less than half of current expenditures, and I bet people would do pretty well.
I could be wrong, but I know the current system is not working, and is in a state of latent default.