Regardless of where someone may view himself along the political spectrum (conservative, libertarian, or modern liberal), there are always a variety of government programs and activities that they either think are not worth the money or should not be the business of government in the first place. Yet, it seems almost impossible to rein in government. It keeps growing in size and scope in one direction after another. Why? And is there any way to reverse it?
Growing Government Spending and Taxing
The federal government keeps getting bigger and more intrusive and more costly. In the 2013 fiscal year that ended on September 30, 2013, Washington spent a bit more than $3.4 trillion. This compares (in inflation-adjusted 2013 dollars) with 2.1 trillion in 1993. In other words federal spending has increased by 62 percent over the last twenty years.
The same dramatic growth has occurred on the revenue side. The federal government took in about $2.8 trillion in taxes in fiscal 2013, compared to $1.7 trillion in 1993 (in 2013 inflation-adjusted dollars), for a 65 percent increase in government revenues compared to two decades ago.
This increase in expenditures and revenues over the last twenty years is reflected in the tax burden on the American people. The average household paid $28,205 in taxes to the federal government in 2013, up from $22,230 (in inflation-adjusted 2013 dollars) in 1993, or a 27 percent increase in twenty years. While the population of the country has increased by around 22 percent during this time period, per capita federal government spending has risen by 33 percent.
Both “entitlement” spending (Social Security, Medicare) and “discretionary” spending (including defense) have significantly increased over these two decades. Discretionary spending went up about 50 percent over this period, while entitlement spending rose by 100 percent.
Special Interests and the Growth in Government
According to “public choice” theory, this growth in government transcends the political differences in modern democratic society. Rather, it is structured into the existing political system itself.
Public choice theorists are economists who argue that the political process should be studied in the same manner as markets are analyzed. Over the last several decades, they have attempted to explain the factors behind the growth of government in modern democratic society. They say that individuals in the political arena are motivated by self-interested goals (which can include ideological or ethical ends, as well as financial gains).
This self-interest prompts individuals and “special interest” pressure groups to weigh the costs and the benefits in deciding to be for or against various government policies; and they attempt to influence political outcomes through their votes, their campaign contributions, and their lobbying expenditures.
Their goal to obtain through either government regulations or income redistribution what they cannot or do not want to peacefully and voluntarily acquire on the open, competitive market: other people’s money.
Rather than earning the revenues or income they desire by offering the consuming public more, better and less expensive products, they turn to government to get anti-competitive domestic regulations, import restrictions against foreign rivals, or subsidies or government contracts to acquire the additional wealth they want — all at taxpayers — and consumers’ expense, of course.
If they are “non-profits” such as many environmental groups, they turn to government to restrict people’s use of their own private property through land use prohibitions or regulations, or through government control and ownership of land and wildlife they want preserved from private access and development. Unable to persuade enough of their fellow citizens to voluntarily contribute sufficient money to buy up and maintain the land they wish “untouched by man,” they turn to the coercive power of government to get what they want through taxes and regulations.
Politicians, Bureaucrats and the Growth in Government
Politicians, on the other hand, desire to be elected and reelected. They gain political office by “selling” programs, regulations, and spending taxpayer dollars for the benefit of various constituent groups whose campaign contributions and votes they hope to receive.
Why do they want to be elected or reelected? So they can impose on the citizenry — both supporters and those who may have voted against them — programs and spending and taxing that they arrogantly presume to be good for “the people,” under the presumption that they know what is good for others; and which those others would want of their own free will if only they were intelligent enough to have the wisdom and values that those holding political office believe they possess.
Of course, sometimes the desire for political office arises out of pure personal ambition, including the desire to “leave their mark on history,” their “legacy” that future generations of little children will learn about in government schools. And, sometimes, it is the simple desire for power over others, and any material wealth that can come their way through political plunder and manipulation.
Those who run the government bureaucracies desire larger budgets and greater administrative responsibilities over economic and social affairs. They hope to gain promotions, higher salaries, and more control through discretionary decision-making.
Larger budgets and expanded regulatory authority opens the door to promotions and higher salaries in the government pay grades. In addition, some of those in the government departments, bureaus, and agencies suffer from the “psychology of the petty bureaucrat” who craves power over others; others who deferentially have to come to them and plead for the regulatory and licensing permissions without which the honest men of the market place cannot go about their productive business.
Bureaucrat’s Incentive to Never Get the Job Done
There is also a perverse incentive mechanism within the halls of bureaucratic power. Those who manage and work in these government departments and agencies have little or no incentive to “solve” the problems for which their department or agency was originally created. If they do so they lose the rationale for maintenance of or increase in the budgets and authority without which they have neither their incomes nor positions.
This stands in stark contrast to the incentives for the private enterpriser in the competitive market. In the free market there is only one way to gain and retain the consumer business from whose purchases market-base enterprises earn their revenues: to solve people’s problems.
It may be a tastier coffee or frozen dinner; or a more wrinkle-free shirt or suit; or a longer-lasting chewing gum; or better fitting and lighter wearing prescription eye glasses; or a better quality and less expensive private education; or a wider covering and lower premium car insurance or health insurance policy. Whatever it may be, in the voluntary free market attracting customers and winning their repeat business requires private enterprisers to make people’s lives easier, more comfortable and less expensive.
There are no such incentives within the government bureaucracies, in which the “servants of the people” have monopoly control over certain services and regulatory rules and permissions. In addition, they acquire their incomes not through voluntary transactions but through compulsory taxation.
If this is the crude, but no less true reality behind the “public interest” and “general welfare” political rhetoric and ideology with which those in political power attempt to mesmerize citizens and taxpayers, then why, once it is understood, does the governmental system of paternalism and plunder persist?
Concentration of Benefits, Diffusion of Burdens
One of the core ideas of the public choice theorists is that there is a bias toward growth in government spending and redistribution that results from the pattern of a “concentration of benefits and a diffusion of burdens.” The logic of this process was actually explained more than a century ago, in 1896, by the famous Italian economist and sociologist Vilfredo Pareto.
Imagine that in a country of 30 million people, the government proposes to tax each citizen $1 more, and then redistribute the extra $30 million among a special interest group of 30 individuals. Each taxpayer will have one extra dollar taken away from them by the government for the year, while each of the 30 recipients of this wealth transfer will annually gain an extra one million dollars.
Pareto suggested that the 30 recipients would collectively have a strong incentive to lobby, influence, and even corruptly “buy” the votes of the politicians able to pass this red