Thursday, February 6, 2014

Why we need less government

You don't have to be a libertarian to believe that we need less government. You just need to understand and appreciate how really huge our government today is and the problems that creates. Brian Domitrovic has a nice essay in Cato's Policy Report which lays it all out. He also does a great job of explaining, from a supply-side perspective, why less government and lower tax burdens would benefit us all. Here's an excerpt, but I recommend reading the whole thing:

In 2013 the government of the United States spent 55 percent more money — in real, inflation-adjusted terms — than it did in 1999. Economic growth in that 14-year span has been 30 percent. Where government at all levels soaked up 32 percent of national economic output in 1999, it took in 37 percent in 2013 — an increase of nearly a sixth, in less than a decade and a half. By way of comparison, for the first 125 years of this nation’s existence under the Constitution, through 1914, government spending was largely parked between 3 percent and 6 percent of national output. 
The gorging on the part of government in our recent past has been so unrelenting that aside from flashes from the likes of the Tea Party, the public is meeting the development with quiescence. At $6.4 trillion per year, total government spending is now so immense that any yearning for something smaller and more reasonable from our minders in the state runs the risk of appearing as quaint and otherworldly. Government that is huge and ever-expanding is a matter of concern in its own right. But perhaps less understood is an additional problem: the developments of the current millennium are inuring a rising generation of Americans to the immovable fact of big government.  
It was only when tax cuts did not come in the face of the huge 1999 and 2000 federal budget surpluses that the Fed began its contemporary activism, an activism which grew to an unimaginable extent in the aftermath of the Great Recession. 
This is not to mention the unholy tide of regulation and spending, from Dodd-Frank to Obamacare, which has washed upon us since 2008. Given the resurgence of big government in the 21st century, private enterprise in this country has proven reluctant to explore the full extent of its legendary ambition. 
Instead of conceding long-term mediocrity under Leviathan, we should take inspiration from our past, indeed our recent past. The last time we were stuck with 2 percent growth for the long term, the 1970s and the early 1980s, we mustered a means of narrowing government. The real results were so stellar that to recite them is to take us back to a world we have lost — but only 15 years ago. 
Tax cuts, stable money, and the rendering of spending and regulation as superfluous are the formula of the supply-side revolution — the Reagan Revolution. They stand sentinel right there, not long ago in our history, as the way to advance through our sluggishness and purposelessness today.

8 comments:

Benjamin said...

Egads---and large government just does not work.

Without forces of private competition destroying the inefficient, large organizations inevitably become self-serving, ossified, hidebound, self-exalting.

This applies across the board, from the HUD, to the VA to the USDA to the HHS to the Pentagon, to the LAPD to the State of California to any part of the City or County of Los Angeles.

I think we have to have a law that federal spending cannot top 15 percent of GDP.

How we handle growing state and local governments I do not know.

BTW, speaking of libertarians, it is often local governments that most mindlessly inflict Nannyism on citizens.

Can you run a push-cart food stand in your town? Be a prostitute? Open a gambling saloon? Operate your own taxi service? Sell alcohol without meeting any number of regulations? Sell alcohol after 2 am? Own a handgun? Sell recreational drugs? Openly live a gay or polygamous lifestyle? Open a bar to serve only the people you want to serve?

Not all parts of libertarianism, like free speech, are edifying. I might be offended to see a bar that refuses to serve a particular group. I would not patronize that bar. Some people engage in free speech that is revolting.

But the question is, do you want freedom or not?

American say "not."



William said...
This comment has been removed by the author.
William said...

"Traditional U.S. stock mutual funds and exchange-traded funds together saw withdrawals of $20.9 billion in the week ended Feb. 5, their biggest weekly withdrawals on record. The abrupt reversal, led by ETFs, comes after U.S. stock funds attracted $172 billion in 2013, the biggest inflow since the financial crisis.

"Meanwhile, taxable bond mutual funds and ETFs soaked up $10.7 billion, their biggest intake on record, Lipper's data showed.

"Virtually all of the shift came from money sloshing out of U.S. stock ETFs and into bond ETFs, funds that can often see big weekly swings in assets. Traditional U.S. stock mutual funds actually had inflows of $1.5 billion in the most recent week. Traditional bond mutual funds attracted $1.2 billion.

From the Wall Street Journal:
http://online.wsj.com/news/articles/SB10001424052702304680904579367380409272214

Lipper: http://www.lipperusfundflows.com/#create:home:Home:/php/signup_trial.php

William said...

American Association of Individual Investors

These guys never disappoint - their mood is highly correlated with the direction and speed of the movement in the S&P 500. Two weeks ago they were 39.4% Bullish.

Bullish...27.9%
down 4.3
Neutral...35.7%
up 0.6
Bearish...36.4%
up 3.6

Long-Term Average:
Bullish:...39.0%
Neutral:...30.5%
Bearish:...30.5%

Public Library said...

Interesting how it coincides with the creation of the Federal Reserve. Once the tether of reality broke, the upper bounds on money printing and Government spending broke with it. This is predictable.

William McKibbin said...

The US government needs to be cut by at least 40% -- only uniformed personnel should be permitted to collect paychecks from the government, and that should be made a constitutional amendment -- anyone in government who does not wear a uniform is non-essential, period -- that includes politicians who should serve as volunteers -- that's my vision of government cutbacks -- most of government today is lard -- people who work for the government who do not wear uniforms should resign and join the private sector for the good of America.

PD Dennison said...

Long ago, I stopped arguing for this politician, or this policy, or that plan...and only argue for less government, no matter what is done with it the smaller government.

No policy matters, other than limiting the size of government, though my preferences for government spending are this:

1) Debt payments...they hurt the least.

2) Military...great job training

3) Welfare...hurts human potential

4) Regulation...hurt all potential

My vote is for smaller government and bigger deficits to help support the smaller government argument.

Hans said...

Excellent thread by, Mr Grannis! All your points are good arguments and are supported by long term growth.

PD Dennison, how do "bigger deficits" produce smaller government?