The Small Government Fallacy

Politically, today’s cry for small government has more to do with reducing government power than its size. Granted, without accountability, any agency, public or private, can balloon beyond its reason for existence. But try to imagine this: big oil, big banks, big cyber companies, big finance, big pharmaceutical, big retail, big transportation, big aviation, big utilities, big insurance, big lobbyists, big tobacco, big prison industry, big media and a big military industrial complex overseen by a little government.

To the ideological right, this is heaven on Earth. To the working men and women in America, this is a quicker road to serfdom than anything that economist F. A. Hayek could have conjured up — a land of Goliaths and a population of Davids, where wages, pressured by global corporations, experience free-fall.

Put another way, this kind of dream portends a 21st century with corporate fiefdoms and an ever-growing number of consumer-serfs. It frees up the power of the already powerful. Worse still, government collusion with big business that transfers public wealth to private executives, in what Naomi Klein calls corporatism, erases all hope for a better future for average Americans. The feudalism of the Middle Ages can’t really be that much different from what could become of America if the growth of income inequality continues to escalate.

To her credit, novelist Ayn Rand warned against government complicity with big business. Too bad she didn’t know enough about human nature to realize that her virtuous fictional character John Galt is a creature that does not exist in the real world of business.

All John Galt pretenders are causalities to vice or corruption of one kind or another. That’s why we need a government that’s accountable to the people and has enough muscle to deal with giants without being intimidated or stomped into submission.

It is a well-accepted premise that pure communism and pure socialism are unworkable ideologies. But so is pure capitalism. The wants, needs, temperaments, talents, beliefs and traditions of human beings with diverse backgrounds require an economic system calibrated to sustain a high quality of life for all citizens, not just a few super-needy individuals following a myopic ideology.

Hayek maintained that government involvement in the economy would lead to serfdom. Indeed, corporatism does the trick. But so will capitalists accountable only to markets that they create and control. There are many roads to serfdom but none quicker than the thoroughfares run by international corporations shadowed by small, ineffectual governments.

A few years ago, Dutch economist Jan Pen asked us to imagine people’s height as being proportional to their income, making average income equal to average height. He asked us to picture everyone in America walking by us in one hour’s time in ascending order of their income.

In the first several minutes of the procession, the passersby would be invisible. It would take 45 minutes before people of today’s normal height would appear. Then, with six minutes to go, giants would begin to pass by. And near the end, these individuals would be more than two miles tall. Of course, that was some time ago. Today the last few would likely be much taller.

A close reading of American history shows beyond a doubt that our health as a nation is dependent in large part on a vibrant middle class. Extreme inequality severely weakens our economic foundation.

The incessant roar to reduce the size of government has so oversimplified the politics of the matter that few people even give the issue much thought. It’s simply accepted as fact by a growing number of people that all of the world’s ills are due to big government, end of story.

Thomas Jefferson, Thomas Paine and Henry David Thoreau are often mentioned in connection with the assertion that “the government that governs best is the government that governs least.” This declaration is no doubt true. But it also has less to do with the size of government than with efficiency and effectiveness.

All three of these men were strong advocates for effective government, and after making the statement above, Thoreau clarified that his aspirations were not necessarily for making government small but rather for bringing about better government. We would be well advised to heed his wisdom. Instead of continuously ranting about the need for small government, we must decide, once and for all, what we expect from government and then make sure we get it.

Capitalism is an extremely powerful system, so much so that it cannot be sustained without safeguards. To make America safe for “creative destruction” requires responsible citizens and the collective authority to see that we are not overrun by giants accountable to no one but themselves. Our anthem is “We the people,” not we the serfs.

Charles Hayes
Self-University 

Posted: Sunday, 29 April 2012