Shrinking Leviathan

October 18, 2011

Government spending in the United States grew little during the 19th century relative to national income, with the federal government spending about 3 percent of national income in 1900.  Most of the federal government's spending went for national defense and a few public goods.  Today, the federal government spends approximately 30 percent of national income, with more than half dedicated to transfers from one group to another, not for public goods.  Why has government continued to grow?  The answer is that private interests and transforming ideologies propel this trend, say J.R. Clark, of the University of Tennessee at Chattanooga, and Dwight R. Lee, of Southern Methodist University.

Private interests, recognizing the significant financial pool of the government, have increasingly appealed for targeted support since the late 19th century.

  • While interest members represent only a fraction of the voting electorate, patterns in voting behavior underlie their success in gaining profitable policy.
  • Collective action problems prevent the voting public from applying reverse pressure.
  • Even if a voter does take political action, psychological studies show that citizens who are not members of the private interest are easily manipulated to support the group.

In addition to private interests, the transformation of governing ideologies has facilitated the growth of government.  The watershed moment in this regard was combination of the Great Depression and World War II.  The expansive fiscal policies of Franklin Roosevelt were unprecedented in the United States, but because the New Deal was credited with helping to end the Great Depression, the government's role as economic manager was solidified.  This paradigm shift opened the door to additional governmental responsibilities and laid the foundation for the size of government that exists today.

There is the possibility, however, that these two trends can be overwhelmed and reversed, decreasing the size of government.  Someday, the costs of inaction will outweigh the benefits of apathy and the voting public will overcome its collective action problem.  The resulting mass ideological shift will check private interests and reverse the direction of government growth.

Source: J.R. Clark and Dwight R. Lee, "Shrinking Leviathan: Can the Interaction between Interests and Ideology Slice Both Ways?" Independent Review, Fall 2011.

For text:

http://www.independent.org/pdf/tir/tir_16_02_4_clark.pdf

 

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