Thursday, June 20, 2013

Government Scale and The Regulation of Government Size

Inherent in modern organization is the propensity to self-propagate and expand to satisfy a collection of internal interests. The need for the organization becomes an abstraction and the organization becomes the focus. The pursuit of profit in an organisation rationalises behaviour to outcome, the creation of laser focus on outcome is the key to the success of any organization. In the absence of focus on purposeful outcome, the organization expands to evermore perceived requirements of the people within it to satisfy their ambitions. The combination of people’s internal ambitions and expanding sources of revenue creates a reality that is the core of the challenge of government and the inclination for it to expand beyond a useful scale; or worse, collapse under the weight of it's Byzantine maze of laws and regulations.  

There is almost universal consensus on the need for government and zero consensus on the extent of government. Regardless of the amount of government, there are two primary views to governance; one view sees government as a tool to control the populous and one sees government as a means to liberty by the non - intrusive facilitation of human exchange. When government acts to provide an environment where people are actuated by their own creativity in response to their desires, within a given environment, an infinite number of possibilities come to the fore and are pursued – a thousand flowers bloom. When government seeks to plan the actions of people, it moves the creative process from billions to a few. This assertion is born out with a single trip through a western shopping environment; thousands of people daily are seeking to provide me with anything I can imagine and many I could never have imagined. Stand this in contrast with a shopping circumstance in Soviet era Russia, a totalitarian centrally planned government – grey buildings, shortages and very little selection.

Looking to government to solve our problems is a temping thing. When we cast our eyes to government to solve our problems we need to look back, as Winston Churchill said “the further back you look the further ahead you see”, so look back over history and almost every civilisation imploded under its own bureaucratic weight. Government actions, while necessary must be delivered efficiently and in a manner that is sensitive to the liberties of the people receiving them. Too often, government and its appointed representatives feel that when a person falls into state care in some capacity, that they in some way have the right to impose the state on the personal choices of the individual. It is for this reason that government should remain in the role of arbiter and facilitator, and refrain from being the provider.

Regardless of intent however, as government exceeds a given threshold it begins to exercise greater and greater influence over our lives. This is the paradox of the two freedoms, government by extending services to the populous to facilitate access to a liberated circumstance for its citizenry becomes increasingly coercive. The critical element in the contemplation of government action is to ensure that government action is directed toward facilitation of human actions and away for the provision of services. This paradigm is critical, because the provision of services moves us toward a totalitarian circumstance, where government is seen as a source of entitled sustenance. This insidious progression toward totalitarianism moves us away from an enterprising group of people paying taxes and takes us toward a centrally planned society. This circumstance takes decision making away from people and gives it to government, and nearly always with a loss of freedom and always with a loss of efficiency. The closer management is to the point of actuation the better executed action is. To substantiate this point, where would you expect to find greater efficiency; on the family farm in Canada or the government farm in Russia – history has judged the Canada family farm very favourably.

Canadian medicare is a source of national pride. There is a wide debate on the nature and scope the system should take on. It’s relative benefit to other jurisdiction’s solutions in many cases is great, so my introduction of the system is to provide the system as a muse, rather than as a subject of critique. In Canada when I go to buy food; the types, natures and modes of delivery are abundant – choice abounds. When I go to seek medical help in Canada, I have one choice – only the government provided service. Once the again, the relative merit is mute, the issue is that, in the government provision of the service my choice is limited compared to garnering other essentials like food, – this is an intrusion on my choice. What is more concerning though is how the provision of free medical helps to take the thinking of policy makers further and further into our private life, on the justification that a given set of actions cost the “system” money. A body weight that garners a certain body mass index generates a high risk for ill health, is this justification then for government to regulate my diet or to enforce exercise? In just one generation past, if someone suggested that government might one day legislate the consumption of food and exercise, the prospect would have been considered completely implausible. Yet now there is justification and contemplation of such policies. It is in this way that government provision of services has government insidiously progressing more deeply into our private lives.

As government does more, people expect more, which generates an increase in velocity of the expansion of government; this phenomenon generates an exponential growth in government. As government grows it draws more people and resources to its ambit and away for the private sector, away from the private sector which is the source of the resources that government is dependant on. You might say it begins to parasitize itself, lake a snake eating its own tale, the circumstance is unsustainable. It is important to limit government; because government’s effective existence depends on it. There is a harmonic between government and the economy, if government grows too quickly it stifles the economy by increasing the tax burden, first the economy must expand and then the government can increase its contribution.

The gestalt which has as its parts, government, market economy and self interest is a most powerful generator of prosperity. Once again, cast an eye over human progress and you will be unable to find as widespread prosperity at any point in human history; we in Canada and most of the Western World are living better now than any other humans in history – ever – and that wealth is generalised. Can it be better? absolutely. Has ever been better? never. There are many who are inclined to point out that wealth is unevenly distributed; they are correct, wealth is unevenly distributed, but in modern day western society our “poor” are the rich of yester year. More importantly, with government as a facilitator people can look forward to a piece of an ever expanding pie. To maintain this generalised assent we must manage this trifecta carefully and the most critical element is the axis between governments’ mass and its two vital counterparts, the market economy and self interest.

KISS provides a useful acronym to help remember the appropriate size of government to its counterparts - keep it small stupid or at least keep it relatively small. While this comment is intended to be tongue in cheek, the premise is accurate. There is a large body of work that justifies constraining the size of government on an economic basis. Of greater concern is the intrusion of government on personal sovereignty. There is a rubicon between the mass of government and the mass private society that when grossed generates the beginning of the suppression of constructive free human action.

The political process is driven by many interested parties, largely all wanting government to do something. As, thankfully, the democratic process responds to people and as a result government tends to do more things, as aforementioned, creating continued inertia toward expansion relative is other two counter parts – the market economy and self interest. As it is the political process which is effectively contributing to government’s harm, either by the retarding of growth, or the dissuasion of new enterprise do to excessive taxes, or the repelling of new citizens due to high relative tax rates, or the excessive control of its citizens; there needs to be an apolitical means of regulating government expansion. The Bank of Canada (BOC) is an apolitical institution that is generally accepted as effective. The BOC is effective precisely because it has a narrow mandate to manage the money supply relative to inflation and employment. A Central Finance department functioning at arms length to the government, with the single simple mandate of constraining or increasing the flow of tax revenues to parliament depending on whether government has surpassed or receded a critical size relative to the economy at large, would provide the same effective functionality as the Bank of Canada. Debate around the critical size at its inception would undoubtedly be vigorous, but as a concept to manage excesses of government this entity would have merit – leaving the decisions on how to spend revenues where it belongs, in the hands of the people, but regulating the amount based on a rationale other than a political imperative to respond to more requests for money.

To the extent government action seeks to liberate human resources, then government action will ultimately result in self fulfilling progress. To the extent government retards actuation of human resource it will curtail its own progress. The challenge is recognising the harmonics at play and bringing resolution to when government size will firstly result in the curtailing of public actions and then government revenue.

"Extremism in the defence of liberty is no vice. And let me remind you also that moderation in the pursuit of justice is no virtue." Barry Goldwater

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