A Postcript on Big Government

Having posted yesterday on the limits and dangers of the ideological assault on “big government,” I read today with particular interest an op-ed by Tom Flanagan charmingly entitled, “Down with Big Government”. He argues that the Prime Minister’s refusal to shrink government goes a long way to explaining the political problems he has run into. His particular argument is a bit of a stretch and I will leave it to you to read and assess. It’s his general argument that’s more instructive, not that we didn’t already know that Flanagan has been a forceful proponent of limited government but it’s always useful to check out the new ways in which this essentially ideological and tired position is trotted out. This time his examples of “big government” that should be cut down to size are local festivals, grandiose foreign-aid initiatives and uneconomic green projects, none of which, he says, should receive public money.

The arguments against government spending always use these kinds of examples because they don’t hit home like health or education or public safety but those are the areas, along with infrastructure and defense, where the big spending is. Sadly, on aid, we don’t even spend .7 of GDP, a Canadian idea implemented by others and not by us. The examples almost always try to evoke easy agreement about “stupid spending” or at least spending remote from our everyday lives and thus avoid the real and tough issues around services that we value even if we often take them for granted.

In any case, legitimate debates should be had about the costs and benefits of government action but the anti-government proponents don’t generally want to do that. They only talk about costs, never benefits. Do the public benefits of festivals outweigh their costs? Quite possibly we would agree with Flanagan on festivals once the evidence on both benefits and costs was assessed and debated. But we shouldn’t just look at costs. And of course we would agree that foreign aid that doesn’t help, especially grandiose versions, shouldn’t be supported, but that too should follow a discussion of both benefits and costs and debates about how we could help more cost effectively. And as for “uneconomic” green projects, surely the only reason we are pursuing them is because they are in the short term unattractive to the private sector (“uneconomic”) but no less in our collective interest. No one would dispute that government must be prudent in its interventions and that includes looking beyond the immediate and beyond our own neighbourhood. Debates about how government spends are the stuff of democracy so let’s look at benefits and costs and let’s start with the benefits and costs of prisons (of which apparently Flanagan wants more.)

Another piece just came out in the U.S. arguing that government’s admitted incapacity to deal with the oil spill very effectively is proof positive that “big” government doesn’t work. The piece is making the rounds in Canada too. And again the authors cannot move beyond ideology to consider, for example, whether sharp cuts over decades may help explain why government is weaker than we wish. And even if the answer is that we simply don’t have the knowledge and expertise to fix the spill, surely that’s the most telling argument for why we should have listened to those who warned that the risks to “drill, drill” were too great, and that means tougher regulations and regulators with teeth, hardly an argument for reduced government.

While not free of bias, and then again who is, have a read of J. Madrick’s, The Case for Big Government, just as a refreshing counter-balance. He provides a lot of evidence that many today might find counter-intuitive .

4 Responses to “A Postcript on Big Government”
  1. Big Mac says:

    Maybe a better question for participants in that debate would be: “which parts of government should be big, small or absent and at which level of government?” Are jurisdictions even defined intelligently in Canada? Why is Toronto lumped in with the rest of Ontario? Personally I would like to see a big role for government in facilitating early childhood education, particularly as it relates to full labour force participation and long-term competitiveness whereas in the field of healthcare, I would like to see a smaller role and the emergence of a hybrid system similar to the NHS or Obamacare (although I’m certain we can improve on a 5 per cent gap).

    • himelfarb says:

      Andrew, thanks for your thoughts. I agree with much of what you propose and indeed that is what the debate should be all about – purpose and priorities, prisons or schools, for example. On roles and responsibilities,who could argue against some greater clarity with each level of government contributing from strength – although flexibility so that we are able to adapt to new and emerging challenges has always served us well and some overlap is inevitable and often healthy. But I think you’re dead wrong on healthcare. Yes there have been recent and important NHS improvements and some prospects for advances in the U.S. And yes our system needs major reform (a lot is in fact happening) but not, I hope, in the directions you propose. Indeed, the French health system, which yields excellent outcomes and from which we could learn a great deal, is more, not less. public than ours. You will have to be clearer as well about what you mean by “less government” here. Physicians are private deliverers, for example, of a publicly administered system. Are you talking about how we organize our insurance or are you talking about how we deliver services and, if so, which services? Our single payer model of compulsory risk sharing is probably the best part of the Canadian model. Yes we have to change delivery and funding models, and help jurisdictions manage health resources better. And first dollar coverage is probably not on if we expand homecare for example, but pooling risk as we do is smart insurance policy,

  2. Big Mac says:

    The single payor system is at the core of the problem. The private sector has enormous experience with procuring goods and services at volume at cost-effective rates and that is one highly effective tool to bring health care costs down. There are certainly improvements like technology investment and better administration, but at a certain point, you run out of low hanging fruit when you’re up against massive demand. The fact that our health care system is too expensive and takes far too great a share of public resources is well illustrated by the fact that the rates of interest on Canadian student loans compare very poorly to the most competitive rates that can be found on some credit cards, not to mention lower rates on federal student loans in the United States. Many baby boomers can afford comprehensive, private insurance, and they should not only be given the option of taking it, they should be compelled to take it in accordance with their economic means. In some cases, taxation of their estates ex vivos to recoup health care costs (by the appropriate level of government) may have a role to play — at least that might help to preserve something of a “public option” for post-boomers, rather than bankrupting the health care system in the years ahead, and possibly the Canadian state itself at both levels of government.

  3. Himelfarb says:

    You are plain wrong and you confuse insurance and delivery – any insurance scheme, public or private, has some moral hazard problem but none of what you say will reduce the costs of health care, in fact the reverse. The most expensive scheme is just south of us and the cost cutting plans introduced there have nothing to do with insurance. I strongly recommend that you read Joseph Heath’s Filthy Lucre which just came out in paperback and deals directly with some of the myths that seem to be shaping your thinking. He fas a great chapter on insurance and what he calls “club goods” that should be compulsory reading.

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