Addressing the Myth that "Government is Smaller"

The Atlantic published a blog post a few days ago (shared on tumblr yesterday by azspot, and promoted to the #politics tag by politicalprof) claiming that “We Now Have Our Smallest Government in 45 Years.”

It shared this graph from the Hamilton Project:

Smallest government in years? Sounds like something to celebrate!

Alas, The Atlantic, Hamilton Project, azspot, et. al. are not celebrating.

Getting causation, correlation, and simple logic twisted around, The Atlantic’s Jordan Weissmann ponders “how badly [this has] actually hurt the job market.” The Hamilton Project, every bit as state-loving as its proto-Keynesian namesake, agitates that cuts in government have “worsened the current economic situation and the nation’s unemployment rate,” paying no mind that government spending must always come at the expense of private (see: consensual) spendings, savings, and investments. Indeed, Hamilton flatly assumes that if employment ratios were kept the same “employment would be 1.7 million jobs higher today,” absurdly assuming that these new jobs would be filled solely from the unemployed and absurdly assuming that funding for these jobs would have no adverse affect on the private economy and thus employment.

Truth ultimately requires, in my opinion, a deeper understanding of economics than they perhaps may be willing to acquire, so let’s just address the canard that government is smaller.

To begin, observe the metric used. Usually, statists (leftists, most often) will employ GDP figures (inherently flawed calculations, see here and here) to fluster at perceived drops in government spending, as if a growth in an economy (see: all interacting individuals within a given region) must be joined by a corresponding increase in government largesse.

This claim of a smaller government takes a different tract, by comparing the total number of government employees to the total population and having this be a stand-in for the “size of government” in general. To anyone with even a cursory understanding of the state of the economy, one flaw is immediately apparent: ”To Population” is not “To Employed Population.” Considering the extended recession-related unemployment, with more people often completely dropping out of the workforce altogether than new jobs being added, overall employment to population is the lowest its been in decades. Should government jobs - paid for by the productive taxpayers* in the private (see: consensual) sector - be maintained at greater costs while employment drops everywhere else?

According to BLS, total employment-to-population dropped from 62.7% in 2002 (a pre-recession high point) to 58.5% in January 2012. This means (accepting Hamilton’s government employment figures as correct as I have been unable to find supporting numbers at neither BLS or FRED for “Federal, state, and local government, including government owned schools and hospitals, and the US Postal Service” for any year outside 2011), that the decrease in the ratio of government employment to population is essentially the same at about 7.7% to 8%. So this is at least a more illustrative figure of what’s happened: government employment has dropped, but private employment has dropped almost exactly as much. The gap is a little wider when taken from mid-2009, when Hamilton claims the “recovery began,” but the overall picture remains: unemployment is everywhere.

Of course, when faced with tightening budgets, reasonable people cut expenses of least utility. In other words: the less necessary or desired something is, the more likely its consumption will be foregone. So a person with less disposable income than usual will more likely cancel his hockey season tickets than starve. And since “unnecessary government employees” are like “wet rain,” it seems reasonable that they should be more likely to go. Furthermore, as I’ve explained before, the politicians like to make those cuts hurt as much as possible by targeting those services the public find most appropriate and beneficial (either on principle or because government monopolies have crowded out alternatives). Therefore, police, teachers, emergency responders, and the like are always trotted out as martyrs for the cause of more taxes. This is why the Hamilton Project highlighted these jobs.

But, again, is total government employees actually determinant of the size of government? A ruthless dictatorship with no “employees” outside of its army would be small in total personell, but no one would actually call it a small government.

So let’s consider some more telling ways in which government is not, in fact, smaller.

For starters, we can look at money and spending. In 2002, total government spending for federal, state, and local governments was $3.7 trillion. In 2012, that figure rose to $6.3 trillion, nearly double. Over $2.5 trillion in stimulus spending - a net economic negative - in just the last few years. The federal debt was $6.2 trillion in 2002. It’s currently at $15.95 trillion, more than doubled in a decade. And it has grown even adjusted for inflation, though why should the figures be adjusted when inflation is the government’s doing anyway: the supply of money was $1.19 trillion in 2002 and $2.26 trillion today, more than almost double. 

Note that all those numbers got bigger and not smaller.

But spending is only one dimension on the size of the state.

The U.S. legal code is hundreds of thousands of pages long. Dodd-Frank alone started as 900 pages and is now nearly 9,000 pages of rules and regulations. Most of those laws and rules and regulations are ultimately unjust, as most represent interference in the peaceful interactions of free people.

We now have a government that can wage wars without declaring them, local police forces have drones and tanks and anti-aircraft weaponry, indefinite detainment and assassination of U.S. citizens without due process, intimate health decisions - and costs - fall under government purview after the passage of the Patient Protection (sic) and Affordable Care (sic) Act, federal raids of legal marijuana dispensaries have increased, immigrant deportations have hit record numbers, even limiting the size of sodas is being claimed as a proper role for government… We need licenses to braid hair and permission to get married. Students have to keep their speech segregated into government-designated zones. Governments claim the land of rightful owners in order to collect more tax money from the corporations who want to build on the land. Surveillance cameras are multiplying, the prison population has steadily exploded, internet activities are now closely monitored, we can’t fly to the next city over without getting zapped with unnecessary radiation or groped by agents of the state. Guitar makers are getting busted for profoundly stupid and arbitrary laws. Government helps the sugar and corn industries with subsidies and tariffs, making industries richer and all of us less healthy. The tax code is well over 72,500 pages long, steadily growing every year. Governments keep some of us from tinting our windows and others from protecting ourselves from armed thugs. Helpful drugs are kept from desperate patients. All while portions of our lives - our labor and wealth - is extracted through threat of force by governments who grant favors to their friends and corporate cronies.

Nearly every aspect of our lives is interfered with by the various states who presume to rule over us.

The idea that “we now have our smallest government in 45 years” is so fallacious that it necessitates the willingness of otherwise smart people to engage in outright sophistry. 

The warfare state, the welfare state, the police state, the nanny state - the state is bigger in every way.

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*(Note: government employees cannot be considered taxpayers. The taxes they “pay” are no different than an accounting gimmick. They are net tax consumers.)