Can Big Government Be Rolled Back?

The U.S. government is involved in the American economy on a scale that few would have predicted a century ago. In 1900, Uncle Sam spent about 3 percent of national income, and state and local governments spent about 6 percent. Today, federal spending amounts to about 30 percent of national income—roughly double what state and local governments spend combined. Must advocates of limited government resign themselves to the Leviathan state?

The answer, according to J. R. Clark and Dwight R. Lee, is a resounding no. The task of reversing the growth of government is formidable—even herculean—but it is in principle doable.

In fact, some of the mechanisms that served to increase the size and scope of government over the past century could also serve to reverse the trend toward Big Government, the two economists explain in their article for the fall 2011 issue of The Independent Review, “Shrinking Leviathan: Can the Interaction Between Interests and Ideology Slice Both Ways?”

As advocates of Big Government became more numerous, their goals became more attainable, and this spurred them to invest more resources in their cause, which in turn made their movement more popular. But that kind of bandwagon behavior—what Clark and Lee call an “ideological network effect”—can also work in the opposite direction: if more people grow disenchanted with Big Government, the perceived value of working to reduce it will rise, making retrenchment more popular and more likely.

Moreover, voter behavior would reinforce such a trend. Because voters know that a single vote doesn’t decide an election, they vote largely according to their ideology, rather than according to whether they might gain or lose a perceived government perk.

These two phenomena—ideological network effects and the indecisiveness of voting—could enable an initially minor ideological trend that favors shrinking government to become a major political force that defeats the supporters of Big Government. That outcome could happen more quickly than one might expect, but only if the foes of Big Government work hard to achieve their goal.

Shrinking Leviathan: Can the Interaction Between Interests and Ideology Slice Both Ways?, by J. R. Clark and Dwight R. Lee (The Independent Review, Fall 2011)

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[This post first appeared in the October 11, 2011, issue of The Lighthouse. To receive this weekly email newsletter of publication summaries and event announcements from the Independent Institute, enter your email address here.]

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Carl Close is Research Fellow and Senior Editor for The Independent Institute and Assistant Editor of The Independent Review and editor of The Lighthouse, The Independent Institute’s weekly e-mail newsletter.
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