I keep hearing from the Republicans how the Democrats want to tax and spend the wealthy for the poor; how the Democrats advocate Big Government that is inefficient and wasteful; how government should be small to foster competition and to let capitalism work. Have you heard this one mentioned by anyone you know?
One of these Republicans is my uncle who is (supposedly) smart; he's not a redneck. He's an Indonesian Chinese who is a CPA and who passed the lawyer's bar exam. He's rich (naturally) and makes a lot of money from real estate. And yet, to defend the "Republican Values" of "Small Government," he 's willing to vote even Mickey Mouse as long as he has an (R) right beside his name (I learned of this through email exchanges that I'm not disclosing here).
That is why I want to see what big or small government is. So here is my attempt to really see what big government and small government really means. And besides, is the United States the epitome of Big-Government? I hope I can make clear whether my Republican uncle's advocacy of "small government" in US makes sense.
When people say "Big Government," people think of socialism and communism. Just to be sure, I don't think I need to argue that real communism won't work. Government controlling what to produce and by how much will definitely be inefficient and wasteful. So "Big Government" in extremity won't work.
I would assume that when someone says "Small Government," they mean a government that adhere to Capitalism, with minimal government intervention. Now try to imagine a country where everything is ruled by capitalism - meaning almost no government intervention. It's going to be a country where the rich will get richer since they control the capital, and the poor will forever be poor, with not much chance to get proper education or health care that are all sold for profit. Imagine a country where the legislation, justice, and security is for sale. Infrastructure will be built only for the benefit of the rich and corporations, but not the poor. I think by my example it's obvious that pure capitalism doesn't work (unless you are rich).
In reality, most countries fall in between these two extremes. Any working state will have government intervention. There are some bare minimum of governance in order for a state to function that I don't think is up to argument, for example: security (police, army), infrastructure (roads, electric grid, airwaves, etc), judicial (legislative, bureaucracy etc.). Then there are some governance that may be up to arguments but I certainly advocate: education, health care, monetary policing, and so on.
I advocate them because I believe it is the government's duty to try to address the imbalance of wealth in society by providing equal opportunity to the people by ways of providing education, health care, and a judicial system that is truly egalitarian, and to let them complete in a capitalistic system of an egalitarian society. Aside from that, I believe that as long as it doesn't harm the public, private enterprises should be free to pursue wealth using capitalistic system. If to pay for this service a progressive tax is needed to tax the rich, then I would advocate it.
If anyone want to call that SOCIALISM or LIBERALISM, I say fine. But they are NOT DIRTY WORDS. Implementation of socialistic policies is a reality to all working countries in the world. In the United States, FDR's New Deal is a form of socialist policy. So is the creation of Federal Reserves, Social Security, Medicare, etc. Even the creation of Interstate Highway, an investment that greatly benefits the economy in general, is a form of government intervention. How to stick this point to your average Republicans is a separate matter and is way beyond me.
Yes, government bureaucracy is inefficient compared to private sector. But if we accept that there are many services and projects that the private sector can not or should not provide (infrastructure, security, education ?, health care ?), wouldn't it be better for the government to focus on ways to improve efficiencies and to have oversight? Isn't it the case, then, that Republicans see government agencies as inherently inefficient and therefore they should be minimized, and that the Democrats essentially believe that government agencies could be monitored to produce acceptable results?
Now let's get to numbers and see if the United States really is an example of "Big Government" How can we figure out what a big government and small government is? Well, how about government expenditure by percentage to GDP? If you have the time, go to this Forbes article and download the tax burden list from the year 2004. (I'm sorry I don't know how to reproduce the table in this diary)
From 30 OECD countries, the United States is ranked 27th in total tax burden. Its total government spending is 36.4% of GDP, the seventh lowest from the data (three countries don't have data on it, ranking the US at 4th from 27 countries). This is well below countries like Sweden (57.3%), France (53.7%), Italy (50.5%), United Kingdom (43.7%) or Germany (47.5%). So, does that translate to lower economic growth for these countries compared to the US? Using 2008 data, Sweden has 3.4% growth rate; France has 1.8% growth rate, Italy has 1.9% growth rate, the UK has 2.9% growth rate and Germany has 2.6% growth rate, compared to the US with 2% growth rate. So government expenditure does not correlate with growth rate.
What's more, there seems to be an inverse correlation between the gini coefficient and government spending: Sweden at 23.0, France at 28.0, Italy at 33.0, the UK at 34.0 and Germany at 28.0. Compare this to the US's gini coefficient at 45.0, on par with China's 46.9. I don't deny that there are some people who does not want a smaller gini coefficient in society, believing that the strong should be rewarded much more than the weak, and it might be a form of an unfair wealth redistribution. But if the small gini coefficient is a reflection of equal opportunities for all its people caused by education and health care, then I certainly advocate this - I will need to dig for more data to back this up.
So, in big government (socialist?!?) Sweden and Germany, the economy is still growing, the wealth imbalance is relatively not so great, and the data still does not account for the financial meltdown in the small-government country of the US. I have not even mentioned the growing deficit in US government budget. The total tax burden in 2004 for the US is 25.5% of GDP, which is lower that it was in 2001 (29.6%), while the government spending does not decrease (it slightly increased).
Interesting to note that all these countries have deficit budget. A mild deficit will in the end result in a mild inflation (assuming these countries don't default on their debt), which is quite alright in a growing economy. But the US's 10.9% of GDP deficit is a cause for worry, and a president Obama could raise the tax burden or cut government spending or both. But if his speeches are any indications, I don't think he's looking forward to cutting spending anytime soon. So, yes, he's advocating a bigger government, although I doubt that it could ever reach the level of western European countries.
But what exactly does McCain advocate? A lower tax burden with an unclear promise to cut spending from earmarks and porks - highly unlikely considering his lobbyist-ridden campaign. Sure, McCain does not advocate a bigger government. What he's advocating is a growing debt for the future generation. Either that or he's advocating a cut in Social Security spending, which he once called "a disgrace." Now this is what the Republicans should argue, but because it's politically unpopular, they talk about pigs and lipsticks and bitter and pedophilia.
So to conclude, I do not think the US is the epitome of "big government" and that "big government" is not a dirty word, much like socialism is not. It is a choice a society must make: what kind of society does it want to be? What kind of and how much services should the government provide to achieve that goal? And how to finance such services? For example, rich Asian countries do not have social security system, and can therefore afford relatively smaller governments. Is this what the US populace wants?
These questions needs to be answered between you, American citizens, and my uncle.