Negative Interest

Restructuring government

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Over at Modeled Behavior, Karl Smith answers David Wessel’s ten questions for Republican candidates. In response to a question on how cutting spending and eliminating federal jobs helps the economy, Smith writes:

It’s not “good for the economy” in a stabilization sense, though some people might prefer a smaller government.

It’s important, however, to understand what the government actually does. Nearly half of all civilian government employees work in education. The majority of total federal government employees work in the military.

While I am for less wars and more school choice these are not changes that can occur overnight and so restructuring government employment will not happen overnight.

Cutting spending has a strong appeal in the abstract if government is thought of as a large body of waste, fraud, and abuse, topped off with foreign aid and handouts to freeloaders. When slashing spending turns out to mean getting rid of teachers and military members, the politics get trickier. Recall the political difficulties that Lewis Douglas ran in to in his pursuit of government economy. As FDR’s budget director, Douglas sought to reduce benefits for World War I veterans. The political benefits of compensating veterans overcame the political benefits of budget cutting. Teachers and military members are fairly strong interest groups that have the added bonus of being politically sympathetic and necessary (not that every expenditure on education or the military is necessary). There is still no politically convenient means to small government beyond picking the low-hanging fruit – at some point, you’re going to have to go after things that Americans actually want to continue spending money on.


Written by negativeinterest

October 12, 2011 at 5:35 pm

Posted in Uncategorized

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