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Thread: size of government and the competence of government

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    Quote Originally Posted by Jimbean View Post
    The only way to substantiate any claim is with facts.

    We can also apply the principle by Ludwig Von Mises that government have no price discovery mechanism and therefore cannot allocate resources efficiently.
    His point was not exactly that; namely, a whole planned economy has no price discovery mechanism, but a government as part of a market economy indeed has a potential "price discovery" mechanism through the market itself. Surely it can distort this price mechanism, as much as a couple of "market failures" may do aswell.

    Anyway, an easy way to substantiate your claim would be to assume the absence of economies of scale in government function, coupled with a constrained govt budget and a kind of marginal salary = marginal productivity general equilibrium condition. If that is the case, the "first" government employees will be the best paid and most productive, and a budgetary expansion will necessarily have to cater to less "able" workers. It's kind of heavily theoretical as an argument, I wouldn't bet my money on it, and it's only valid "ceteris paribus" so you won't be able to compare even very similar countries.

    Exceptions also exist, there are natural monopolies (where big economies of scale and barriers to entry exist) which are somewhat better administered by politicians because at least they need to take into account their re-election, or more generally by a cooperative structure created by a union of citizens. "Government" is a bit too abstract. I'm a bit of a fan of regionalism, especially since the west *seems* for now to be a relatively war-free environment.

    Another way to approach the topic would simply be to assume that there is a bounded and stable number of functions a government should perform. Each heterogeneous individual can perform a maximum number of functions, which varies according to ability (let's assume it's inborn), and needs to be provided with a minimum salary to live off, whatever its level of ability. The minimum salary acts as a fixed cost, thus for a given level of budget and "functions", there will be an inverse U-shaped relationship between the number of govt employees and total effectivness (basically a too low number can't perform all the functions but a too high number requires hiring marginally unskilled workers).

    Finally, I'm pretty sure these topics have been explored to death in the economic litearture thus I advise you to look it up on google scholar.
    Last edited by FDG; 04-15-2013 at 04:25 PM.
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    The government feigns incompetence while pursuing their own alternate agendas. I don't think a large government is necessarily incompetent. But an oversized one is different from a large one. The argument for small government is that personal freedom for action is maximized, and is more suited to the scenario. The problem with taking that to the extreme is free action can easily become mindless & without direction. A government is just systemization. On a very basic level there is nothing wrong with government. Everything a person does becomes systemized as it's perfected. To avoid this systemization to retain some mindless freedom can actually be detrimental and inefficient, as there are only so many scenarios one can encounter in life, and the same scenarios tend to pop up repeatedly... one arrives at an ideal course of action and that's integrated into the system. Whether this systemization is necessary really depends on whether the scenario is recurring and predictable enough to systemize, or whether it's better handled on an individual level.

    The government we have is not a good example of what government can be. There are many underlying agendas which we are unaware of. The public politics like abortion and all this is a complete sham. That they are incompetent is a projection while under the surface they are totally competent for an alternate agenda. The alternate agenda isn't entirely selfish, it's somewhat noble though still convoluted, but the details of it are totally unrelatable to the average person. The real problem with our government is it's misguided. It's following an agenda which leads to failure.
    Last edited by rat1; 04-15-2013 at 05:14 PM.

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    Quote Originally Posted by FDG View Post
    His point was not exactly that; namely, a whole planned economy has no price discovery mechanism, but a government as part of a market economy indeed has a potential "price discovery" mechanism through the market itself. Surely it can distort this price mechanism, as much as a couple of "market failures" may do aswell.

    Anyway, an easy way to substantiate your claim would be to assume the absence of economies of scale in government function, coupled with a constrained govt budget and a kind of marginal salary = marginal productivity general equilibrium condition. If that is the case, the "first" government employees will be the best paid and most productive, and a budgetary expansion will necessarily have to cater to less "able" workers. It's kind of heavily theoretical as an argument, I wouldn't bet my money on it, and it's only valid "ceteris paribus" so you won't be able to compare even very similar countries.

    Exceptions also exist, there are natural monopolies (where big economies of scale and barriers to entry exist) which are somewhat better administered by politicians because at least they need to take into account their re-election, or more generally by a cooperative structure created by a union of citizens. "Government" is a bit too abstract. I'm a bit of a fan of regionalism, especially since the west *seems* for now to be a relatively war-free environment.

    Another way to approach the topic would simply be to assume that there is a bounded and stable number of functions a government should perform. Each heterogeneous individual can perform a maximum number of functions, which varies according to ability (let's assume it's inborn), and needs to be provided with a minimum salary to live off, whatever its level of ability. The minimum salary acts as a fixed cost, thus for a given level of budget and "functions", there will be an inverse U-shaped relationship between the number of govt employees and total effectivness (basically a too low number can't perform all the functions but a too high number requires hiring marginally unskilled workers).

    Finally, I'm pretty sure these topics have been explored to death in the economic litearture thus I advise you to look it up on google scholar.
    I'm pretty sure there are many big governments that are more effective then small government. Core efficiency in a government is the overhead and scalability of it's fundamental design. In all systems, bigger will mean more efficient until a certain point where it becomes less efficient due to resource shortage and contested access to limited resources. A government should ideally function in the sweet-spot of it's scalability based on its design rather than at it's low point or high point. Naturally governments reforms and adopts new technologies which increase scalability as it grows and shrinks, it will also encounter natural disasters, conflicts, attacks, and environmental changes which may reduce the resource pool and scalability.

    I think Governments need to be properly sized for the design of the system, functional and effective rather than naive good/bad ideas about big/small. I consider any sort of big is good, small is bad rhetoric at best sophistry, at worst fraud(given the increase in the size of government due to small government proponents).

    I'm pretty sure there are many big governments that are more effective then small government. Core competency in a government is scalability of it's fundamental design. In many systems, bigger means more efficient until a certain point where it becomes less efficient.

    Anyways I'm pretty sure boosting IQ in the general population(as bad as a measure of intelligence it is) has a much higher chance of increasing wealth then almost any fantasies politicians will concoct to promote a ideological message.

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    Quote Originally Posted by hkkmr View Post

    I'm pretty sure there are many big governments that are more effective then small government. Core competency in a government is scalability of it's fundamental design. In many systems, bigger means more efficient until a certain point where it becomes less efficient.
    Historically this is often not the case. Government expands easier than it can be reduced and often expanding beyond its fundamental design.
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