15,000. 535 members of Congress and the Senate plus 2,700 staffers to pass the omnibus act that includes the earmark for the lightbulb, 1,100 staff members at OMB to produce the study on the optimal procurement procedures for lightbulb acquisition, 3,500 procurement officials to arrange and conduct the blind bids for the lightbulb contract . . .
If I recall correctly, by the time the joke is finished we’ve had a change of administration and the office with the blown lightbulb has been shut due to budget cuts.
Jokes like this notwithstanding, most people are hard-pressed to identify what particular government activities they want to see eliminated. Conservatives of a serious stripe are apt to answer: entitlements, but unless it can be demonstrated that the private sector could provide health care and retirement benefits much more cheaply than the government does, this is at least partly a red herring. Yes, the costs of Medicare and Social Security are rising, and will consume a rising share of national income. But that’s because health care is getting increasingly expensive and the population is growing older. Neither of those things would change if we means-tested these programs or otherwise cut them back.
I happen to think that there are efficiencies to be obtained by certain privatization plans; but when people compare, for example, the “return” from Social Security to the return on investments in equities, and hypothesize that we could all retire for free by privatizing Social Security, they ignore the fact that Social Security’s big “investment” in government debt is one reason that interest rates are as low as they are, which in turn underwrites the higher returns in the private market. Reallocating capital more efficiently should bring gains, but not remotely on the order of the gains that would appear to be achievable if you just compare equity returns and returns on the Social Security Trust Fund.
It is always a good idea to ask, what should the government properly do and what should it not do. Limiting the question to how much are we paying for government as a percentage of the economy will inevitably give you an incomplete answer if you do not also know what the government is doing and how that activity would change as a percentage of the private sector if that government activity were privatized. This is particularly relevant to health care, but not exclusively so; it’s relevant to every aspect of government. We are spending, as a society, more and more on health and nursing care, on education, on policing and corrections – on services that government either substantially funds or directly provides. Would we be spending much less on these things if the government were not funding them? That question must be answered before one can seriously debate the meaning of growth in government spending. Myself, I doubt it; I think the primary drivers of growth in spending in these areas are unrelated to government involvement.
And here, one cannot avoid discussion of Baumol’s Cost Disease – still relevant after all these decades. Productivity growth in education, for example, has been essentially nil – I would argue that the internet offers the first prospects of potentially meaningful productivity improvements in this sector, but to date I would not be shocked to discover that the improvements have been negligible to negative. You would expect that if productivity growth were zero in education, but positive throughout the economy generally, then the quality of education would go down even as the cost went up, because first the returns to labor input would be higher elsewhere, attracting talent away from education; and, second, the cost of maintaining a middle-class lifestyle would be tied more to economic growth than merely to inflation, hence driving up wages for teachers even in the absence of productivity improvements in that sector. And this is indeed what has been observed. You can blame teachers’ unions or feminism or immigration – and all three deserve their share of the blame for the state of education today – but at bottom you have this real economic problem that in the absence of revolutionary productivity gains, you would expect to have to spend more and more on education just to stay put in terms of outcomes. The same goes for any other economic sector that is vital but experiencing no productivity growth. And if these are sectors where the government is heavily involved, you’re going to see government expenditures rise faster than inflation – indeed, faster than economic growth – just to keep from falling behind.
I’m not actually endorsing such a pessimistic assessment, so much as saying that it’s an assessment that needs to be grappled with before you can make a coherent conservative case against perpetually growing government. Myself, I think there are much more persuasive metrics of the rise of government influence in our lives than the continued growth in entitlement spending; in fact, I suspect that the growth in entitlement spending is masking a relative decline in spending on government services.
By the way, how many supply-siders does it take to screw in a lightbulb? None – if the government didn’t get involved, the lightbulb would just screw itself.