IS GOVERNMENT SHRINKING?

In today’s political climate, the more implausible the claim, the more likely it is to stick. One that seems to be sticking now is that government today is small by historical standards and constantly shrinking.

Run that one by the man on the street — looted by the tax man, harassed by police, hounded by regulators — and he will scoff. Now comes the highbrow journalist with a nuanced view to correct him, citing all kinds of complex data.

The highbrow in this case is Catherine Rampell, writing in The New York Times. Her claim seems apodictically certain. “Government has been shrinking steadily for two years,” she says, “and compared to the size of the overall economy, government is actually slightly smaller today than it has been on average in the postwar era.”

Huh? Well, she provides data of “the percentage change in total government spending and investment” as compared with the change in the GDP. She shows GDP rises and government falls. Wow, amazing.

Not so fast. You can always know that when people claim that government is small, it will always appear small by comparison to the GDP, which is to say that anything looks small by comparison to anything (in the words of economist Roger Garrison).

Moreover, it is a peculiar presumption that government should always grow in proportion to the wealth of society (presuming that GDP does measure that). Why? If government is providing essential and minimal functions only, it should get smaller in proportion to economic growth. Should the thief keep coming back for more when his victim grows wealthier?

Also, shrinking by comparison to everything else doesn’t mean that it literally gets smaller. It should only constitute a smaller portion of the total.

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