Do Bigger Governments Work Better?

Government always wants to grow bigger and more powerful. Cities want to engulf surrounding communities to become bigger cities. But are bigger governments truly more efficient?

It is not that the elected officials in smaller jurisdictions are better or that the electorate is better. The superior performance stems from the reality that smaller governments are closer to the people, and decision-making tends more to reflect their interests more faithfully than in a larger jurisdictions. _NewGeography

Larger Governments Less Efficient

The reality is that there is a single measure of efficiency: spending per capita. Here there is a strong relationship between smaller local government units and lower taxes and spending. Our review of local government finances in four states (Pennsylvania, New York, Indiana and Illinois) indicates that larger local governments tend to be less efficient, not more. Moreover, the same smaller is more efficient dynamic is evident in both metropolitan areas as well as outside. "Smaller is better" is also evident at the national level (Figure 1).

...special interests have more power in larger jurisdictions, not least because they are needed to finance the election campaigns of elected officials, who always want to win the next election. They are also far more able to attend meetings – sending paid representatives – than local groups. This is particularly true the larger the metropolitan area covered, since meeting are usually held in the core of urban area not in areas further on the periphery. This greater influence to organized and well-funded special interests – such as big real estate developers, environmental groups, public employee unions – and drains the influence of the local grassroots. The result is that voters have less influence and that they can lose financial control of larger local governments. The only economies of scale in larger local government benefit lobbyists and special interests, not taxpayers or residents. _NewGeography

One reason why larger governments -- with their larger special interests -- become less efficient and less sustainable, is the swelling bloat of public sector pay, pensions, and benefits. This can be a huge problem for national governments as well as for provincial and state governments. Public sector unions are always corrupt, with ties to elected officials as well as to even less savoury elements of society.

Public Sector Pension

Public Sector Union Pensions are Unsustainable

The same type of corruption found in larger local and regional governments is also seen in national governments. As illustrated below, the more of a nation's output that is confiscated by government, the less economic output the nation typically will have.

Counter-productive Effect of Government Spending on GDP

<

US President Obama has accelerated the accumulation of debt significantly, rapidly leading the US government toward an economic point of no return.

Obama to Add $9.3 trillion to US Debt

US Government's Economic Future is Not Sustainable

Even before Obama, the US budgetary system was headed for a cataclysm. But Obama has accelerated the time table to the train wreck by a matter of decades.

The chart shows that by 2030, Government spending will exceed historical levels of receipts and lead to ever increasing amounts of borrowing. The chart also shows that if receipts remain at their historical level of 18.3 percent of GDP, by 2070, receipts will be sufficient to cover the costs of only Social Security, Medicare and Medicaid. _Unsustainable US Spending

About the time the US runs headlong into its inability to finance its aging citizens' infinite demands and "needs," China will be splitting into warring fiefdoms, Russia will be collapsing from demographic implosion and population pressure from the outside, the senile former EU will be history, dotted with rival Revolutionary Islamic Republics, and Japan will be an island museum dedicated to the phenomenon of demographic decline. Africa, of course, will be on fire.

All of this unfortunate messiness might have been prevented, had citizens of advanced western nations thought to keep their governments small enough to be efficient and answerable to their people.

Let that be a lesson to you.