Government A adopts a program whereby it provides service X to each citizen at a cost of $10k per citizen per year.
Government B gives each citizen $10k per year and does not provide service X.
Now we ask: which government is bigger? Depending on the definition, government A can be said to be bigger than, smaller than, or the same size a government B.
A>B:
If the size of government means something like the level of control that the government has over our lives, government A is bigger. Government A spends the same $10k on each citizen that government B spends, but it decides how that money will be spent.
Or, if size is determined by the value that people get out of government, and service X is something that sufficiently many people use and that economies of scale allow to be provided sufficiently more cheaply when it is provided by government, government A will be bigger because it offers the equivalent of more than $10k in value from its $10k in spending, while B offers exactly $10k.
B>A:
If the size of government means something like the scope of what the government gives its citizens, government B is bigger. Because the $10k from government B can be spent on anything, government subsidizes not only service X purchased privately, but all other serivices as well as all goods.
Or, if size is determined by the value that people get out of government, and service X is something that few people use and that does not benefit from economies of scalet, government B will be bigger because it offers exaclty &10k per citizen for it $10k in spending, while government A offers less.
The same:
If the size of government means something like the amount the government spends, then it must be agreed that these governments are equal in size.
It is a concern of the percentage of the population who are doing no more than controlling the population. It is the same with businesses or other organizations. The size of the “administration” or “management” versus the number of people being administered to or managed.
Just to be nitpicky, I don’t think this example really makes sense.
The government can’t just give each citizen $10k/year. Not without printing $10k/citizen/year, or alternatively first taxing an average of $10k/citizen/year. Apart from printing or taxing, it doesn’t really have money to give.
A more sensible example might have been,
Gov A (does what you said it does)
Gov B has all the same policies as Gov A except that one service, and taxes are $10k less per year.
Size of government can mean either the number of people employed by governments or the amount of ‘interference’ the governments exert on your daily life. To which are you referring, Carleas, or do you have a different definition?
If ‘size’ of government means the number of overlapping agencies and the number of people employed by those agencies, wouldn’t you have to eliminate the redundancies within the overlapping agencies, stop creating new agencies that are actually redundant, and fire everyone who’s a part of the redundancies? (Which is more cost effective? That’s a question about redundancies, btw. To answer it, you’d have to take into consideration the number of people who’d then be eligible for unemployment benefits.)
If you mean cutting back on the amount of ‘interference’ governments exert on your daily life, wouldn’t you have to go through a process of separating the Federal government from the State; decide which programs promoted by either are actually beneficial to the majority of people; and question the legality of a law that’s been used to criminalize, let’s say, picking up your glass of wine from the bar table and moving it to your dinner table, after your name’s been called?
His scenario B didn’t say that. That was nowhere in his post. He just said that the gov gives it away, without saying the source of the money being given away. I made that issue clear in my post.
Now, in his two examples:
A) you pay 10k, and get 10k-worth-of service X
B) you get 10k in cash
A and B don’t appear equal to my eyes, not the way they were phrased. Seems like each person nets an extra 10k in B the way he said it, but in A it’s zero-sum.
In my two examples:
A) pay 10k extra in taxes, get 10k worth of service X
B) don’t pay extra, don’t get extra service
A and B here appear equal – both are zero-sum.
(not that I believe in zero-sum economics anyway – I believe in subjective value)
Not all taxation comes from the state’s own citizens, does it? Plus, you could argue that a state with 100% inheritance tax has income that doesn’t tax its (living) citizens. Unless you regard inheritance as a fundamental human right, rather than a social convention.
I think FJ makes a very good point. If you have a taxation system that people generally assume is roughly fair, and a government gives large tax breaks to one group, that’s generally seen as a gift to that group. When it’s to everyone, though, it’s hard to phrase it in that way.
In any case, the size of the state is affected by whether the tax is (nominally) collected and handed back, or just not collected in the first place - the former requires more work, more employees, and so on. I think the usual meaning would have government A as bigger because it employs more people (the service-deliverers, who would otherwise be in private employ). But there’s a difference in the outcomes of these two situations - in the first, someone paying $5k a year would end up paying nothing and receiving $5k a year, while someone paying $100k a year would only pay $90k a year - it would be redistributive, and cost the state more, than just cutting $10k off everybody’s tax bill (and letting people who pay under $10k a year not pay anything).
It depends on whether that state is part of some super-state entity like the EU, in which cases SOME states with the super-state are subsidised with taxes taken from the citizens of other states. In the UK, all the taxation comes from the citizens of the UK, though not all of it is returned to those citizens in the form of services because quite a lot goes to ‘bail outs’ and other forms of central banking shenanigans.
However, not all of a government’s revenues come from taxation - some comes from debts, issuing bonds etc., and some comes from corporate revenues, investments and the like.
Regardless of what you consider inheritance as, if you’re taking money from living people who would otherwise have that money then you are taxing living citizens. You are equivocating in a truly ludicrous manner with this claim.
Perhaps I could have been clearer, but I intended to leave taxation out completely. Assume however taxes are collected, they are collected equally by both governments. It should read:
In Government B, it’s most effective for the purposes of this discussion to assume that they tax the same way they tax in Government A, and then give out stimulus-like checks for $10K. This keeps the tax system equal between the two, and also makes it plausible to assume that administering service X and the stimulus program are equal in cost and human capital.
The only difference I meant to create between Government A and Government B is that Government A gives in kind, while Government B gives in cash. If it’s easier to see the comparison, we could take Government A as giving $10k in vouchers that are tied to the individual and redeemable only for service X, while Government B provides a liquid $10k.
That would just create massive inflation because the ‘stimulus checks’ are just paper money, backed by nothing, based on nothing, and therefore would raise the price of the same goods and services every year.
SIATD, How is that different for Government A and Government B? As I clarified, both policies result in a cost to government of $10k. Whether the money is given to service X providers or to citizens, it’s still spent. If it causes inflation, it does for both. If it depends on running the printing presses, it does for both. Wherever the government gets its money, the question is how (or whether) its spending policies differentiate larger from smaller government.
Unrelated:
To Dan, James, and Lizbeth’s reactions, that the size of government is a matter of how many people are involved: How does that work in a democracy, where in some sense everyone granted sufferage is a part of the government. What about jury duty? What about the military, especially where service is mandatory? What about prisoners? What about mandatory education?
I would suggest that a government that employs 100 people and imprisons 1000 is a larger government than a government that employs 200 and imprisons no one. Pure employment doesn’t seem right, in that case. I think Lizbeth’s articulation, that size is “the amount of ‘interference’ the governments exert on your daily life,” is a better starting point. That can certainly include employment, but employment alone is not decisive.
But “the amount of ‘interference’” can be understood in many ways, as my hypothetical governments get at. A government that redistributes wealth directly, as Government B does, is interfering pretty substantially. At the same time, a government that would instead decide how that money would be spent, as Government A does, seems to be interfering more.
Obviously wouldn’t it depend on the service and the potential buying power of the cash? The only purpose of cash is to buy services, but are they the same as serviceX? Is the serviceX worth the cash to anyone? Is it worth more?
You’re not taking it from living citizens. You’re taking it from dead ones. Money is issued by the state; at the end of your life it returns to the state.
Sure, both scenarios, as they are now described, would cause inflation. Simply issuing currency to people would cause more inflation though, because at least when a government spends money on providing services it has to actually buy the things necessary for that service (energy, staff, buildings, vehicles, whatever). Now, if the government could spend the money with 100% efficiency, i.e. by only paying a fair market price for those things, then it wouldn’t cause inflation, but I can’t think of a single example of that happening in reality. Governments always pay more for things than they would be worth on an open market.
However, just making the economy awash with cash, particularly now there’s no energy surplus to fuel conventional economic growth (i.e. more stuff being moved around quicker) as in previous decades, would just cause massive inflation. Right now, regardless of any economic theory you might throw at me, that’s all it would accomplish, at least in countries like ours. One might make a different argument in, say, Russia, which has a comparatively small population and a comparatively massive energy surplus. There, the additional money could fuel economic growth without causing too much inflation, and therefore the general material quality of life for people could increase under such a policy.
Money is issued by the state at zero cost, backed by nothing. You’re talking about preventing parents from passing on a house to their children when they die, or a child inheriting a family business and taking over the job of running it, because of the state issuing some pieces of paper. It’s absolutely disgraceful, morally speaking.
You should read some Proudhon. He’d be disgusted with what you are suggesting, and Charlie Marx suggested before you. Charlie and Joe Proudhon used to argue about it at length. Proudhon didn’t really believe that anything belonged to anyone, he didn’t believe in property of any kind. However he also staunchly argued against the state taking what was otherwise a citizen’s private property from them in the name of… whatever. I’m very much with Proudhon on that one.