Among the catalogue of ironies perpetrated by the humourless, few are more gutbusting than the wholehearted participation of small-government advocates in the processes of government. If there’s one thing that both libertarians and small-L liberals are more enthusiastic about than reducing the size of the state, it’s that they be next in line to ride the leviathan.
Without doubt, massive inefficiencies exist in any organisation designed by fallible people. But to suggest, as those who would shrink the state might be tempted to do, that the public sector has a monopoly on busywork or socially useless production is far too generous a compliment to the government’s selection criteria. As Hanlon’s razor attests: never suspect a conspiracy when incompetence will do. (The public sector doesn’t have a monopoly on incompetence, either.)
And yet the attitude that many proponents of ‘small government’ bring when they are added—no doubt with a great deal of self-loathing—to its swelling ranks, is that the state should do less, not more. If anything, government should be a paragon of anaemic efficiency, operating like many of these advocates claim to have run their own small businesses.
Rather than granting him the misfortune of seeing his dreams realised in the public sector, let’s envisage what the philosophy of a small-government cheerleader would actually look like in business.
Imagine installing a rabid adherent of the ‘small business’ ideology at the helm of Woolworths or Wesfarmers. In the name of efficiency, we should firstly expect widespread redundancies. Coordinating such a large number of staff members—many of whom do nothing but coordinate, in turn, the layers of management below them, down, down, all the way down to the floor staff who are employed largely to throw out perishable food which some know-it-all regulator has decided would be poison after four months—is the real waste here.
Drastically reducing staff and store numbers would leave the company with quite a bit of spare real estate, which could be sold off to another part of the private sector for more efficient use. Because the company was contracting, not expanding investment, it could live within its means and not flirt with the folly of going into debt—at least, not for as long as this management team was around. And if the one‑off windfall from its asset sales one day ran out? Well, that would be a burden shouldered by future generations. At least current management didn’t compound their problems by going into debt today to invest in more stores.
Granted, the company would sacrifice some of its economies of scale and scope with these cutbacks, but think of how efficient the handful of remaining stores would be! Service delivery would be far, far more limited—realistically, the only people served would be those who could afford to go elsewhere for sustenance—but queues would be a thing of the past. What’s more, the company would no longer need to cross‑subsidise its unprofitable regional outposts using the proceeds of its metropolitan stores. And really, if people wanted to buy vegetables that badly, they would have made the lifestyle choice of moving to the city, rather than living out on some farm where all they did was mass-produce vegetables or something.
With his operation running more efficiently, our Woolworths or Wesfarmers fountainhead figurehead could unashamedly embrace the principles of the free market by doing away with those anti‑competitive contracts that gouged farmers and enabled his shops to sell milk for $1 per litre. Milk is for the weak, anyway. Any man still drinking milk past the age of 25 should consider himself a failure. On the whole (and on the skim), new management would be doing private citizens a favour. For too long, grocery bludgers have suckled at the teat of Big Supermarkets, under the guise of gaining nutrients for survival. The philosophy of small business would put an end to that.
Despite his innate Randian superiority, our small businessman could not afford to rest on his laurels at this point. After eviscerating his workforce, his worries would turn to whether any of these ingrates would turn on him. Not in the commo revolutionary sense, of course—even the proles could recognise we all had to tighten our belts—but in voting with their feet. Now that we mention it, the few lingering stores had been suspiciously quiet since the former workers had their primary source of income removed… This could only mean one thing: they must be starting their own businesses! Hah. Good luck in this economy.
The uninitiated reader might consider our hero to be something of a villain for reducing employment, output and profit. Not so! In pursuing his efficiency-enhancing policies to their logical extreme, he has shrunk the size of business and thus succeeded in one important respect: concentrating its (admittedly) smaller residual profits in the hands of an even smaller (but very deserving) number of residual colleagues.
This reductio ad absurdum doesn’t deny the wisdom of stamping out waste or chasing efficiency gains, whichever sector we find ourselves in. But to claim that so-called private sector virtues—balancing the budget over the cycle, avoiding debt at all costs, embracing perfect competition by shunning exclusive deals and refusing corporate welfare, reducing employment to an inflexible skeleton crew and cutting the wage (costs) of those who remain to below‑subsistence levels—are observable or desirable, even in the private sector they’re supposed to represent, is lunacy. For small government acolytes then seeking to impose the ‘conventional wisdom’ of these imagined businesses onto the public sector, perhaps Hanlon’s razor needs sharpening: never suspect an ideological imperative when making a quick buck will do. Just watch how quickly that champion of free speech, the Institute for Public Affairs, shuts up when asked about its funding sources.
It’s precisely because of the latent (if hypocritical) success of such well‑funded vested interests, who advise unleashing unbridled competition upon everything except the market for paid advice, that the ‘public sector bad, private sector good’ dichotomy has become entrenched in public debate. Consider the privatisation of public utilities (this summer, your most expensive Christmas present is likely for AGL or Origin Energy), or the outsourcing of public projects (world-class NBN, anyone?) to the intrinsically more streamlined, competitive, and lower-cost private sector. Why would you shop anywhere else?
Not that Australian Parliament has lately been covering itself in the glory of ruthless efficiency. But even here, the very lethargy of debate serves the false premise that the public sector is incapable of doing anything except the most elementary functions of defence, a few tax and welfare cuts, and a bit of basic R&D to keep Malcolm’s agile mind from fogging over. A well-worn phrase has re‑emerged to classify resistance to anything that falls outside this broadly agreed agenda for government: playing politics.
Playing politics is the charge levelled at one side for failing to fold on something that its opponents consider straightforward or trivial. Its validity largely depends upon where you draw the boundaries between the public and private sectors. Bill Shorten has accused the Prime Minister of ‘playing politics’ in suggesting that the South Australian government’s renewable energy policies posed a threat to the energy security otherwise afforded by non-renewable sources like coal and gas. In turn, Malcolm Turnbull has accused the Opposition of ‘playing politics’ in rejecting the same‑sex marriage plebiscite as divisive, expensive and unnecessary.
Playing politics is apparently an indulgence that prevents governments from governing, or oppositions from representing the unlucky minority who voted for them. But it doesn’t take a reference book to recognise that the opposite of ‘playing politics’ isn’t ‘working politics’. No, it’s surrendering the point to your opponents, conceding that their constituencies and vested interests are more representative or crucial than yours. With greater frequency, the motive for accusing one’s sparring partner of playing politics appears to be undemocratic, cheered on by unrepresentative but well‑funded interests who would rather hitch the political process behind their inexorable private sector tugboat than see it play out as a public sector tug‑of‑war. While I loathe interminable political debates as much as the next person, I want politicians to play politics, almost as much as I want the Australian cricket team to start playing cricket. Politicians should play politics, eat politics, sleep politics, work politics and repeat politics. It’s what they’re elected to do!
Whether you resent or resign yourself to politics as currently ‘played’, the beneficial potential of the state remains missing presumed dead. The overt libertarian supporters of small government fantasise about it as a regulation‑stripping rubber stamp, and thus cheer on its demise. Arguably though, a greater threat to the state comes from the equivocators. These are the avowed supporters of democracy, who nevertheless adopt a small‑government ideology. They are the small-L liberals, or the advocates of ‘liberal democracy’.
Full disclosure: only implicitly, I might be identified as a small-L liberal. I trust people. I assume the best in people. I admire the initiative, ingenuity, resilience and sympathy of people. When people work or enterprise in the private sector, I don’t assume they immediately become mindless slaves to the profit motive. But nor do I assume that people who’ve chosen a life in the public service become indolent pencil‑sharpening clock-watchers.
Regardless, I consider deeply misguided the trumpeting of one’s own liberalism, as if the absence of freedom is currently the gravest threat to western societies. Arguing for more liberal democracy amid chronic failures of social democracy is like campaigning for more dessert when an increasing number people are going without dinner. And while the importance of classically liberal principles like openness, flexibility and self-determination are important, they cannot risk being drowned out or transmogrified by the kind of society-denying libertarianism that would bite the hand of the state that, at some point or another, has fed its ingratitude.
To provide an example of the short-sightedness of well-meaning small-L liberals, let’s take the Uberised economy. Stage 1: Uber and its ilk are heralded by liberals as the dawn of a brave new innovative age. The reluctance of Uber to pay tax, to attend humanely to the conditions of its workers, or to share its profits beyond its few founders are dismissed by liberals as transitional speedbumps at best, or evidence of the declining relevance of the state at worst. Stage 2: The technological revolution reaches its zenith, with robotic cars—which liberals had hungered for—emerging as one of many innovations liberating the masses from the drudgery of employment. Stage 3: In the workless liberal utopia, all individuals can pursue their potential with the aid of a Universal Basic Income provided by the state, which is of course financed by…all the taxes that Uber and its ilk failed to pay. Whoops. Will government in any meaningful, democratic sense exist in such a place? Or should we look forward to Uber Presents Western Democracy?
So what is the alternative? Though both libertarian and liberal champions might have their delicate free-speech‑loving ears offended by such a suggestion, it must exist in restoring the role of the state. While ‘the system’ we have now has at times failed the majority, this is not because the state is unfit for purpose. Rather, the state has been uprooted from its democratic foundations by opportunists wishing to make a quick buck, abetted by libertarians who attack its foundations and by liberals who are either too preoccupied downloading their latest firmware updates or too staunchly, unironically protectionist of their own current slice of tolerable fortune.
A stronger state has at least two desirable features. The first is the recognition, not before time, that the private sector is not enough to deliver social benefits. For instance, the private sector will never deliver sufficient jobs to secure full employment. Even if the non-government components of demand (consumption, investment and exports) improved such that all available workers could be hired, an emboldened and vocal labour force is simply antithetical to the private sector’s interest at the bargaining table. The second feature of a larger state is that such emboldened, employed, and embiggened working and middle classes provide an organic safety valve to fight the state’s potential overreach.
Robust middle and working classes are better nourished, educated, paid and engaged with democratic processes. They are granted admission to the liberal bubble (which, I’m sure if they are ready to shake off recent and offensively illiberal charges of elitism, liberals won’t mind) and are more capable of rejecting at the ballot box those government actions that fail to capture the will of the people. To think what a government threatened only by its constituents and not by moneyed interests might achieve! It might tax super profits during a once-in-a-lifetime mining boom, or borrow to invest in public goods at lowest-in-a-lifetime interest rates. It might start to sound dangerously like civilised social democracy.