Is big government too small?

How well would your company be doing if the number of employees remained static while your customer base grew by a third and you started providing dozens of more services?

In the eyes of the American public, it’s a lousy time to be Big Government and a great time to be Small Business. Fear of The Authorities is at near-record levels, while faith in business of all sizes just keeps growing. What’s odd about the Government vs. Business split is that it seems to be at odds with each group’s actual influence in the nation.

According to a new Gallup study, 64 percent of Americans say big government is the greatest threat to the country. This is just one percent lower than the all-time high. Small business, by contrast, is positively beloved – the second most trusted institution in the U.S. behind only the Armed Forces. And, better yet, the public considers business owners the most trusted when it comes to knowing how to save the economy. Big Business also does relatively well, despite all the mortgage fraud, unemployment, and unlimited donations to political candidates that can be laid at its feet. Only 26 percent see Big Business as a danger to the nation, down from an all-time high of 38 percent in 2002.

What’s odd is this: In numerical terms, Big Government isn’t currently all that big. In fact, that may be one of its biggest problems (please read a little further before throwing stones at me). Consider: The size of the federal civilian workforce has remained pretty much flat— around two million workers — since the 1960s. At the same time, those employees have been given ever greater responsibilities by Congress and have had to provide services to many, many, many more people. In the past 50 years, the U.S. population has grown by 100 million people.

To put that in direct terms: How well would your company be doing if, while the number of employees remained static, your customer base grew by a third and you started providing dozens of more services or products?

One of the arguments in favor of keeping the government small – usually by reducing the size of the workforce – is that it costs less to run and forces it to be more efficient. Actually the case for that seems pretty weak. In 1996, Congress ordered a 25 percent decrease in the Defense acquisitions workforce by the end of the 2000. That and other workforce reductions from earlier in the decade cut the number of Defense contracting officers by 50 percent—from 460,000 to 230,000.

The result was more expense, not less. John Gravois points out that, according to the Government Accountability Office,

In 2000, the average weapons system contract ultimately cost 6 percent more than originally projected. In 2009, the average weapons program ended up costing 25 percent more. Cost overruns for that year alone amounted to $296 billion. Among the causes of the problem, the GAO’s 2009 report cited “shortages of acquisition professionals” as well as “degradation in oversight, delays in certain management and contracting activities, increased workloads for existing staff, and a reliance on support contractors to fill some voids.”

Now I realize that the size of the workforce isn’t a reflection of the government’s powers and that it’s the government’s powers that worry people the most. Anyone who’s been through a TSA checkpoint knows those fears are far from ungrounded. However, one of the thing that worries me most about the government is its incompetence in so many different areas – and that’s a direct result of not giving it the resources it needs. We want the SEC, the FDIC and other agencies to do a better job policing the financial sector because we have seen what happens otherwise. So all these regulators keep getting additional duties. Yet we don’t give them the resources to do them. States aren’t the only places that get hit with unfunded mandates.

I am well aware that government regulations can be a ridiculous burden on your business. No argument here. We definitely need regulatory overhaul in a lot of ways. We need to have fewer regulations that are also more effective than many now in place. We need to protect and promote public safety without stifling economic growth. And we need regulators who have the capabilities to enforce the rules needed to maintain honest, transparent markets.

You may now start throwing the stones.

(Image courtesy Harold Groven)

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