Thursday, February 25, 2010

Does Big Government Lead to Smaller Government?

Greg, a loyal reader,, emails me this query:

I live near Chicago Illinois. It must be one of the least libertarian places in the US. Chicago is famous for its preposterously large (and horrendously run) government. All this government has created very large operating deficits for the city, county and state. The government has gotten so big and burdensome that Chicago has had to think creatively to solve its debt problems.

Here's my dilemma: To solve their budget problems, Chicago has ironically been at the leading edge of some very libertarian-friendly policies.

For example, the city became one of the first municipalities to privatize a major tollway (the Skyway)... and is now trying to privatize a major airport (Midway). Chicago also privatized its parking meter operations. With that privatization, parking rates rose to a more competitive and unsubsidized rate. This deal has been criticized - but now more parking spaces are available and the company that runs the meters has upgraded all the facilities so that now people no longer need 500 quarters to feed the meters... you can pay with cash, credit card, etc.

The obvious paradox is that as government gets worse (and budgets get bigger), the city has resorted to more libertarian-friendly options. So what's the hopeful libertarian to do?
So does this mean that Frankin Roosevelt, Lyndon Johnson, George W. Bush, and Barack Obama are big time libertarians?

33 comments:

Jason said...

Oh that's rich! Government gets so big that it has no choice but to go libertarian. In Chicago of all places!

Maybe there are reasons for "hope and change"!

happyjuggler0 said...

The ultimate in big government was Communism. Today the former communist countries are running some of the most economically libertarian countries in the world, especially compared to their neighbors.

Of course there are some former communist countries that still have poorly run economies; Ukraine comes to mind. But looking at income tax rates for example, and Eastern/Central Europe runs rings around Western Europe. Not only do they have low tax rates (relative to developed countries) on both personal income and corporate income, but they almost all have flat tax rates, which make for both less economic distortion as well as disable the divide and conquer strategy that big government types love to use to ratchet up taxes, and hence spending.

Stephen MacLean said...

This may be slightly tangential to the argument under discussion, but I was intrigued by Bruce Bartlett's discussion 'On Starving the Beast'--of forcing the inevitability of spending cuts through the fiscal constraints of tax cuts--and the link he provided for his larger study of the phenomenon and its failures (which goes some way to arguing that in the first instance, bigger government does not lead to smaller government).

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