Small Government Proponents are Apparently Getting Their Wish

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For those Americans who have been clamoring over the past several years for a smaller government, it looks as though you’ve finally been granted your wish. Well, in terms of a body count, anyway.

The Wall Street Journal has dug into the most recent employment report numbers released every month, and has discovered that as the economy as a whole continues to add new jobs across the spectrum, there’s only one job sector that is actually shrinking: Employees of the federal government. That’s right, the federal government now employs the least amount of people than it has at any time since the 1960s, with a total current figure of just over 2.7 million employees. On top of that, the government’s share of civilian employment in the workforce is also the lowest it’s been since World War II.

Keep in mind that these are federal government employees and that there has been a hiring boom in state and local governments. According to WSJ, state governments currently employ around twice as many people as the federal government, and the numbers have grown from a total of around 4 million in the 1950s to around 14 million today. All told, 15.7% of the American workforce is on the payroll of some governmental body. With the exception of a short period in 2000, that is the smallest that figure has been in nearly five decades.

Again, this might be welcome news to many who feel that the government could definitely use some downsizing, the issue is that the benefits of a smaller workforce — i.e., a reduction in spending and overreach — are not likely to materialize as a result.

The government may not be employing as many warm-blooded bodies on its payroll as it once did, but that hasn’t stopped it from continuing to spend like crazy, or cut back in any meaningful way. Sure, there have been a few exceptions, such as the sequester of 2013, but that hasn’t really helped reign in the hemorrhaging of taxpayer funds. According to figures from the Congressional Budget Office, the total budget deficit for the 2014 fiscal year is expected to be $492 billion, or 2.8% of the nation’s GDP. That’s a pretty big shortfall, but it is still better than 2013, when the budget deficit was at 4.1% of total GDP, and miles ahead of 2009, when it was at 9.8%.

So, while the number of bodies on government payrolls are down, it appears that spending — while still wildly out of control, by many counts — is coming down in increments as well. The issue is that there are a small handful of areas where the great majority of government spending goes toward, and almost nobody is willing to look at slashing those expenditures. The two biggest of which — entitlement programs and defense spending — are often heavily supported by those same people who typically want to see the government reduce its size.

Another thing to take into account is whether or not a smaller government workforce actually means that we are seeing a smaller government. The argument could be made that the overall economy, which tallied up at $16.8 trillion by The World Bank’s calculations, is as big as ever and still growing, all the while doing it with less manpower. As automation and technology make businesses more efficient and less-reliant on humans, it could easily be said that the government is doing the same. In other words, organizations (including the government) are growing with fewer people — doing more with less.

Does this mean we actually are seeing smaller government? Is it at least good news for people want more localized decision-making? The answer to the second question seems to be yes, especially considering the growth of local and state governments in comparison to the evident contraction of the federal government. The first part, however, is a bit more ambiguous.

Bruce Bennett/Getty Images

Bruce Bennett/Getty Images

The idea behind wanting a smaller government is rather simple: If there is less government intrusion into the free market and our personal lives, freedom and commerce should expand, and business should run more efficiently. While almost everyone agrees that there is still a place for a regulatory body to enforce laws and retain order, it’s not hard to argue that the government does overreach its boundaries — by collecting everyone’s phone calls, regulating what substances people can or cannot consume, etc.

President Obama himself has been mindful of striking the correct balance in terms of the government’s size, even bringing it up during his last State of the Union Address, “For several years now, this town has been consumed by a rancorous argument over the proper size of the federal government.  It’s an important debate – one that dates back to our very founding.”

But actually putting your finger on exactly how big the government is, is incredibly difficult. Spending is part of it, and percentage of GDP as well, but the state is pretty much entwined into almost everything. Businesses survive off of government contracts, for example, and getting a grasp on how pervasive that is in society is difficult all on its own. And there have been studies that have shown that smaller government does lead to more positive social outcomes. One such study, from Livio Di Matteo of the Fraser Institute, came to just such a conclusion.

“A survey of the literature shows that numerous studies document a negative empirical relationship between government size and economic growth rates. As well, there seems to be an association between smaller public sectors and greater efficiency in public service provision, as well as better performance outcomes,” the study says.

A lot of people probably won’t deny Di Matteo’s findings, and there are plenty of policymakers in our current government doing what they can to reduce its size. The issue has been that by doing so, they have rendered the entire body ineffective, and even hindered economic progress at the same time. But if Obama actually is reducing the size of the government payroll, then why has he come under such fierce resistance at every turn?

We’ll have to wait and see how it all plays out. But the government payroll has shrunk, and that’s something that even conservatives can likely get behind. The question that still lingers is whether or not a reduction in bodies on the payroll is the same thing as reducing the overall size of the government.

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