martedì 25 ottobre 2016

Does Technology Drive the Growth of Government? Tyler Cowen

Notebook per
Does Technology Drive the Growth of Government?
Tyler Cowen Bryan Caplan
Citation (APA): Caplan, T. C. B. (2013). Does Technology Drive the Growth of Government? [Kindle Android version]. Retrieved from

Parte introduttiva
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Highlights from "Does Technology Drive the Growth of Government?" Bryan Caplan
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start with what Gordon Tullock (1994) has cal ed the paradox of government growth. Before the late nineteenth century, government was a very smal percentage of gross domestic product in most Western countries, typical y no more than five percent. In most cases this state of affairs had persisted for wel over a century, often for many centuries. The twentieth century, however, saw the growth of governments, across the Western world, to forty or fifty percent of gross domestic product... I'd like to address the key question of why limited government and free markets have so fal en out of favor.
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Inadequacies of public choice theories of government growth: Public choice analysis has generated many theories of why government grows and why that growth is inevitable. Special interest groups, voter ignorance, and the pressures of war al are cited in this context. Those theories, however, at best explain the twentieth century, rather than the historical pattern more general y. Until the late nineteenth century, governments were not growing very rapidly.
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Inadequacies of ideological theories of government growth: According to this claim, the philosophy of classical liberalism declined in the mid- to late nineteenth century. This may be attributed to the rise of socialist doctrine, internal contradictions in the classical liberal position, the rise of democracy, or perhaps the rise of a professional intel ectual class. While the ideology hypothesis has merit, it is unlikely to provide a final answer to the Tullock paradox.
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Does Technology Drive The Growth of Government? Tyler Cowen
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I. Introduction
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Why is government so large in the Western world?
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start with what Gordon Tullock (1994) has called the paradox of government growth.
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Before the late nineteenth century, government was a very small percentage of gross domestic product
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no more than five percent.
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The twentieth century, however, saw the growth of governments,
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to forty or fifty percent
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regulatory burden,
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Extant hypotheses
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historically contingent explanations fail
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complements, not substitutes.
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Public choice analysis
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Special interest groups, voter ignorance,
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Those theories, however, at best explain the twentieth 2 century, rather than the historical pattern more generally. Until the late nineteenth century, governments were not growing very rapidly. The standard public choice accounts do not contain enough institutional differentiation to account for no government growth in one period and rapid government growth in another period. Some structural shift occurred in the late nineteenth
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inquiry focuses on ideology
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intellectual climate.
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philosophy of classical liberalism declined
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rise of socialist doctrine,
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rise of a professional intellectual class.
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Ideologies changed, in part, because intellectuals perceived a benefit to promoting ideas of larger government, rather than promoting classical liberalism. It remains necessary to identify the change in social conditions that drove this trend.1
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Some authors attribute the rapid governmental growth of the twentieth century to war,
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international conflict,
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crisis more generally.
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Robert Higgs
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Crisis in Leviathan,
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ratchet effect.
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For instance, state activity invariably expands in wartime, if only to fight the war. Taxes increase, resources are conscripted, and economic controls are implemented. When the war is over, some of these extensions of state power remain in place. The twentieth century, of course, has seen the two bloodiest and most costly wars in history, the two World Wars.
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Many changed their minds sincerely,
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objective conditions caused socialists to win larger audiences
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The example of Sweden is instructive. Sweden avoided both World Wars, and had a relatively mild depression in the 1930s, but has one of the largest governments, relative to the size of its economy, in the developed world. The war hypothesis also does not explain all of the chronology of observed growth. Many Western countries were well on a path towards larger government before the First World War. And the 1970s were a significant period for government growth in many nations, despite the prosperity and relative calm of the 1960s.
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third answer
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expansion of the voter franchise.
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In the early nineteenth century,
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rights typically were restricted
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wealthy male landowners.
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Under this hypothesis, widespread voting was the central force behind the move to larger government. The small governments of the early nineteenth century are portrayed as the tools of ruling elites. But once the franchise was extended, the new voters demanded welfare state programs, which account for the bulk of government expenditure.2
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First, non-democratic regimes, such as Franco's Spain, illustrate similar patterns of government 2 Along these lines, Husted and Kenny (1997a), looking at data from state governments, find that the elimination of poll taxes and literacy tests leads to higher turnout and higher welfare spending. Lott and Kenny (1999) find that women’s suffrage had some role in promoting greater government expenditures.
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Second, much of the Western world was fully democratized by the 1920s. Most governmental growth comes well after that date, and some of it, such as Bismarck’s Germany, comes well before that time. Third, and most fundamentally, white male property owners today do not favor extremely small government, though they do tend to be more economically conservative than female voters.
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there clearly must be something to the voter hypothesis.
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If all or most voters, circa 2009, wanted their government to be five percent of gross domestic product, some candidate would run on that platform and win.
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Democratic government cannot grow large, and stay large, against the express wishes of a substantial majority of the population.
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I therefore start with the notion of an ongoing demand for big government,
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I then consider why twentieth century technology might have changed supply-side factors
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I do not consider this technology hypothesis to be a monocausal theory
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the missing element
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II. The Role of Technology
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The late nineteenth century and early twentieth century saw a fundamental change in the production technology for large government,
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communications, organization, and coordination.
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Western countries all have had access to (roughly) the same technologies, and at roughly the same points in time.
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Which technology?
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period from 1880 to 1940
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electricity, automobiles, airplanes, household appliances, the telephone, vastly cheaper power, industrialism, mass production, and radio,
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railroad was not new but expanded greatly
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A bit later the 1950s brought television
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The historian S.E. Finer (1997a, 1997b) first suggested that technology was behind the rise of big government, though he did not consider this claim in the context of public choice issues. Bradford DeLong’s unpublished manuscript, “Slouching Towards Utopia,” sometimes available on the web in various parts, appears to cover related themes.
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Transportation has made it possible to extend the reach of modern bureaucracy across geographic space. The railroad allowed the North to defeat the South in the Civil War. More generally, cheap transportation increased the reach and power of a central Federal government. Federal employees, police, and armies can travel to all parts of the country with relative ease. Transportation allows published bureaucratic dictates to be distributed and shipped at relatively low expense.
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organized groups to lobby Washington more easily.
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Individuals could now go to Washington,
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increased national consciousness
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think in terms of a large national government
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Telegraphs and Telephones
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possible for a political center to communicate with a periphery at much lower cost,
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"knit the nation together,"
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Industrial capital and mass production
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Factories, smokestacks, power plants, and assembly lines are difficult to move,
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large and immobile assets provided a tempting target for taxation and regulation.
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When most of the population lives from small-scale subsistence farming, and takes income in-kind, it is much harder both to levy taxes and put the in-kind revenue to good use.
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Radio and television
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opportunity to hear their leaders
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tap into the human desire for stories and myths.
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Franklin Delano Roosevelt
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totalitarian movements of the twentieth century could not have mobilized
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Television entered American homes in the 1950s.
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consumer protection movement,
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environmental movement.
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politics based around simple and emotional issues
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discourages analysis, and discourages an emphasis on unseen “opportunity costs”
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focus on national rather than local
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Communications and management
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large-scale bureaucracy
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advances in recording, processing, manipulating, and communicating
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Welfare states could not have arisen unless central governments had means of identifying, tracking, and monitoring potential recipients.
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doctrines of "scientific management"
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We take the practices of modern bureaucracy for granted, but most of them are quite recent.
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British government did not organize its paper records in terms of "files" until 1868 (Finer 1997b, p.1617).
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Tax-collecting technologies
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Most of the technological advances described above make it easier for governments to collect taxes,
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a wealthier economy will have many citizens working at legitimate, regular businesses with a distinct physical locale.
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methods of accounting and reporting.
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The growth of the publicly owned, limited liability corporation, also helped create the systematic records that make corporate taxation possible. Collecting taxes is easier in an economically advanced environment.
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Growing wealth
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Government is to some extent a luxury good.
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Wealth above subsistence allows people to vote to assuage their consciences, even if the collective result of such votes destroys wealth and opportunity (Brennan and Lomasky 1993).
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disproportionately greater demand for government
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because they can afford them.
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thought experiment.
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Assume that we had no cars, no trucks, no planes, no telephones, no TV or radio, and no rail network. Of course we would all be much poorer. But how large could government be? Government might take on more characteristics of a petty tyrant, but we would not expect to find the modern administrative state, commanding forty to fifty percent of gross domestic product in the developed nations, and reaching into the lives of every individual daily.
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timing of these innovations.
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The lag between technology and governmental growth is not a very long one. The technologies discussed above all had 10 slightly different rates of arrival and dissemination, but came clustered in the same general period. With the exception of the railroads and the telegraph (both coming into widespread use in the mid-nineteenth century), none predated the late nineteenth century, exactly the time when governmental growth gets underway in most parts of the West.
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1920s and 1930s,
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The corporate analogy
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hypothesis predicts that other organizations
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comparable expansion
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This is exactly what we observe. Prior to the American railroads, which arose in the middle of the nineteenth century, private business corporations were not typically very large. The costs of control and large-scale organization were simply too high and no single business had a truly national reach.
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Following the railroads, large corporations arose in steel, oil, and later automobiles, to name a few examples. The United States Steel Corporation was the largest of the new behemoths. The J.P. Morgan banking syndicate created the company in 1901, through a 4 On the rail numbers, see Warren (1996, p.2). On the growth of large rail companies, see Chandler (1965). 11 merger of numerous smaller firms. The new company owned 156 major factories and employed 168,000 workers. The capitalization was $1.4 billion, an immense sum for the time,
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Merger waves
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Other very large companies followed, including General Electric, National Biscuit Company (Nabisco), American Can Company, Eastman Kodak, U.S. Rubber (later Uniroyal), and AT&T, among others.
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Large corporations and large governments have common technological roots.
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corporations grow large before government
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private firms are more adept at adopting new technologies
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History of governments
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The technology hypothesis also finds support from a broader swathe of human history.
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Consider a society of hunter-gatherers, as we still find in the Pygmies of Central Africa. Under some interpretations Pygmy society has a kind of anarchy. The reason for this state of affairs is obvious. It is not due to the Pygmy electoral system, Pygmy ideology, or the infrequency of Pygmy war. The Pygmies simply do not have any large-scale formal institutions of any kind. A typical Pygmy family (at least those who continue to live a traditional Pygmy existence; there are migrants to other cultures) will not own any more than its members can carry on their collective backs, when moving from hunting camp to hunting camp. Given this low level of technology, big government, for the Pygmies, simply is not an option.
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advent of writing, arithmetic,
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large-scale cities
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3500 B.C.
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Bureaucracy suddenly became possible,
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Sumerian bureaucracy made extensive use of files, records, and archives,
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The Persian Empire
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Herodotus cited it as an example of tyranny, relative to the liberty of the Greek city-states.
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technology limited its daily control over the lives
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It took a traveler 67.5 days to cross the empire,
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The Persians therefore governed through a simple formula, as explained by Finer (1997a, pp.297-8): “[They] set themselves the most limited objectives possible, short of losing control: in brief, to 13 provide an overarching structure of authority throughout the entire territory which confined itself to two aims only: tribute and obedience. Otherwise nothing.”
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most totalitarian
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relied heavily on bureaucracy, formal taxation, and centralized record keeping.
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Nile ran through most of the Egyptian kingdoms and served as a highway,
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the best communications system of the ancient world,
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strongest tyrannies.6
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"For thousands of years mankind had no large-scale empires or bureaucracies. Suddenly government became much larger in Sumeria, Egypt, and other locales, and has stayed large." While our historical understanding of this period is incomplete, new technologies appear to have been central to the growth of empire in that time. The same advances that boosted living standards also boosted centralized rule.
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centuries to follow
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many tyrannies
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none of these regimes had the technology
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Historian Jean Dunbabin
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"nobody was governed before the late nineteenth Century."
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Imperial China
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ideology was highly statist
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Finer (1997a, pp.73-4)
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“In principle the emperor knew no substantive or procedural limits to his authority, and the localities, down to the 14 villages, were supposedly completely controlled and directed from his palace.” In reality, however, the reach of the emperor was quite modest. Finer (1997a, p.73) tells us that in Imperial China “the scope of the central government was, of course, very much narrower than in our own day.”
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Greek city-states, were small-scale tyrannies.
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The ruling party or parties would control many aspects of city life, political, economic, or otherwise, but only on a small scale. In other words, the rule of government could be highly intensive, but it was not typically very extensive.
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Larger-scale empires were mechanisms for extracting tribute rather than well-honed sources of detailed rule.
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central set of rulers
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Mongol or Aztec
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the reach of those central rulers was limited by modern standards.
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Troops were sent when tribute was not paid,
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They could not issue, communicate, and enforce the kind of detailed laws and regulations that emanate from Western governments today. So for much of recorded human history we had a combination of oppressive local governments, on a small scale geographically, combined with the payment of tribute to an external central ruler.7
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slavery is the greatest tyranny we find,
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This institution came before the advent of big government.
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primary enforcement mechanism was local,
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Government sanctioned a system of private violence and oppression, but the government of that time did not have the reach or the machinery to run a full-scale slave economy.
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Today’s low-technology countries, the poorer ones,
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These governments may be highly corrupt and destructive, but they do not typically command
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do not exercise direct and daily control
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Per capita income ranges around $400, literacy rates run about fifteen percent, and life expectancy barely exceeds forty. The rate of malaria infection is almost one hundred percent.
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Haitian government, if that word can even be used, is little more than a group of thugs.
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twenty percentage
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Haitian politicians are brutal and corrupt, but they do not have the power to control most of the country.
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low level of technology.
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Most parts of the country have neither electricity nor running water.
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Few people have cars.
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“oral culture,”
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relies very little on newspapers
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Haitian countryside lives in a state of virtual anarchy
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Unlike most African polities, which stand closer to Haiti, Botswana has democratic government, a semblance of rule of law, and a developed market economy.
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government that stands at about forty percent of measured gross domestic product,
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III. Implications for reform
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Is large government inevitable in the developed countries?
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immediate reasons why big government is hard to reverse,
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We could make government smaller by throwing away modern technology, but that is hardly a desirable
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technology hypothesis
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necessary conditions rather than sufficient conditions.
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Those technologies made mass culture possible and in the realm of politics that mass culture translated into fascism. Only after bitter experience did fascist ideas become less popular and social and political norms subsequently evolved to protect electorates against the fascist temptation. In any case, these examples raise the question of whether we might see a subsequent evolution of institutions today, reversing how mass media and technology have shaped our politics.
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Earlier times probably had no greater love of liberty than does the present.
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we should be skeptical of plans to recreate the historical or intellectual conditions behind "classical liberalism,"
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when we examine the broader historical picture, big government has been one result of a more general increase in wealth and freedom.
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a simplistic “liberty vs. power” story is unlikely to mirror reality
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brought us both more liberty and more power
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recent job growth has been concentrated in the sectors of health care, education, and government itself.
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Future technologies?
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often hear it argued that new technologies will bring about greater possibilities for freedom.
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on-line anonymity,
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genetic engineering
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Others argue that greater competition across governments has brought greater freedom
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how freer capital movements impose discipline on governments and force them to institute better policies.
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Such hypotheses, however, do not find support in the data.
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small open economies tend to be more interventionist rather than freer (Rodrik 1998).
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The more open the economy, the more risk that individuals face from the perturbations of larger world markets. These citizens then tend to favor more government intervention, not less, to protect themselves against those risks.
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Global markets have punished many poorer countries, such as Argentina or Indonesia, for their bad interventionist policies. Often the end result is more government intervention, not less.
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Canada is a more “open” economy than is the United States, yet it typically has greater government intervention and higher levels of government spending.
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Nordic economies are both very open and have lots of government spending,