Although it is widely believed that persons who oppose big government are sympathetic to large businesses and have no compassion for the little guy, no such logical connection exists. Democratic governments, as the author points out, respond to the interests of large, well-organized, and well-financed groups. Big business learned to induce governments “to further their interests at the sacrifice of average living standards . . . before almost any other interests had organized and learned to play the political game.” Similarly, many regulatory programs exist largely for the benefit of well-organized and well-financed industries, occupational groups, and workers. One significant intended side effect of many occupational and industrial regulatory programs is to fence out low-income and minority businesses and workers.

Mills, who is professor of economics at Princeton, feels that elimination of regulatory programs would improve economic opportunities of low-income and minority businesses and workers. The goal of such reforms. Mills asserts, should be to increase the competitiveness and flexibility of the economy by exposing entrenched interests to competition. He contends that temporarily strong market positions, as reward for valuable innovations, are also self-liquidating—the stronger the market position, the greater the incentive for competitors to supplant it. Only with the help of government coercion can market power be preserved more than the few years it takes for competition to bid it away.

The author advocates thorough reform of government transfer programs which, at the federal level, should be reduced 50 percent in transportation, agriculture, health, housing, energy, and education. Large segments of the Departments of Agriculture, Commerce, Interior, and Labor are shown as tax-financed lobbyists whose function it is to promote joint interests of government employees and private interest groups. Hundreds of state, federal, and local government spending and regulatory programs have payoffs to identifiable constituencies that make the economy neither more efficient nor equitable.

Mills asserts that, from the point of view of welfare economics, it is difficult to disprove that elementary and secondary education should be based on a voucher system. Most expenditures in agriculture are said to be disguised transfers that reduce social efficiency and are devoid of equity. Virtually all housing and energy programs should be abolished and the Departments of Energy and Education eliminated.

Such developments will not happen for reasons that David Stockman discovered and set out in The Triumph of Politics: Why the Reagan Revolution Failed. Politicians, Presidents, voters, including the most ardently conservative politicos as well as the typical go-alongs, do not want it. Mills thinks that even a complete understanding of the harm done by excessive government will not make people change their political behavior. Therefore, a different set of rules by which democracies transform citizens’ interests into government actions is needed. Such rules should restrain private interest groups and government organizations from enlarging government at the expense of the taxpayer, even if it means displeasing wealthy Midwestern landowners living off public bailouts.

Mills recommends a negative income tax, which would allegedly provide stronger incentive for self-help than do present transfer programs and prevent handouts to recipients living better than working taxpayers. Additionally, according to Mills, it would be simple and comprehensible (enough reason of itself to mobilize the legal and accounting professions against it) and would cost about half the present price of transfer programs.

 

[The Burden of Government, by Edwin Mills (Stanford, CA: Hoover Institution) $23.95]