Regardless of where you may view yourself along the political spectrum, there is always a variety of government programs and activities that you either think are not worth the money or should not be the business of government in the first place. Yet, it seems almost impossible to rein in government. It keeps growing and growing in one direction after another.

Over the last several decades a group of economists known as the “Public Choice” theorists have attempted to explain this bias towards growth in government here in America and around the world.

One of the core ideas in their analysis is the frequent pattern of a “concentration of benefits and a diffusion of burdens” resulting from many government programs. The logic of this process was actually explained more than a century ago, in 1896, by the famous Italian economist and sociologist Vilfredo Pareto.

Imagine that in a country of 30 million people it is proposed to tax each citizen one dollar, and then redistribute that $30 million among a special interest group of 30 individuals. Each taxpayer will have one extra dollar taken away from them by the government for the year, while each of the 30 recipients of this wealth transfer will gain an extra one million dollars.

Pareto suggested that the 30 recipients will jointly have a strong incentive to lobby, influence, and even corruptly “buy” the votes of the politicians able to pass this redistributive legislation. On the other hand, each individual taxpayer will have little incentive to spend the time and effort to counter-lobby, influence, and petition members of the legislature merely to, respectively, save one dollar off his or her tax bill.

To see the cogency of this argument, let’s look at a part of the U.S. federal government’s budget. For the current fiscal year that ends in October 2008, the federal government is budgeted to spend a total of $2.931 trillion. The government plans to collect $2.521 trillion in taxes, with the difference of $410 billion being the projected federal budget deficit.

With a population of around 305 million people, this means that the expected per capita cost of total government spending will be $9,610 for every man, woman and child. But in fact, the number of actual taxpayers in the United States is only 117 million people, according to the Internal Revenue Service. Thus, the average expenditure burden for these 117 million taxpayers will be $26,052.

The following table shows the amounts planned to be spent by some of the federal government’s cabinet-level departments and agencies. The table also shows the per capita cost of these departments and agencies for the entire U.S. population, and the per taxpayer cost of these government activities.

While the average taxpayer will be paying over $26,000 in taxes, the cost of each of these departments and bureaus and the specific line items in each of their budgets will be only a fraction of this overall tax burden.

For example, suppose a “conservative” is critical of the Department of Education, thinking that many of its activities are misplaced, or perhaps that the whole department should be abolished. While the Education Department will be spending over $68 billion this year, the average taxpayer will only shoulder $582 of this expense, or on average only $48.50 in monthly withholding tax, which comes to around $1.60 a day.

In most instances it will be hard to arouse the interest and support among the general taxpaying public to be willing to learn enough about the pros and cons of the actual programs of the Department of Education to make an informed decision. After all even if the Education Department was abolished it would save the average taxpayer less than two dollars a day – assuming taxes were cut by the full amount if enough voters were persuaded to support abolishing this department.

On the other hand, that $68 billion will be concentrated on the incomes and activities of at most several hundreds of thousands of teachers, educators, school administrators and textbook and school-supply providers for whom those federal dollars will represent a sizable portion of their administrative budgets, take-home pays and business profits. The lobbying and voting incentives, therefore, will be heavily on the side of those who see economic and related gains from continuing and increasing federal spending on public education.

Someone on the “liberal” side of the political spectrum might be equally critical of, say, some of the line item spending in the Defense Department budget or on subsidies to some corporate agri-businesses planned by the Department of Agriculture. But the same bias would work in these areas of government activity, as well, in making it difficult to politically create the necessary counter-weights to lobby for the reduction or elimination of these federal programs.

Thus, government tends to grow in many directions in the form of concentrated benefits for special interest groups of all types at the expense of all the citizens and taxpayers who bear the dispersed financial burden that nonetheless adds up to hundreds of billions, indeed trillions, of dollars a year.

Of course, people take an interest in government programs and activities for a variety of ideological, ethical, and “public interest” motives. But nonetheless, part of the incentive for paying attention to political issues is tied to the extent to which individuals expect that they or causes they support may financially gain or lose from what the government might do. And this factor explains a lot about the continuing growth in government.
 

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