Introduction

GOLDILOCKS GOVERNMENT

Understanding Government in the 21stCentury

Prof. Colin R. Talbot and Dr. Carole L. Talbot

 

GG

 

The 20thcentury was the century of many things – two world wars, the great depression and multiple recessions and financial crises, fascism, Stalinism, de-colonization, democracy and so on.

This blook* focuses on one aspect of all these “interesting” events  – by the end of the 20thcentury ‘Big’ Government, or what we prefer to call ‘Goldilocks Government’, was the dominant model of government in all advanced capitalist democracies.

(Blook = Blog cum Book)

Before we go any further, why ‘Goldilocks’. We borrow the term not so much directly from the children’s fairy story but from astronomy, or more precisely that branch of astronomy that studies the possibility of life on other worlds.

These scientists coined the term ‘goldilocks zone’ for that area around any star where a planet orbiting within it would have liquid water and other conditions for life because it was neither too hot nor too cold. In other words, where it is “just about right” for life.

Screenshot 2019-02-10 at 18.27.45.png

We use the term “Goldilocks Government” because we believe there is a zone in which government is ‘just right’ for the type of society it governs. We think, from the empirical evidence, there is such a zone – however fuzzily defined – for modern, developed, democratic and pluralistic societies. This book explores that idea.

Let’s start with a striking diagram of the growth of government spending over the ‘long’ 20th century (from the late 19th to the early 21st).  If we look at the “G7” countries (we’ll explain why later) the pattern is striking.

At the start of the 20thcentury ‘general government spending’ (that is all public spending at whatever level of government) was at about 10% of GDP. If we look at the G7[1]group of leading advanced democracies by the end of the 20thcentury the average figure is around 45% of GDP – a more than fourfold increase (Figure1). Notably this growth leveled off at the end of the 20thcentury. We want to suggest that the ‘Goldilocks zone’ for government spending in theses countries now is about 40-45% of GDP, with variations above and below this of maybe 5%?

Figure 1 G7 average Government Spending as a percentage GDP

Screenshot 2019-02-10 at 18.26.38Source: calculated from Tanzi & Schknecht (2000) & OECD (2006 figures)

Nor is this some misleading statistical average. To be sure there were different pathways to becoming Goldilocks Governments and there are substantial differences in just how big ‘Big Government’ is – even just in public spending terms. But the overall pattern is very striking. By end of century all these countries – with very different 20thcentury histories – end up fairly close to the average and in a very different place than they were at the start of the century (Figure2).

Figure 2 G7 Government Spending as a percentage GDP

Screenshot 2019-02-10 at 18.27.22.pngSource: calculated from Tanzi & Schknecht (2000) & OECD (2006 figures)

We will return to these figures in more detail later in the book but for the moment we just want to emphasize just how dramatic this pattern is. Whilst there have been many analyses of the rise of ‘Big Government’ they have, in our view, often been too narrow and/or too academic. We want to be more comprehensive and, we hope, comprehensible to the ordinary reader who wants to make sense of these developments. In the process we hope we challenge some long-held myths about the nature of Big Government.

Some have ploughed well-defined but restricting academic furrows – political economy; welfare economics; politic science; public administration; etc – with very little interchange much less integration between explanations. Even when they have used comparative analysis (e.g. studies of the ‘welfare state’) they have tended to do so from within narrow academic disciplinary confines.

The other weakness is they have often been focused only on one country – the USA and UK being the favorites, but sometimes also the group of Scandinavian social democracies. Studies of ‘Big Government’ in the USA have been especially prominent – somewhat ironically as amongst the leading capitalist democracies US Government has remained at the lower end of “bigness”.

Public spending is, of course, not the only way of measuring the size of government, nor do the headline figures tell how the money is being raised through taxes or spent on services and ‘transfers’. But the overall level of public spending is, we would argue, probably the strongest single indicator of just how big Big Government is.

Other measures of Big Government we will be looking at include the numbers of people (as a proportion of the overall workforce) government organizes, the degree to which government tries to direct what we do, and should not do, through laws and regulations and how it controls and shapes information flows (another often neglected subject).

We have chosen to focus most of our analysis on the seven largest, advanced, democracies that come together under the umbrella of the “G7” – an informal grouping of such countries.

We’ve done this for several reasons.

Firstly, by focusing on these seven countries it makes it easier to make comparisons and tease out both the similarities and important differences between them.

Secondly, the G7 countries are big, really big. Although they include only 11% of the world’s population they account for more than half – 54% – of global GDP.

The main possible alternative was use the OECD grouping of 35 advanced democracies, something which is frequently done.

This however has several drawbacks. The G7 (who are all OECD members) represent the majority of the OECDs economy and population: 75% of GDP and 60% of people. The rest of the OECD – 28 countries – are mainly small and now also include a lot of small, ex-communist, countries with have specific issues that can also distort analysis.

Other groupings of countries such as the EU, the G20, and so on all present even bigger problems for any sort of coherent analysis.

Focusing on the G7 leaves out one notable group to which a lot of attention has been devoted – the strongly social-democratic Scandinavian states (Sweden, Denmark, Norway and Finland). We will look at these as part of our analysis but we would argue that they are clearly ‘outliers’ that can often distort discussions of the size and role for government. No-one can reasonably argue that any of the big G7 countries is moving in a Scandinavian direction. Quite the reverse if anything, it appears that these outliers are now moving, albeit slowly, more in the direction of the G7 countries.

We will draw on these other OECD states, and indeed others such as the so-called “BRICs”[2]in our analysis and our argument will be that these countries and other emerging economies too are mostly moving in the broad direction of becoming more like the G7 in the size and shape of governments role in society and the economy.

The trajectory of the Scandinavians or BRICs towards becoming more like the G& is not meant to imply any simplistic ‘convergence’ thesis. There are important differences within the G7 and these are likely to remain.

Although they are all ‘industrialized’ they did so at different times and rates and some have since arguably “de-industrialized” (but still remain advanced economies).

Although they are all now unified democracies three of the seven (Germany, Italy and Japan) had periods of authoritarian or fascist governments and only three (Canada, GB and USA) remained democracies throughout the past century or so. Germany had a period of fascism followed by division into democratic and communist states. France was occupied.

They also represent some fairly diverse political-institutional set-ups today. We have one presidential system (the USA), one semi-presidential (France) and five parliamentary systems. Three of them are federal states (Canada, Germany and USA) whilst the others are unified.

These differences are of course important, and as we hope to show they account for some of the differences between these seven ‘Big Governments’ in the precise size of government and the configuration of public activities. But that doesn’t detract from the simple fact that put into historical perspective these are all clearly “Big Governments”.

Colin Talbot & Carole Talbot Feb 2019

[1]Canada, France, Germany, Great Britain, Italy, Japan, the United States of America

[2]Brazil, Russia, India, China. Sometimes South Africa is added to this group