Scoping the Size: How Big Should Government Be?

Colin TalbotProfessor of GovernmentUniversity of Manchester

How can we measure Government?

• Treasure

• Organisation

• Authority

• Nodality

Christopher Hood’s “NATO” model of ‘tools of government’

Problems of Comparison

• Gotten a lot easier in recent years– Big efforts from OECD, UN, etc

• But still major issues about

• definitions– E.g. “civil service”

• And reliability

Treasure

• For OECD countries, general government expenditure ranges from about 35% (e.g. USA) to 55% (e.g. Sweden) of GDP

• A couple of outliers at lower end >30% – e.g. Korea, Mexico)

• Average is about 42%

• Despite all the reform efforts of last 30 years, hasn’t changed very much

UK, USA, Swedengovernment spending as % GDP in the 20th century

Are emerging countries going to follow same

trajectory?

UK public spending as % GDP

Av. 42.6% +/-

4%

Sources: HM Treasury PESA and OBR

What do we spend it on?

Spending as %GDP (2006)

Source: OECD

What?

• Big variations:

• Social Protection: Korea 3.7% GDP, Sweden 22.7%

• Defence: USA 4.3%; UK 2.5%; Germany 1.1%

• And surprises:• Health: UK 7.1%; USA 7.7%

• Expenditures on health and education generally similar

Organisation

• Public employment (as % of workforce) ranges from about 10% to about 25% in OECD countries

• Again, this has changed very little over past 3 decades.

• Interesting variations: e.g. Norway spends 40% GDP with 28% workforce; UK 43% and 15%.

What is this?

PompeiiThis is the almost 2,000 year old ‘mensa ponderaria’ or the public weights and measures table in Pompeii. This was used to check the accuracy of the measures of the merchants who sold their products in the forum.

The weights and measures table has 9 holes and these can be seen in the picture. Each hole was equal to a measure and the merchants in Pompeii had to abide by these measures. Each of these measuring holes had a perforated bottom so that the product being measured would pass through. They would pass through to be collected and the trays that did this can be seen in the picture below the table.

The weights and measures table was first used by the Oscans before the Romans came to Pompeii. When the Romans arrived they modified the measures and this is recorded in an inscription which can be seen in the picture on the front of the table. The inscription reads:

'Aulus Clodius Flaccus son of Aulus, Numerius Arcaeus Arellianus son of Numerius, Duovirs with the power of law, gave this by the decree of the Decurians for the measures to be equaled out.'

Authority• Measuring the extent of government “authority” – usually

seen in the degree of regulation – is very problematic

• It has to include formal authority – laws, regulation, etc, as well as informal authority

• Most analysts would agree it has grown over the 20th century

• But there have also been wide variations.

Nodality

• Is about the state’s central role in information processing

• “Statistics” derived from ‘state-istics’ – gathering social and economic information about the state and its inhabitants

• Includes things like patents, research, libraries, etc• Like the other three, undoubtedly grew massively

during the 20th C.

Measuring Leviathan?

Government

Nodality OrganisationAuthorityTreasure

High

Low

High

Low

High

Low

High

Low

Liberal democratic states

Government

Nodality OrganisationAuthorityTreasure

High

Low

High

Low

High

Low

High

Low

Social democratic states

Government

Nodality OrganisationAuthorityTreasure

High

Low

High

Low

High

Low

High

Low

Developmental states

Government

Nodality OrganisationAuthorityTreasure

High

Low

High

Low

High

Low

High

Low

So, how big should government be?• Depends on: Need, History and Choice

• Stage of socio-economic development (need)– Is there a ‘Goldilocks’ zone related to stage of development?

• Political culture and institutions (history – past choices)

• Political choices (choice)