I have received a couple emails from different people criticizing me, for lack of a better term, because I fail to give a nice clean version of what I think Government should do as far as policy is concerned. Do I believe in small government, big, free trade or protectionism, do I believe in social programs etc. Let me first start by saying that I have not really blogged about this kind of stuff because explaining government policy is not my main concern as a studying economics student. At the moment, I am much more interested in ‘how’ to think about economics than ‘what’ to think, this is to say, I am interested in methodological issues at the moment and I want to expand those ideas to critique more of the neoclassical economics that we see today. Another reason why I have refrained from explicitly expressing my views on the topic is that I only generally know what I think government should do. I really do not have an ideal amount of government I want, and ideally, what programs I see my ideal government having. But because I have been asked to say something about my thoughts on government, I will express my general views on government.
First off, I believe a government is necessary. I am not an anarchist or an anti-statist and I do think it is really hard to justify that position. Sure, they can point to certain points in history of societies where they thought it was anarchist with some capitalistic aspects (and we can see some of the failures, even in their own literature (look at the conclusion of ‘Not So Wild Wild West‘)) , but what of modern times where we have complex financial systems? It seems like these anarcho types ignore this capitalistic aspect of the economy when theorizing their anarcho society. I leave what I have to say about anarcho types at this, for it is not the purpose of this post to critique anarcho types.
So what policies do I believe a government should pursue? I do agree that in a recession, a government needs to spend and decrease taxes. How much or how little of each, I do not know. At the same time though, I do think in all times, whether recession or not, to cut inefficient government programs. I believe in this because I do not believe in creating programs because the program in itself creates jobs, I believe in programs because of the possibility that it will benefit society.
For example, one of my greatest influences is my grandfather, who worked for social security for decades. During the Clinton administration, there was some type of bill that basically forced government programs to hire certain unemployed people, like low income people or former Armed Forces people. Well many of those new people he hired made his social security office more inefficient because most of these people did not do anything, and my grandpa, as a head, couldn’t fire these people, as it was very difficult to fire people that got jobs because of this bill. The only thing he could do was to tell these people to stay out of the way and stay in their cubicle. So while we did increase employment here, these newly employed made the office less efficient and the end result was a waste of government money because they were paying these people for doing nothing! This is wrong, in my opinion and we cannot just increase the size of social programs because we need to increase employment.
Another example of absurd social program polices is section 8 housing, especially in Dallas, which is where I am from. I was raised in what I consider lower middle class. I lived ok but I lived in a one bedroom/one study apartment with my mother in Dallas. I really cannot say we lived paycheck to paycheck, since we had some money to spare for some entertainment on occasions, but we lived close to it. What always angered me though were the section 8 houses a few blocks down. Most, if not all, these places had relatively new renovations and the spaces were huge (in Dallas there are several two story houses/town homes that are part of section 8). This to me, is absurd. Here is my mother and me, both working and me going to school too, and not part of social programs where the government paid certain stuff for us (aside for my Pell Grant), and we lived in a one bedroom apartment, while there are people across the street that may not have jobs (highly possible actually), are not tax payers, and just brings property value down and crime up and at the same time, get nice housing paid for by government.
I am not saying I consider these programs to be illegitimate, but that there needs to be some restructuring in these programs. Take the section 8 housing for example,… do these people really need two story houses and newly renovated equipment, or just a basic place to live? Benefits shouldn’t increase because of lack of responsibility, this is to say for example, one should receive a bigger home or more money because they up’d their family size by one. Housing provided by the government is not so poor people can live in luxury, it is so they can have basic shelter.
How big would I like to see government? I don’t know. I generally see myself as a classical liberal, thus implying that I believe in a limited government but how limited, I do not know. Obviously, I do not want a government so limited that it cannot engage in policies to help in recession or the marketplace. That said though, I put the same amount of uncertainty to the government as I do in markets. Post keynesians, at least most of them, agree that governments reduce uncertainty, but I do not see that as true, at least in a theoretical perspective. If we look at the markets, we both can agree that there is ontological uncertainty and is non-ergodic. But to me anyway, this applies to governments as well, thus they both have similar problems because of reality. And thus, I do not see how governments limit uncertainty, especially in a world of change. The post Keynesians essentially fall into the same trap as (some) Austrians when they claim that increase of knowledge = less uncertainty. (more on this by a ‘post’ austrian, here and here )
One thing I completely agree with libertarians is how government should treat social issues. Stuff like marriage, what kind of dog breed you can own, what you can or cannot see on the internet, abortions, requirements for adoptions, etc. are stuff that government shouldn’t get involved in. And if there are things that people do not like about the government, they should have the right to protest about it and practice civil disobedience (though there can be limits on civil disobedience. )
So hopefully by this, at least some of you will get where I am coming from. Again, I tried not to put too much detail into this because I do not really have a set in stone ideal picture of government, nor is it currently something that I am putting a lot of time into because as I said, I want to discuss methodological issues than policies, this of course is not to say that I wont do research on policies, it is just that I wont do it at this time.