Excessive government: Is it time for Labour to rein it in?

Dr Eric Crampton
The Dominion Post
5 September, 2022

Joseph Heller invented one of literature’s better paradoxes. In his classic World War II novel, Catch-22, only a madman would be willing to fly nearly suicidal missions. But objecting to the danger was a clear sign of sanity. Those who objected were sane enough to be forced to continue on. Those who did not were probably mad, but because they did not object, nobody would stop them from flying.

It was some catch, that Catch-22.

Economist Dwight Lee found an even better one.

Two decades ago, Lee developed a paradoxical defence of excessive government. It seems mad: if it is excessive, how could one praise it?

But Lee was clever.

Classical liberals recommend tight constraints on the state because they recognise the dangers of excessive government. Unchecked, governments trammel on rights and blunder into areas where they have every chance of doing more harm than good. If government is prone to error, misadventure and even brutality, then it needs to be bound.

If a government cannot be bound, it will be excessive.

If it can be bound, there is still a problem. Some things might be best entrusted with government, if government deserves that trust. If it is possible to bind government to doing only the small set of things that classical liberals might like, perhaps it could also be trusted to do a few more things as well. Because it is bound, it would not get out of hand.

So, in Lee’s argument, no defensible minimalist government is possible. If you can have it, you won’t want it because a larger government would then be better. It’s when it’s impossible that it is most needed.

There then is only excessive government.

It’s a problem. New Zealand’s government shows every sign that it’s in need of some restraint, and no sign that it’s willing to consider any.

Last week, essayist Danyl Mclauchlan tallied the symptoms at The Spinoff.

The health system is short some 4000 nurses, but foreign nurses aren’t made a priority for automatic residence so they’re leaving.

While the health system is falling apart, an $11 billion* project attempts to restructure the bureaucracy.

The polytechnics, which had been working tolerably well, are undergoing a $200 million merger that’s threatening to ruin the sector.

Business cases for Let’s Get Wellington Moving cost over $100 million before anyone considers building anything.

Centralising the fire service has brought high cost, equipment failure, and strikes.

An initiative to fund counselling for school students seems on track to deliver less than 10% of what was promised.

As Mclauchaln asked, “Aren’t we seeing an erosion in state capacity alongside all this centralisation and expansion? Aren’t outcomes in health, education and welfare trending down rather than up? What’s going on?”

Mclauchlan wondered whether the state has been captured by those who do well out of constant restructurings – the permanent managerial class who need not care about whether anything in government actually works, only that they get to produce reports on the next wave of mergers and de-mergers.

I wonder if it’s something simpler. Something a bit more in line with Lee’s paradox of excessive government.

Kiwis simply got used to having a state that was really rather competent within a small range of functions and bet that it could deliver a lot more without the whole thing falling apart.

Under Helen Clark’s Labour government, the bureaus simply worked. Our family moved to New Zealand in 2003 and every interaction we had with the state, from immigration to driver’s licenses and tax, just worked in ways it did not elsewhere. The apparatus of the state was reasonably competent.

The same held true under Key’s National government. Finance Minister English added new measures to help ensure continued competence and delivery. National set performance benchmarks for Ministries and, under the ‘investment approach’, tested policies before implementing them to see whether they would deliver long-term benefit.

Whether one agreed with overall policy directions, ministries delivered government policy objectives tolerably well. Stuff-ups tended to be one-offs within particular agencies rather than systematic across all agencies at once.

Lee warned that no desirable minimal government is possible: if the minimal government is possible, people will want more than that. Governments prior to 2017 were far from minimal, but they recognised that state capacity and capabilities have limits. Their aspirations had at least some anchoring in reality.

The failures of letting government aspirations become unanchored from reality are becoming difficult to ignore. Doing a more limited number of things well might just be better than failing at many things simultaneously.

I worry about the flipside of Dwight Lee’s Catch-22. If a somewhat more constrained state now seems more desirable, is it possible to get back to there from where we are now?

Excessive government. It’s some catch.



* The $11.1b figure cited by Mclauchlan at The Spinoff included operational expenditures that would have occurred regardless of the restructuring. Budget 2022 overview documents had also cited $11.1 billion for “Reforming the health system”, but had also rolled together new initiatives including the health system restructuring with ongoing programmes. The cost of the reform programme, on its own, would need to be tallied across multiple years of appropriations, but will be much lower than $11 billion.

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