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Commentary: Need to discuss size and responsibility of government

This article first appeared in the St. Louis Beacon, Sept. 25, 2012 - Mitt Romney’s statement about who depends on the government and who doesn’t raised ire from the left and dismay from the right. Lost in the commotion was actually a valid question: How much should the government provide for its citizens?

The Pew Social Mobility Project survey in 2009 asked people what they thought was essential for success. Ninety-two percent responded that it was hard work. A significant number also thought that the government was a hindrance to achieving economic success. Forty-six percent of the respondents answered that the government impeded mobility than helped it.

Even after the economic ravages of the past several years, the results from a more recent survey did little to change that overall assessment. To deny that the government plays a significant role in our success is to deny the facts.

Our public educational system recognizes the significant spillover effects from having a more educated populace. The increase in knowledge has given us significant improvements in our lives, from healthcare and housing to safer cars and even in the availability of those life-easing amenities that we take for granted, such as microwaves, cell phones and computers. We also benefit from access to public goods such as roads and municipal services, fire and police protection.

Over the past 50 years there has been a growing trend as more and more of us increasingly rely on government programs for income security and medical care. Romney’s distracting comments have misdirected focus from the discussion we should be having. It isn’t whether the government should provide assistance but the extent to which it should.

Even the most conservative thinkers believe in the social safety net. In his classic “The Road to Serfdom,” Friedrich A. Hayek wrote in 1944 that “there can be no question that adequate security against severe deprivation, and the reduction of the avoidable causes of misdirected effort and consequent disappointment, will have to be one of the main goals of public policy.” In the 1960s, Milton Friedman argued in “Capitalism and Freedom” that the government should act to “alleviate poverty; to set, as it were, a floor under the standard of life of every person in the community.”

These are not callous calls for shipping the unfortunate off to the poor house. They are ideas based in the tradition of modern civilization that some social responsibility is required. They also are rooted in the concern that if unchecked, growth in such social systems will adversely affect incentives by reducing individual responsibility. (Why save? I’ll get Social Security when I retire.) They also give rise to unchecked bureaucratic expansion.

Nicholas Eberstadt of the American Enterprise Institute reported in the Wall Street Journal that entitlement payments to individuals, after correcting for inflation and population growth, have increased more than 700 percent since 1960. In 2010, the amount of transfer payments made by all levels of government amounted to more than $2.2 trillion, or roughly the equivalent to $7,200 for every American.

Payments included under the heading of entitlements mainly include Social Security, Medicaid, Medicare, income maintenance and unemployment insurance. And most of the growth over the past 50 years stems from the first three.

Susan Dudley and Melinda Warren of the Weidenbaum Center at Washington University, find that spending for social regulation by federal agencies — excluding homeland security — increased from $1.1 billion in 1960 to $18.8 billion in 2010 after adjusting for inflation. This 17-fold surge in spending reflects the fact that bureaucracies are excellent at creating a niche and expanding. Included in this category are those agencies with the responsibility for consumer health and safety, transportation, workplace, the environment and energy. Today, homeland security accounts for more than 50 percent of the total agency spending.

At some point we should restart the reasoned debate over whether to limit the government’s provision of income security. That or move toward the European model by ever-expanding coverage. For those who champion liberty, the trend from the past half-century suggests we are inexorably moving down the latter path.

As the government controls an ever-increasing share of the economy it will erode the dynamic forces that produced our current standard of living. Look to the erstwhile great economic powers that traded economic security for economic freedom to see our future.

R.W. Hafer is a research professor of economics and finance at Southern Illinois University Edwardsville and a research fellow at the Show-Me Institute, St. Louis.

Rik Hafer is a distinguished research professor in the Department of Economics and Finance at Southern Illinois University Edwardsville and a scholar at the Show-Me Institute.