Could political distrust lead to small government?

[Restored from NLA site]

Over at his blog, Andrew Leigh asks a question he previously discussed in more detail in a book he co-edited, The Prince’s New Clothes: Why Do Australians Dislike Their Politicians?:

If you???re a classic small-government conservative, rising distrust of politicians is consistent with the Reaganesque ???government isn???t the solution, it???s the problem??? message.

I can see the logic, but it just hasn’t happened. There doesn’t seem to be any relationship between trust in politicians and attitudes on the size of government. For example, in the Roy Morgan series of polls on the ethics and honesty of various occupational groups, politicians have consistently done badly. Last year just 15% of voter rated them highly for ethics and honesty. And would we trust such rogues with our money? Yes! 68% of us would rather the politicians spend the surplus than give it back to us so that we can spend it ourselves.

The Roy Morgan survey is a bit demanding, wanting high or very high ratings. A better question has been asked in the Australian Election Survey, which asks whether people in government are looking after themselves or whether they can be ‘trusted to do the right thing nearly all the time’? With both ‘usually can be trusted’ and ’sometimes can be trusted’ options, in 2004 40% of respondents thought the politicans could at least sometimes be trusted. But that still leaves quite a few people who seemingly think that politicians are unstrustworthy and that they should spend surpluses rather than give them back.

Why has this happened? One theory, which I have advanced in Catallaxy posts that are inaccessible due to their server problems, is that the claimed distrust of politicians is a bit of a pose; a cliched response to questions about trust, but not actually an operational assumption when people think about politics. We can see this in higher trustworthiness ratings for specific politicians than politicians in general, and arguably it is showing up here as well.

Another possibility is implicit in the title of Andrew’s post, ‘ A place called Hope’. Yes, that’s Hope with a capital ‘H’. Perhaps the electorate, like social democrats, want to believe in the possibilities of government, even though it is an endless source of disappointment. It will be better the next time, or if not then the time after, or if not then either, the time after that… Classical liberals are the people who have given up waiting.

A third possibility is that though people do not think much of politicians, the people who deliver the government services that are popular spending items, such as nurses, doctors, school teachers, and police do score highly in ratings of ethics and honesty. So even though many people think that health and education services are getting worse and crime is on the increase, the problem is not the workers in these fields, it is that they don’t have enough money. This takes us back to the question of whether the distrust of politicians is a pose – perhaps they are not trusted much, but they are trusted enough to hand the cash over to people who enjoy high levels of trust.

It’s possible that distrust of politicians is a necessary condition of mass political support for small government (though intellectually it should not be; the problems of government are primarily to do with institutional structures, not the integrity of people within them). But it certainly isn’t a sufficient condition. People need to believe that the government is hopeless, and that there are better practical alternatives. There is no sign that the Australian people have signed up to either proposition.

18 thoughts on “Could political distrust lead to small government?

  1. Unfortunately the answer is no. All my travels this year from China to the Ukraine underscore the fact that no matter how much people distrust their government, this is no precondition for smaller government. I would actually argue the inverse.The more people distrust their government, the bigger government becomes to convince people that government is important and they can actually trust them! If you don’t believe this theory, look at the next government advertisement campaign you see on something like a national smart card.


  2. Andrew, my argument is an ‘all else equal’ one. In my view, the growth of the government sector across the developed world over the past few decades has been driven by factors unrelated to ideology or trust. More technology in the workplace increased demand for education, better medical technology increased demand for healthcare (which in turn made us live longer, which in turn boosted our demand for healthcare). And a rise in crime in the late-1980s led to demands for tougher penalties, and thus the cost of incarceration.

    BTW, capital-H Hope was a Clintonian allusion. He was born in Hope, Arkansas, and used to often say that he still believed in a place called Hope.


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  4. Andrew – Sorry, I missed the Clinton allusion. I agree with those structural factors for the growth in government. But the paper I am writing on the Howard government, which I wrote a little about last week, does suggest that ideology has played a part. Howard has spent up big in areas that fitted with his ideology, but for which there was no compelling need or electoral demand.


  5. One theory … is that the claimed distrust of politicians is a bit of a pose; a cliched response to questions about trust, but not actually an operational assumption when people think about politics … A third possibility is that though people do not think much of politicians, the people who deliver the government services that are popular spending items, such as nurses, doctors, school teachers, and police do score highly in ratings of ethics and honesty.

    Part of this is a general mistrust of those who claim credit for other people’s work, or who noisily draw attention to their contributions while those of others go unrecognised. The teacher who takes your child over the course of a year from below-average to above-average has made more of a contribution to education than the self-seeking person who makes a seven-minute speech and a one-page press release on the subject.

    In terms of the link between trust in politicians and size of government, big-government politicians set themselves up for more of a fall because they necessarily promise more than can be delivered. Matt’s right: another example came with the exponential growth in the German government of the early 1930s after the replacement of small-government Weimar with big-government Nazism.


  6. “People need to believe that the government is hopeless, and that there are better practical alternatives. There is no sign that the Australian people have signed up to either proposition.”

    …precisely because they are, one the whole, pretty smart. Part of it is devil’s advocacy, part of it is that politicians are ultimately more accountable than the free market you are implying could deliver better results. The personal trustworthiness figures could be accounted for by very public announcements politicians must make as part of policy (which, inevitably, get changed once elected). When was the last time a private company was held properly accountable for those kinds of breaches of public trust? We as a populace are confronted daily with politicians lies (on both sides) being exposed, and we’re comfortable that their under enough scrutiny that we can assess their “truthiness” and continue to support them or not.

    However, there is no such guarantee with corporations (i.e. BHP shenanigans over asbestos, AWB corruption,and the worst of the lot, Enron) for whom we rely on the rather less comforting idea that a whistleblower will bring their actions to our attention. I’m certainly not ready to hand healthcare and education over to these kinds of people. I might be convinced to switch (say) the doll to unemployment insurance, but there is no way the cheapest (or most cleverly corrupt) bidder is running my kids school or the only local hospital. Better the devil you know.

    So, better practical alternatives? I think you’ll find it’s easier to start from the facts rather than the conclusion and try to make it fit.


  7. “there is no way the cheapest (or most cleverly corrupt) bidder is running my kids school or the only local hospital. Better the devil you know.”

    What are you talking about? The best run schools and hospitals are NOT run by government, they are private.


  8. David, where is Enron now and how is the AWB share price going? Please remind me the last a government was ejected for breaking a promise or making a decision that harmed its citizens.


  9. “best run schools and hospitals are NOT run by government, they are private”

    That’s an interesting assertion entirely unbackable by any fact. The most *expensive* schools and hospitals are private, it doesn’t mean they are the best run (and it certainly doesn’t mean they are the best). It’s an easy mistake to think that expensive = good, but it isn’t always true.


  10. Rajat, we know AWB share price has tanked and Enron has been broken up. The point I was making was that I am not comfortable with corporations that are allowed to be as corrupt as these running a school or a hospital (are you?). The implicit assumption made by rabid free market types is that the market will fix everything, which obviously is false. There are some part s of society where the motivations of greed are enough to ensure fair outcomes, but education and health are not those places.

    I would remind you that the Keating government was kicked out after they futzed the economy, Australians are pretty good at saying enough is enough (and it can’t be too soon with the incompetent fools who are running the place at the moment).


  11. Well, good can be hard to judge. But we know that parents are willing to pay extra to send their children to private schools, so they must be perceived to be better. And who is better to judge than the parents?


  12. “he implicit assumption made by rabid free market types is that the market will fix everything, ”

    David’s getting too ideological and dogmatic to have a debate with, but I think this is worth picking up on, because it includes one of the most common misunderstandings. The key difference between market and non-market institutions is not that things can go wrong in one and not the other. That can and will occur in either system. The differences are in three areas.

    First, feedback mechanisms. The level of demand and the prices they can get tell producers how valued their goods and services are; that private hospitals and schools can charge much more and attract customers tells them they are doing something that pleases others (though it does not tell them exactly what; that requires further research, such as asking parents directly). Conversely, those that are doing things badly will know about it because they lose customers or have to charge lower prices. Non-market institutions which are monopolies have only the latter mechanism, ‘voice’ in Hirschman’s terminology – people saying what they think is wrong. Hence ongoing discussions in newspapers about curriculum etc.

    Second, incentives to respond. Profit-making entities don’t like losing customers or cutting prices, so they have a strong incentive to find out exactly why things are going wrong and fix them. The financial incentive for government bodies can be the reverse; ie the more people who leave the less work the staff must do and the less money the government will have to spend. This is counteracted by other forces, most notably elections and other forms of political pressure. But this is a very muted incentive for most government services. Elections only happen every 3 or 4 years, while market pressures are constant, and voters have to bundle their opinions on possibly dozens of matters into one or two ballots, whereas in the market they need only concentrate on one matter. If you can’t make yourself an important issue, as universities haven’t been able to do, you’re stuffed.

    Third, capacity to respond. Government power is, quite properly, restrained. We have checks and balances to stop governments misusing their power, but this makes them slow movers. Even simple changes can take months, where legislation is required. In business, CEOS can make many decisions immediately if there is a business need. Because governments try to do so much, there are also attention problems – getting the top people to focus on your issue, when thousands of others are trying to do the same thing. Things take forever. Also, because governments like to have control they set up highly standardised systems, with too little discretion to vary at local level. This has been a big problem in schools, though there is a trend toward giving principals more discretion.

    This is why I said in the original post that the case against state provision need have nothing to do with the integrity of officials. In Australia, the level of corruption in public and private sectors is pretty low – probably not much above what you will always get under any system, given the realities of human nature. The differences lie in the incentives and institutions, and their capacity to deal with problems.


  13. Andrew, I appreciate the first year economics lecture, and I don’t want to appear like a Trotskyite fanatic (which I definitely am not), but I still have a couple of issues I’d like to see addressed if you could take the time:

    1) Feedback mechanisms. There are some very important parts of health and education policy that may not necessarily respond to a “customer” based feedback model. One personal example I can think of is the premature birth ward at the Royal Prince Alfred hospital (a wondrous, yet extraordinarily scary place). Our first child was born by emergency caeserean there, largely on the public purse. Our second was born at “The San” on ours. The San is a very nice hospital, with lovely, quiet, comfortable rooms and was ideal for a normal childbirth. However, I would sooner trust the pushed staff at RPH in an emergency. As it turns out, so do the doctors at the San, who quickly ship all emergencies off somewhere else. The price (and other) signals that a private hospital receive are not necessarily those which are helpful in troubling personal circumstances. No government policy can prevent tragedies, but private hospitals have plenty of incentive to treat easy (and profitable) cases and shunt off as many unprofitable ones as they can. What sort of market or other signal is going to encourage private hospitals into taking on loss-making patients?

    2) Incentives and capacity to respond. I think this argument is perhaps the strongest one, but as a consumer of education services, I don’t mind the idea that the beaurocracy takes years to change direction. I think I’d be horrified if I were paying private school fees (and yes, I did for 4 years before realising we were getting very poor value for our $8,000) and the curriculum of the school suddenly changed because the school board decided the best way to attract new customers was to adopt (say) new earth creationism in the science classes. That’s an extreme example obviously. One obvious market signal I receive is that swapping schools every year would be somewhat traumatic on my child. However, it also seems wrong that a privately run educational institution should follow a curriculum dictated by the government. How should this issue be addressed, given that parents don’t like moving their children between schools unless they have to, but the schools are listening for customer based signals on their enrolments?

    In retrospect the “rabid free market types” crack was a extreme, but from my point of view the ideas that drive a lot of privatisation initiatives end up being based on a “trust me” attitude and a vague handwaving motion that seeks to dismiss legitimate and specific concerns about the future of our health and education systems. In the long run, the pointless bickering between states and federal government in Australia over the costs and governance of these institutions needs to be addressed far more urgently than any ideological battle over whether the signals they are receiving are fine tuned enough. A point that currently seems lost on the federal government is that pointless, cold war relic side-shows (Chairman Mao!) are making any real progress impossible.


  14. David – Public hospitals still do most of the highly specialised medical work. This will always be done by a relatively small number of hospitals because of the cost of the equipment that is often needed and the benefits of specialisation itself – surgeons who perfom the same operations repeatedly have higher success rates. Public hospitals also transfer patients between them depending on where they can be best treated. The Alfred Hospital here in Mlebourne, for example has an excellent road trauma unit. A health bureaucrat told me that they now helicopter severely injured people straight there because it is cheaper in the long run, because they are best able to minimise long-term negative medical consequences. Given the huge cost of such procedures, the hospitals that do it for free are going to get most of the patients.


  15. OK, so back to the original point, the fact that we don’t trust our politicians and that we do trust public AND private hospitals leads me to believe that the answer to the original question (does distrust of politicians lead to small government) is a definitive “no”.

    It leaves a far more interesting question: Is a small government a necessary goal to achieving reasonable social outcomes?


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