July 7, 2013


The meat cleaver we need (W.W. | HOUSTON, 7/05/13, The Economist)

One of the basic ideas of political economy is that the costs of any particular government programme are diffuse, spread over the entire (present and near-future) taxpaying population, while the benefits of the programme are concentrated on a relatively small class of beneficiaries. Even large cuts in most specific programmes will save the typical taxpayer at best a few pennies, yet even small cuts can hit a programme's beneficiaries--administrators, contractors, subsidy recipients, etc--very hard. This asymmetry in the burdens and benefits of programmatic spending creates a corresponding asymmetry in political motivation. A few cents is hardly enough to grab taxpayers' attention, but one can count on most programmes' beneficiaries fighting tooth and nail against cuts. So, other things being equal, nothing gets cut, and government grows and grows.

Though the costs of any given programme are quite diffuse, the burden of government spending, taken as a whole, is by no means small change for the typical taxpayer. A cut in aggregate spending therefore stands to benefit many taxpayers enough to make a real difference, even when he or she takes into account losses as the beneficiary of certain programmes. On the other side of the equation, few of us see ourselves as direct beneficiaries of aggregate government spending, except in an abstract or theoretical way. Furthermore, special interests are accustomed to competing, not cooperating, for shares of the budget, so one tends not see recipients of nutritional assistance banding together with engineers from General Dynamics to mobilise against across-the-board cuts.

In other words, if we're ever going to cut spending in a serious way, we may need "meat cleavers" to do it.

Posted by at July 7, 2013 6:24 PM

blog comments powered by Disqus