(Extracts from Milton Friedman’s “TYRANNY OF THE STATUS QUO” in 1981.)
A government program, particularly at the federal
level, almost always confers substantial benefits on a relatively small group
while at the same time spreading costs widely (and hence thinly) over the
population at large.
As a result, the few have a strong incentive to lobby intensively for the program. The many don’t bother even to inform themselves about it, let alone to devote money and effort to opposing it. A legislator who believes that the program on net harms the public is caught in an impossible position. A vote against such a program generates concentrated opposition from the few who will benefit from it, but at best only weak and diffused support from the many who will pay for it.
Although correct, this explanation does not go far
enough. After all, the same incentive for special interest groups to pressure
legislators existed before 1933 as well as after 1933, yet the growth of
government before 1933 was slight but after 1933 explosive.
The catalyst for the explosive growth of spending
was the transfer of power from the state and local governments to the federal
government. That, too, could have occurred before 1933, yet did not. Why not?
Why Government Spending Exploded in 1930s?
The major reason these changes took place when they
did was the basic shift that occurred in public opinion. It shifted “from
belief in individual responsibility and a decentralized and limited government
to belief in social responsibility and a centralized and powerful government to
protect individuals from the vicissitudes of fortune and to control the
operations of economy in the general interest”.
After all, this is a democracy. If the people disapprove
of what their government is doing, they can change the government at election
time – every two years when they elect all congressmen and one third of the
senators, and every four years when they elect the President.
The change in public opinion in 1933 brought
changes in the people whom the electorate sent to Washington. During the
sixty-four years from the first presidential election after the Civil War to
1933, the Republicans controlled the White House for forty-eight years, the
Senate for fifty-two years, and the House for forty-four years.
Beginning in 1933, the tables were turned. During
the forty-eight years from 1933 to 1981, the Democrats controlled the White
House for thirty-two years, the Senate for forty-four years, an the House for
forty-four years.
This turnaround was a dramatic result of the
fundamental change that had occurred in what the public wanted. Moreover, the
long continuance of the same pattern after 1933 demonstrates that for many
years thereafter the public was satisfied with what it got.
A similar change in public opinion was already
manifest in Western Europe long before 1933. A number of countries enacted
extensive programs directed at providing security from cradle to grave –
unemployment benefits, old-age benefits, socialized medicine, child support,
and so on. In some countries, the change went further and led to a growing
nationalization of industries as well.
Before 1933, such a change in policy was not a part
of public discussion in the United States. It was a subject for discussion
among intellectuals on the campus and, to a lesser extent, among some
journalists.
Th eGreat Depression brought unemployment, bread
lines, and business failures. It caused a loss in faith in the prevailing
economic system, which in turn led the public at large to join the
intellectuals in assigning a larger role to government. The NEW DEAL was the
result.
(The NEW DEAL was a series of programs,
public work projects, financial reforms, and regulations enacted by President
Franklin D. Roosevelt in the United States between 1933 and 1938 to rescue the
U.S. from the Great Depression.)
For Uncle Sam to take upon his shoulders all the
cares and responsibilities of his people sounded like a splendid idea. Faith in
that idea remained strong for decades. But after half a century, the faith
weakened as government grew and the costs to the citizen mounted – not alone in
the money, even more in the loss of freedom.
A big and centralized government is an unavoidable
result of a government that seeks to perform the wide range of functions that
the public has assigned to it in recent decades. Only a centralized government
could be expected to act effectively to maintain full employment, prevent
recessions, and avoid inflation.
No state and local government can handle such
problems, which are national in scope. Only a big government could conceivably
protect over 200 million individual citizens against the hazards of old age,
illness, and unemployment, to say nothing of floods and all other vicissitudes
of fortune.
It takes an army of social workers, administrators,
statisticians – you name them – to run a government that seeks to deal with the
specific problems of specific individuals or groups. The truth is that not even
a big an centralized government can successfully perform these functions.
This fact has been demonstrated over and over again
– in the most extreme form, in the communist countries of Russia and China,
where Marxist doctrine holds that citizens proceed on the principle “from each
according to his capability, to each according to his need.” In those societies
the principle never worked; instead, government officials became “the new
class” of (ruthless & nasty) privileged autocrats, (murderously) enslaving
the masses.
