[Market Economy in Your Pocket] Small Government Beats Big Government

The role the government absolutely must play is to protect the people from violence. It must also protect property rights and, as an umpire, broaden the range of choices and promote competition. A government that faithfully fulfills these basic roles is a small but efficient government.

One common trait among countries that achieved great success in the past or are doing well today is that they have small but efficient governments. In the past, Thatcher’s government in the United Kingdom pursued a small-government agenda and boldly pushed privatization, while U.S. President Reagan succeeded by implementing tax cuts. Countries that have recently posted high growth are those that made use of the market economy rather than relying on government-dependent economic management.

By contrast, countries that pursued big government all followed a path of decline. Socialist countries that nationalized the economy, welfare-oriented states, and countries accustomed to government-led economies all failed to overcome crises and ultimately ran aground.

That does not mean abandoning the poor or those without economic means. Of course, the government should support them through taxes. The reason welfare states failed was not because of programs for the destitute, but because they made the middle class and ordinary citizens the targets of welfare policy. When the government becomes preoccupied with redistributing ordinary people’s property in the name of justice, the market and the private sector inevitably lose their vitality.

In world history, freedom has always proved superior to interference or control. Countries that value private-sector creativity and incentives have achieved great prosperity and even attained equality in wealth. By contrast, countries that prioritized equality and had governments intervene in the market saw all kinds of corruption flourish—such as sharing the spoils and soliciting favors—while interest groups proliferated and trapped them in a vicious cycle of poverty.

Our society is still pervaded by a kind of statism that looks to the government whenever a problem arises. The government cannot succeed by taking the place of the market. Now let us move toward a market economy.

Original title: [주머니 속의 시장경제] 큰 정부를 이기는 작은 정부

Author: Center for Free Enterprise (CFE)

Date: 2005-08-01

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=22&idx=10651