Bigger State Doesn’t Mean Bigger Bureaucracy
Debunking a common misconception about the mythological "Big Government"
When people argue about the size of government, bureaucracy is usually the first fear that comes up. A bigger state, the argument goes, inevitably means more red tape, more inefficiency, and more waste. It’s a logical worry — but is it true?
I recently read an interesting piece by Warburton called: The Political Compass
Warburton describes himself as libertarian leftist. While I describe myself as a Nordic democratic socialist. Thus naturally we are going to have some significant differences in opinion. Still, I appreciate his rational, non-dogmatic approach. That’s exactly why this topic is worth exploring further.
The hidden assumption
The core premise I want to challenge is the idea that the size of a government — how much money it handles or how much of GDP it represents — directly maps to how big and tangled its bureaucracy must be. In my experience, that link just doesn’t hold up.
More spending ≠ more paperwork
Take an example: If you raise taxes to pay for higher pensions, the state’s share of GDP grows — but the administrative overhead doesn’t have to. Sending larger pension checks doesn’t demand thousands of extra clerks. The money flows through the same pipes.
The private sector’s hidden red tape
Living in the US showed me a counterintuitive truth: smaller government doesn’t automatically mean simpler life. The American healthcare system is a perfect case. It’s a maze of competing insurance plans, hospital billing codes, and overlapping private standards. To cope with the market’s distortions — profit-driven over-treatment, refusal to treat the uninsured — the state adds patches, rules, and exceptions. The result? More complexity than a single-payer system like Norway’s, which is simple by comparison.
Standards reduce chaos
One lesson from my work as a software developer is that clear standards tame complexity. The same applies to government. In Europe, governments agreed on GSM as a mobile standard. Consumers didn’t have to puzzle over frequencies, towers, or incompatible phones. In the US, the lack of standards turned buying a phone into a headache of competing technologies and regional lock-ins.
Sometimes small government multiplies bureaucracy
A ‘small’ state often means pushing tasks onto a web of local authorities, private contractors, or overlapping agencies — each with their own rules, forms, and fees. You see this in US policing, where many fragmented departments create a patchwork of standards. Or in railways split between track owners and operators, adding extra layers instead of cutting them.
Big companies aren’t immune either
Some argue markets kill off bloated bureaucracies. But big corporations often become just as tangled — and harder to escape. Small, agile firms can get swallowed by giants. Customers stick with big names for safety, not efficiency. The result is scale without nimbleness. The bigger they get, the more layers they add.
The Nordic Counterpoint
Look at developing countries: many have ‘smaller’ states but messier bureaucracies. By contrast, Nordic countries like Norway and Sweden tax heavily and run large welfare states — yet they consistently rank as some of the world’s easiest places to start a business or navigate public services. Standards are clear, laws are simple, and the legal system runs fast — unlike the US, where legal complexity drives a huge lawyer industry.
I was made aware of this years ago when reading a book by Peruvian economist Hernando de Soto called: The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else
In this book he details the complexities of bureaucracies in many developing countries such as his native Peru. Simple registering a simple business like a bakery would take something like 120 steps or interactions with government bureaucracy, around 2003 when the book was published. In my native Norway you could register a business in a couple of days back then.
Yet in terms of size the Peruvian state isn’t very big. Look at government spending as percentage of GDP.
The biggest government on this list in terms of spending is Sweden, but it likely had the most effective government at that time. While the country at the bottom, Peru, likely had one of the least efficient and most bureaucratic governments.
In short the hypothesis that a larger state means a more complex state is not reflect in the real world.
The real point
It’s tempting to blame complexity on government size alone. But the reality is messier. Sometimes shrinking the state creates more layers. Sometimes private alternatives add more friction than they solve. The real trick is not size, but smart design: clear standards, healthy in-house competence, and avoiding unnecessary outsourcing that adds middlemen.
The world is complex — the question is where we handle that complexity. Pretending it vanishes when we push it out of sight only creates bigger headaches elsewhere.
Firstly, I must thank you for laying this out. I believe this is the first time someone on substack's written an article in direct response to one of mine. I think my replies can be brief, however.
You state, "More spending ≠ more paperwork". But this is generally the case. It is not necessarily the case, but it is generally the case. Certainly if you implement more paperwork, then you must spend more to pay for it. But also, if you spend more, then people will appear with their hands out, and they will deliberately complicate the system in order to get their hands on some of the money. And so there will be a correlation between spending and complexity. Not 1:1, but a strong correlation.
The private sector most assuredly has plenty of red tape. Thus Pournelle's Iron Law refers to "any large bureaucratic organisation" - he does not distinguish between government, nonprofit, corporate, military, religious or whatever. All of them follow the same trajectory of bloat.
However, I would note that in a country in which corporations are allowed to grow so large, they are in effect part of the government. They cannot grow so large without grants of public funds, tax subsidies, regulatory capture and so on.
"Standards reduce chaos" - they can do so, yes. But they can also lead to "teaching to the test", and of course we also have the old saying, "when a measure becomes a target, it ceases to become a good measure." As an example, at one point the company running the train system in Melbourne had fines if they had a certain amount of trains late - but not if those trains were cancelled. So when too many trains were late, the trains kicked all the passengers off, and went express back to the depot. "Okay," said the government, "since the measure has become a target, we obviously have to add a second measure - cancellations." But then... you get the picture.
"A ‘small’ state often means pushing tasks onto a web of local authorities, private contractors, or overlapping agencies"
If there's a web of them then it's not "small" government.
"It’s tempting to blame complexity on government size alone. But the reality is messier."
Obviously, yes. Nonetheless there is a correlation. I am not an American libertarian, so I am less concerned with the overall share of the economy taken up by the government, and more the authoritarianism of the government, and the level of pointless fuckery. Most small businesspeople would gladly pay more taxes if they could get less paperwork in trade.
As for Peru: in many developing countries, some of the GDP is not really taxable by government. If a large chunk of "domestic product" is subsistence farmers growing $500 worth of food each to feed their families, none of which is ever turned into money, attempts to tax that would simply be collecting the corn like a Soviet collective farm, with the famine that always accompanies such efforts. So while Peru's government may have "only" 20% of the economy, this may actually represent up to 50% of the actual cash economy. Further, it's a measure of what the modern world is like that you would consider every fifth dollar spent in a country being the government to be "small" government. Consider again the chart in my article - Australia fought WWII against two great empires with 22-27% of the GDP, and I don't think anyone considered the government to be "small" then. Now it's 38% and we couldn't even defeat Afghan goatherds.
Lastly, there is to my knowledge no simple measure of government complexity. But we may take the number of lawyers as a proxy - their job is to navigate the complexity of government. As of the latest available data, Norway has approximately 5,703 practicing lawyers. With a population of about 5.5 million, this equates to roughly 104 lawyers per 100,000 people. In comparison, Australia had about 90,329 practicing solicitors in 2022. Given a population of approximately 25.7 million, this results in about 351 lawyers per 100,000 people. So we can reasonably assume that Australia's government system is more complex than Norway's, despite Norway's government making up a larger share of the economy than Australia's. As I said: the correlation is not 1:1.
Now, from G20 countries with available data:
Brazil 474 lawyers per 100,000
Italy 403
United States 402
United Kingdom 226
Germany 191
Turkey 154
South Korea 116
India 113
Japan 28.7
China 19.9
South Africa 37
Norway has five times as many lawyers as a communist country, who are not exactly known for small government. And it has more than triple the lawyers of Japan. Peru, by the way, has 15 lawyers per 100,000. If Norway's systems are genuinely much simpler than Peru's, why does Norway need 7 times as many lawyers? Do they all sit idle admiring the amazing efficiency of the system?
This is True but irrelevant.
In US, Those who argue against "big government" dont hesitate to support religion in government or means testing welfare.
A State can only succeed when it is Trusted by its population. Only when its population allow bureaucracy to collect taxes or provide service can its function. Without Nation to give its support, any State (no matter how its designed) cant function.
Hostility to bureaucracy is often because bureaucrats is "different" from them. This can be racial, religious, or ethnic reason.
This also why "nordic socialism" dont work in US. Nobody in South would support giving Blacks anything, whether government welfare or private charity.