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.