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?
Thanks for your followup I not it is unrealistic that we will ever agree on this given total opposite political viewpoints.
But let me agree and disagree with some things. I don't disagree with the premise of Pournelle's Iron Law. So I am not rejecting your basic premise.
What I am questioning is whether that effect is strong enough to dwarf all other effects. I suspect you are a little bit cherry picking trying to make reality fit your belief here.
A reason I believe that is that you speculate on the case of Peru without actually knowing what the key driver of the complex bureaucracies in those countries are. I advise you to read the book by Hernando de Soto. It has nothing to do with Pournelle's Iron Law.
It is too much for me to get into now, but one aspect is around corruption. With underpaid bureaucrats, there is an incentive to complicate the bureaucracy to create an incentive for bribes. If a bureaucracy is a major obstacle then people get a need to get around it. Bribes become desirable.
This then helps explain why Nordic countries have more effective bureaucracies. Corruption is low, and thus the incentive to create complexity to encourage bribes is diminished.
Not sure why you read so much into my lawyer example. It is just one simple metric. It was never meant to be THE measure of bureaucratic complexity. The point is that I lived in the US and simply noticed in all manner of things how everything was far more bureaucratic in the US. The lawyer thing is just a simply easily quantifiable metric. So much else comes down to personal experiences.
But I kept noticing this in almost anything I dealt with. Given that the US within the West is one the "smallest" government in the sense of its size relative to GDP by your hypothesis it should have the smallest and least complex bureaucracies and rules. Yet in reality it is the total opposite. Their health care system is extremely bureaucratic despite being mostly private. Their tax code is very complex. Americans regularly hire professionals to do their taxes. Nobody does that in Norway. Filling out taxes is easy.
While we may not agree on any of this, I would implore you to look at the actual world how it looks and spend less time making choices based on abstract theory.
That is at least my takeaway from going from being a libertarian to being a socialist. I had all these beautiful theories about markets that I relied on in the past. And then reality had a nasty way of going against my theories again and again. Until eventually I had to accept the simple truth that my libertarian perspective simply didn't match reality.
I know this may sound hypocritical coming from a socialist. But us socialists have learned that we were wrong about tons of things and chance accordingly. There used to be a very strong belief in planned economics among socialists. That is much more rare today. Typical socialist parties in the Nordics today accept markets as usable. So when going from libertarian to socialist it was not like I abandoned all core beliefs.
I still think markets when they work are amazing arrangements in utilizing human selfish desires for common good. My issue is when markets become a goal onto itself. When people don't see markets as a tool to reach a goal, but a goal onto itself.
I see that too often on the libertarian side of things. One starts with the premise: Markets are desirable and good and work backwards from that. I think instead we should start with human needs and derive political and economic systems from that.
This is where the socialist and liberal mind will collide, as liberals will often insist that human needs and wants cannot be known. While we will argue that we do indeed understand a lot about fundamentals of human happiness: Having the basic necessities of life, friend, family. And we know e.g. that high levels of inequality is bad for happiness in any society. I know this is a well documented fact that libertarians often refuse to accept. I guess because it is inconvenient to libertarian ideology.
We have been through a lot of that soul searching in socialism already. We used to think we could build completely unselfish humans. No, we can't and socialism has had to change for that reason. We humans are a mix of altruistic and selfish behavior.
While the left has underestimated human selfish nature, I think the right, totally underestimate our capacity of altruism.
Naturally you would wish to abandon the lawyer data, since it does not fit your hypothesis. Again: if the system is so simple, what are all the Norwegian lawyers doing all day?
US government spending is 36% of GDP. That's just federally. Again, lower than during WWII. This cannot be called “small” government.
Certainly, human needs should come first. But from this it does not follow that the government is best placed to decide what those needs are.
The Dictators Handbook guys argued that democracy and dictatorshio differ only in how many backs need to be scratched. I would argue that bureaucracy and corruption work in the same way. If I want to sell you some apples, whether I need to first spend $1,000 in bribes or $1,000 on permits, it comes to much the same thing: there's a person who is inserting himself unasked into our transaction so he can get income from unproductive activities. But against corruption there is at least some remedy, against pure bureaucracy there is none.
Officials taking bribes in Peru and conveyancing lawyers in Australia charging fees differ only cosmetically.
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.
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?
Thanks for your followup I not it is unrealistic that we will ever agree on this given total opposite political viewpoints.
But let me agree and disagree with some things. I don't disagree with the premise of Pournelle's Iron Law. So I am not rejecting your basic premise.
What I am questioning is whether that effect is strong enough to dwarf all other effects. I suspect you are a little bit cherry picking trying to make reality fit your belief here.
A reason I believe that is that you speculate on the case of Peru without actually knowing what the key driver of the complex bureaucracies in those countries are. I advise you to read the book by Hernando de Soto. It has nothing to do with Pournelle's Iron Law.
It is too much for me to get into now, but one aspect is around corruption. With underpaid bureaucrats, there is an incentive to complicate the bureaucracy to create an incentive for bribes. If a bureaucracy is a major obstacle then people get a need to get around it. Bribes become desirable.
This then helps explain why Nordic countries have more effective bureaucracies. Corruption is low, and thus the incentive to create complexity to encourage bribes is diminished.
Not sure why you read so much into my lawyer example. It is just one simple metric. It was never meant to be THE measure of bureaucratic complexity. The point is that I lived in the US and simply noticed in all manner of things how everything was far more bureaucratic in the US. The lawyer thing is just a simply easily quantifiable metric. So much else comes down to personal experiences.
But I kept noticing this in almost anything I dealt with. Given that the US within the West is one the "smallest" government in the sense of its size relative to GDP by your hypothesis it should have the smallest and least complex bureaucracies and rules. Yet in reality it is the total opposite. Their health care system is extremely bureaucratic despite being mostly private. Their tax code is very complex. Americans regularly hire professionals to do their taxes. Nobody does that in Norway. Filling out taxes is easy.
While we may not agree on any of this, I would implore you to look at the actual world how it looks and spend less time making choices based on abstract theory.
That is at least my takeaway from going from being a libertarian to being a socialist. I had all these beautiful theories about markets that I relied on in the past. And then reality had a nasty way of going against my theories again and again. Until eventually I had to accept the simple truth that my libertarian perspective simply didn't match reality.
I know this may sound hypocritical coming from a socialist. But us socialists have learned that we were wrong about tons of things and chance accordingly. There used to be a very strong belief in planned economics among socialists. That is much more rare today. Typical socialist parties in the Nordics today accept markets as usable. So when going from libertarian to socialist it was not like I abandoned all core beliefs.
I still think markets when they work are amazing arrangements in utilizing human selfish desires for common good. My issue is when markets become a goal onto itself. When people don't see markets as a tool to reach a goal, but a goal onto itself.
I see that too often on the libertarian side of things. One starts with the premise: Markets are desirable and good and work backwards from that. I think instead we should start with human needs and derive political and economic systems from that.
This is where the socialist and liberal mind will collide, as liberals will often insist that human needs and wants cannot be known. While we will argue that we do indeed understand a lot about fundamentals of human happiness: Having the basic necessities of life, friend, family. And we know e.g. that high levels of inequality is bad for happiness in any society. I know this is a well documented fact that libertarians often refuse to accept. I guess because it is inconvenient to libertarian ideology.
We have been through a lot of that soul searching in socialism already. We used to think we could build completely unselfish humans. No, we can't and socialism has had to change for that reason. We humans are a mix of altruistic and selfish behavior.
While the left has underestimated human selfish nature, I think the right, totally underestimate our capacity of altruism.
Naturally you would wish to abandon the lawyer data, since it does not fit your hypothesis. Again: if the system is so simple, what are all the Norwegian lawyers doing all day?
US government spending is 36% of GDP. That's just federally. Again, lower than during WWII. This cannot be called “small” government.
Certainly, human needs should come first. But from this it does not follow that the government is best placed to decide what those needs are.
The Dictators Handbook guys argued that democracy and dictatorshio differ only in how many backs need to be scratched. I would argue that bureaucracy and corruption work in the same way. If I want to sell you some apples, whether I need to first spend $1,000 in bribes or $1,000 on permits, it comes to much the same thing: there's a person who is inserting himself unasked into our transaction so he can get income from unproductive activities. But against corruption there is at least some remedy, against pure bureaucracy there is none.
Officials taking bribes in Peru and conveyancing lawyers in Australia charging fees differ only cosmetically.
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.