Archives: 06/2013

George Smith’s Long-Awaited Book: The System of Liberty

The System of LibertyGeorge H. Smith is one of the best-read, most insightful libertarians living today. He is the author of most of the Cato University Home Study Course, which you should definitely download. He writes a weekly article for Libertarianism.org titled “Excursions into the History of Libertarian Thought.” He is the author of Atheism: The Case Against God (1974), Atheism, Ayn Rand, and Other Heresies (1991), and audio series on “Great Political Thinkers,” “The Meaning of the U.S. Constitution,” and “The Ideas of Liberty.” And finally – finally – he has been persuaded to write down much of what he knows about the history of classical liberal thought in a new book from the Cato Institute and the Cambridge University Press, The System of Liberty: Themes in the History of Classical Liberalism.

It’s a great study of classical liberalism and the relations among such liberal ideas as individualism, natural rights, utilitarianism, self-sovereignty, and what Lord Acton called “the polar star of liberty.” Along the way he answers such criticisms of liberalism as “atomistic individualism” and “social Darwinism.” It’s a college course in political philosophy in just 217 very readable pages. Buy it now for the low low price of $24.95.

The Defense Reform Consensus

Today at noon, a group of scholars from several different Washington think tanks will present a joint letter making the case for major reform within the defense establishment. The Wall Street Journal blog leaked some elements of the letter on Thursday, and the full text is now available online here.

The initiative is remarkable both for the names and affiliations of those who signed–from the neoconservative American Enterprise Institute and the Foreign Policy Initiative, to the liberal National Security Network and the Center for American Progress–and for the depth of its analysis. Although I will be unable to attend the meeting on Capitol Hill due to a schedule conflict, I am honored to be a signatory. It is a timely (indeed, long overdue) and important undertaking.

Specifically, the letter calls for closing “excess bases and facilities, [reexamining] the size and structure of the DoD civilian workforce, and [reforming] military compensation.”

The letter continues:

While we do not all agree on the best approach to reform in each case, we agree that if these issues are not addressed, they will gradually consume the defense budget from within. This will leave a smaller share of the budget to pay for the manning, training and equipping of our armed forces that make the U.S. military second to none.

I did not have a hand in drafting the letter, but I endorse it wholeheartedly. I have been concerned with all three of these issues for many years. Reducing the civilian workforce accounted for nearly nine percent ($105 billion) of the $1.2 trillion in savings that Benjamin Friedman and I estimated in our Policy Analysis published in September 2010. Ben and I also called for reducing overhead, including excess base capacity, and for reforming the calculation of military pay and benefits.

Other projects involving experts from a number of different think tanks have also taken aim at some of these issues. The report of the Sustainable Defense Task Force (SDTF), of which I was a member, called for reforming military compensation and health care, and reducing “command, support and infrastructure” commensurate with the other cuts outlined in the report.

Unlike the members of the SDTF, however, the participants in this latest effort do not agree that the Pentagon’s budget should be cut in the first place. The letter explains:

Those of us who have joined together in support of these efforts find ourselves with differing views on many other issues, including the proper level of defense spending and how that money can best be allocated. But we are all in strong agreement on the need to pursue these key reforms for a transforming military.

Here are a few other choice passages:

There is no shortage of useful ideas on how to begin addressing these pressing matters. The challenge has been getting Congress and the administration to admit change is required and take action.

[…]

None of these reforms will be easy, painless, or popular. But they are absolutely essential to maintaining a strong national defense over the long term. These smart and responsible initiatives should be undertaken by Pentagon and Congressional leaders regardless of the level of defense spending. While these reforms are necessary, they are not of themselves sufficient to meet the fiscal and strategic challenges the military currently faces.

As the letter states, it will be difficult to implement these recommendations. It cannot be seen as a partisan exercise; and it is not. Signatories include individuals who have served both Republicans and Democrats. There are liberals and conservatives (in addition to this one libertarian). I hope that this joint letter, and the subsequent events and articles that will flow from it, provides some much needed cover for members of Congress, and other experts within the policy community, to advocate for these sensible and long-overdue reforms.

Mirror, Mirror on the Wall, Which Country Has the Most Expensive Bureaucrats of All?

I’ve complained endlessly about America’s bloated and expensive government bureaucracies. It irks me that people in the productive sector get slammed with ever-higher taxes in part to support a gilded class of paper pushers who have climbed on the gravy train of public sector employment.

It even bothers me that bureaucrats put in fewer hours on the job than private-sector workers, even though I realize the economy probably does better when government employees are lazy (after all, we probably don’t want hard-working OSHA inspectors, Fannie and Freddie regulators, and IRS bureaucrats).

But sometimes it helps to realize that things could be worse. And based on some international data from my “friends” at the OECD, let’s be thankful the United States isn’t Denmark.

That’s because nearly 20 percent of Denmark’s economic output is diverted to pay the salaries and benefits of bureaucrats, compared to “only” about 11 percent of GDP in the United States.

Bureaucrat Costs

Not only are bureaucrats nearly twice as expensive in Denmark as in the United States, they’re also much more expensive in Denmark than in other Nordic nations.

Speaking of Nordic nations, they tend to get bad scores because a very large share of their populations are feeding at the government employment teat.

Bureaucrat share of labor force

Whether we’re looking at the total cost of the bureaucracy or the number of bureaucrats, the United States is a middle-of-the-pack country.

But I am somewhat surprised by some of the other results.

  • Germany is significantly better than the United States, whether measured by the cost of the bureaucracy or the size of the bureaucracy.
  • Japan also does much better than America, notwithstanding that nation’s other problems.
  • In the I’m-not-surprised category, France does poorly and Switzerland does well.
  • To see where bureaucrats are most overpaid, look at the nations (particularly Greece, but also Portugal and Spain) where overall pay is a very large burden but bureaucrats are not a big share of the workforce.
  • To see where the trends are most worrisome, look at the changes over time. The total cost of bureaucracy, for instance, jumped considerably between 2000 and 2009 in Ireland, Greece, the United Kingdom, Denmark, Spain, and the United States. So much for “austerity.”

P.S. These numbers are only for OECD nations, so it’s quite possible that other jurisdictions are worse. To cite just one example, I was one of the researchers for the Miller-Shaw Commission, which discovered several years ago that fiscal problems in the Cayman Islands are almost entirely a function of too many bureaucrats with too much compensation.

P.P.S. Here’s my video on the cost of bureaucracy in the United States.

P.P.P.S. Denmark has a bloated and costly bureaucracy, but it compensates by having very pro-market policies in areas other than fiscal policy.

P.P.P.P.S. Perhaps the numbers are bad in Denmark because people like Robert Nielson are listed on government payrolls as independent leisure consultants?