The Twilight of Government Growth in a Competitive World Economy

August 19, 1988 • Policy Analysis No. 111

These words are being typed in a plane at 33,000 feet en route to St. Louis. The computer I am using is about the size and weight of a small box of Tide but has the internal memory of the University of Maryland’s entire computer center when I was a graduate student there two decades ago. I carry in my shirt pocket enough disks to conduct the business of a modest‐​sized firm. Yet any such observation about the small size but great power of modern computers is remarkable only because it is no longer astounding.

Nonetheless, the computing power on my lap represents an immense, not fully recognized, threat to the economic and political power of the U.S. government and other governments around the world. At the same time, my computer represents a liberation of “people power,” because technology is changing the nature of capitalism. Capital is being freed from the strict confines of arbitrary national boundaries; it is becoming internationalized to an extent never before imagined. As a consequence, the power of government to tax and regulate may be in its twilight years.