Updated Nov. 26, 2024 at 5:45 pm*
-Analysis-
BOGOTÁ — Downsizing the state, it’s an age-old politician’s promise that U.S. President-elect Donald Trump is planning for his country. Yet has it ever actually been proven as beneficial or certified as good administrative praxis?
Trump is vowing to create a Department of Government Efficiency led by the billionaire Elon Musk — the new “First Friend” — who in turn promises to use technology and top talents to achieve this goal. We’ll see if he can he actually pull it off.
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The question has been the source of endless thought and energy since the 18th century, when Scottish economist Adam Smith said it was for the market’s invisible hand, not the state, to allocate a society’s resources.
In the 20th century, Austrian-British economist Friedrich Hayek saw state intervention as obstructing the efficiency of economic actors. That free market vision was further elaborated by American economist Milton Friedman and put into practice by liberal governments in the 1970s and 80s, notably those of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher.
The model seemed to work — or worked well enough — until the 2008 financial crash that revealed its flaws and led voters, at least in the United States, to turn to the more interventionist administrations of Presidents Barack Obama and Joe Biden.
New public management
While the failure of Soviet socialism has served as a perfect argument for banning central economic planning, you would not say the same of all administration planning or forecasts, at which Musk evidently excels. And while there is a direct relationship between the size of the state and taxation levels, societies should be considered as separate cases.
Thus, there is economic planning required in both in half-starved, communist North Korea and in Taiwan, a booming economy that respects private enterprise, democracy and human rights. You cannot govern a large organization today without strategic and situational planning or forward analyses of scenarios.
The question of downsizing or not is about social and administrative efficiency as a scientific matter.
That is the spirit of the so-called New Public Management, which allows, through collaboration with the private sector, greater government efficiency and higher success levels, while curbing corruption. Models known as e-government or open government have brought nations progress and benefits, allowing citizen participation in the design and execution of policies, and increased use of technological innovation.
Building a better state
This should be about pragmatism, not dogmatism. The size of the state is an economic and political matter as the state takes decisive social decisions. English economist, John Maynard Keynes is keen on state intervention. The level of intervention is a tool in the government’s hand for adjusting joblessness, income indices or wealth distribution.
The aim is a better functioning state, not to nationalize for the sake of it.
Regardless of ideology, the question of downsizing or not is about social and administrative efficiency as a scientific matter, the recent winners of the Nobel prize for economics concur.
Cut to size
The aim is a better functioning state, not to nationalize for the sake of it or, on the contrary, blow up the state to show liberalism is back.
Despite the fact that he himself is a state contractor with vested interests, Musk can still use his innovative skills and intelligence to help solve a long-standing problem: How best to allocate limited resources. We might agree with public choice theories and American economist James Buchanan’s argument that politicians, like businessmen, are ordinary people who follow their own interests and the state must thus be cut to size — or made as big as is strictly necessary.
But let us recall how state interventionism, and big spending, were crucial to saving society from two of the biggest crises of the past century: in 1930 and 2008.
*Originally published Nov. 24, 2024, this article was updated Nov. 26 with enriched media.
