The social Laffer curve

Philip Collins in today's Times writes, in defence of the notion that the Tories cannot cut the size of the state and tackle poverty simultaneously, of what he sees as the impossibility of moving government out and charity in:

You can't simply move big government out and big voluntary sector in. A third of total voluntary sector funding now comes from the public purse and cuts are unavoidable. Unwinding the stealthy nationalisation of the third sector will cause howls of pain from people the Tories have embraced as their new best friends. Not that the embrace will last long anyway. Many schemes get worse as they get bigger. The great people in the voluntary sector cannot be cloned and the unreliable ones can be a proper nuisance. (src, my emphasis)

The odd thing about this argument is that Collins is using it in favour of the bigger state. But as an argument, it works equally well against the big state as against big charity, because it is a critique of bigness, rather than of any specific sector. The government's operations are not handed over to some mythic race of beings from another world, with greater intellects and purer motives: just like the third sector, it is run by people. It gets worse as it gets bigger, too. That's why we should be rightly suspicious of practically anything which can justifiably be described as 'big': big government, big charity, big labour, big capital.

I had a brief exchange yesterday with John H (blog) about an Independent poll which showed yesterday that Cameron's 'big state' rhetoric may have some traction with the British public (src). (I had previously expressed my agreement with his apparent view that in the UK, he was 'not convinced that the British public thinks in the same terms,' that is, in terms of 'big' and 'small government'.) My suggestion was that the better way to talk about the size of government is in terms of diminishing returns — if not in that language, then certainly appealing to that concept.

As government gets bigger, it gets worse: less efficient at everything it does. It also has to start intruding more, to give politicians the feeling that the locomotive of state is still under their control. The great irony is that by reversing the process and handing power back to individuals, families and communities, politicians will be more effective in those areas where they do have a proper influence.

The logical conclusion is that there is an optimal size of the state, where it is doing what is necessary and doing it well, and beyond which the state's effectiveness degrades. Shrinking the state is not a matter of being a hard-hearted hammer of the poor; it is rather the case that if we want the government to be more effective at helping the poor, then it needs to learn the lesson we all have to learn sooner or later: there are times when we must do less in order to accomplish more.