A fully functioning society requires government. There’s no way around that, though it’s not uncommon for people, particularly those on the political right, to complain about big government.
In reality, their main problem is they don’t like paying taxes.
Understandable. None of us want to pay tax, but society doesn’t pay for itself.
So, the argument tends to be that big government is corrupt and inefficient.
That’s not necessarily wrong, but it has no connection to the size of government. Small government can be efficient or inefficient and big government can be efficient or inefficient.
Still, that doesn’t stop claims that we, as individuals, will spend our money much more wisely than government, because it’s our money and we’re more motivated to make smart choices about how we spend our money.
Unfortunately, that falls down somewhat as soon as you start to read about behavioural economics and see how our various cognitive biases lead us to make some truly dumb and irrational financial decisions.
As I’m writing this, out of my window I can see Juandyman, the local odd-job fella, digging a trench in a neighbour’s garden with a mini-digger. What do you think was the first thing I did when I saw that? Yep, straight onto Aliexpress. They’re not as pricey as you’d think, the cheapest just €387,28 with free delivery (less than £330 or about $420). I’ve not ordered one, but Mrs Forclift has pointed out we are planning to build a fish pond and as she’s the one who has the real weakness for gadgets and toys in this household and considering how quickly she disappeared into her office, I can’t be sure she hasn’t.
In theory, properly trained and experienced people should make better purchasing decisions for governments than we make ourselves.
Unfortunately, that falls down somewhat because often government employees still make dumb decisions. Like us, they’re human and not necessarily as well trained for their roles as they should be
Hence the claim that we should be free to make our own choices, such as arrange our own healthcare.
So, is Big Government really bad? And is Small Government really better?
Well, we know many of us have been primed to think Big Government is bad because it’s wasteful, but let me frame it in a different way.
Big Government is owned by and acts in the best interests of the biggest group in society. The poorest people in society who make up the overwhelming majority of the population based on the wealth that they hold.
Conversely, Small Government is owned by and acts in the best interests of the smallest group in society. The heffalumps.
Before I clarify that, have you ever looked up and seen a load of small birds mobbing a bigger bird?
No, nor me.
However, back when I was a kid, reality TV meant a nature documentary rather than a group of half-naked 20-somethings on an island talking about spray tans and the optimal length for pubic hair in 2023.1
Life was hell back then!
If you’ve never lived through an intensely intimate experience with a seemingly short, yet surprisingly long, curly hair stuck between your front teeth and intermittently tickling your nostrils, you wouldn’t understand.
On the plus side though, I did learn that lots of small birds can work together as a group and mob larger birds, making it impossible for the big bird to knock up a little bird sandwich.
That’s the real advantage of Big Government. It offers us strength in numbers.
As inefficient and disappointing as Big Government can be, that’s no reason to want rid of it. It offers us the protection of a larger group.
The heffalumps promote the idea that Big Government works against us because they know we’re weaker as individuals.
One lone little bird flapping around is much easier to eat than if it’s part of a much larger flock. A flock that will work together to protect its own.
It’s the same for us. Small government leaves us weak and exposed for the heffalumps to predate us however they wish.
Let’s consider one real example of this.
The Insidious Evil that is Pet Insurance
When I was a kid, vets (animal doctors, not military veterans) tended to be small local practices, often with a single owner and maybe one or two other younger vets working for them.
When you took your pet, they’d often have to make a best guess about the cause of a problem and, hopefully, offer a cost-effective solution.
Occasionally a pet owner2 might get a bit of a shock in the pocket, but mostly things stayed affordable. Relatively, anyway.
Then someone came up with what seemed like a great idea.
Pet insurance.
Why put yourself through the stress of having to cover unexpected vets bills, when you could have the predictability of paying a set small amount that would cover all but the most basic costs of treating your pet?
We embrace insurance for our home and our car, why not for a pet?
Nowadays in the UK, there are very few independent veterinary practices anymore. Certainly where my mother lives, anyway. Instead, most have been bought up by larger businesses.
You’d hope that brought economies of scale and made treating a pet even more affordable than decades ago.
However, the opposite is true. The costs of pet treatments appear to have ballooned massively.
So what happened?
Pet insurance changed the relationship between vets and their clients.
Knowing that there was a reasonable chance that Fido’s owner had insurance and wouldn’t be picking up the bill personally meant they could take more time and do more tests to establish just what the problem was.
And if they didn’t have insurance, well at least they’d learned that it might be a good idea in case there was a next time.
So a nasty spiral of increasing costs ensued as more owners bought insurance, and vets offered ever more expensive services and treatments.
I bet it’d be easier for one of our dogs to get an MRA scan that it would be for me.
Actually I know it is. For many years we took in a variety of disabled animals, including a blind and deaf Bichon Maltese. Only he didn’t always seem deaf and some of his behaviour was eccentric at best.
When he was being neutered, we told the vets they could take advantage of the anaesthetic to run any other checks they might have.
When we went back to collect him, a vet I hadn’t seen before told me they’d done an MRA scan.
What happened in the next few minutes is pretty hazy.
I don’t think I wet myself.
And as the vet lifted me up off the floor and into the chair the receptionist had hurried over with, he explained that they’d given us an 80% discount.
That helped a bit. It was just that a few weeks earlier, my mother had mentioned a friend’s vet bill back in the UK that was over £2,000 for an MRA scan alone.
Fortunately, our vet charged less than a quarter of that at full price. But it was a sign that changes we’d seen happen in the UK were happening here too.
I said before that independent vets largely disappeared and I think we can trace this back to pet insurance too.
As vets practices started to generate more and more money from selling more treatments at higher prices, these businesses started to look attractive to investors.
Investors started buying up vets businesses so they could take a share of the profits.
Whereas decades ago, a vets practice just had to generate the money to pay for the employees, now they have to generate additional money to pay the shareholders.
But don’t feel bad, because it’s insurance companies paying the bills.
Caring owners will always insure their pets to ensure they get the best possible treatment. It’s always affordable. Assuming the owner has a job that pays enough. And as long as the pet isn’t too old or is blind and has hydrocephalus or some other pre-existing condition.
Pet insurance made it possible for vets to charge more.
And as vets charged more, more pet owners had to buy insurance.
And as more pet owners bought insurance, vets could charge even more to keep the new shareholders happy.
And as vets charged even more, more pet owners had to buy insurance.
And so on and so forth.
Thank Rod that this only applies to pets.
Imagine if this system was applied to humans?
Imagine you lived in a country that didn’t offer a program of social healthcare?
A country where you had to buy your own insurance to ensure you and your loved ones could get treatment when needed.
Would we see costs increase for no reason other than greater profits?
Yes, we would.
In fact, yes we do.
In the United Kingdom, the prices the NHS pays for drugs are agreed through negotiation between the suppliers and the UK government, based on the advice of the National Institute for Health and Care Excellence.
If a drug manufacturer wants their drug to be available for use by the nearly 68 million people living in the UK, they have to agree a price with the government.
No agreement, no access to a market of 68 million people.
It turns out that’s quite the incentive for drug manufacturers to price their drugs quite differently in the UK, compared to what they charge in the USA.
Let’s compare a few prices for some drugs3 available in both countries and also the cost of insulin for diabetics in Canada and the USA.4
- Actimumune – 12 vials are priced at $52,321 in the USA vs $6,897 in the UK
- Cinryze – 20 vials are priced at $44,140 in the USA vs $34,293 in the UK
- Firazyr – 2 syringes are priced at $32,468 in the USA vs $3,597 in the UK
- Harvoni – 21 tablets are priced at $31,500 in the USA vs $12,561 in the UK
- Insulin – the average price of a vial is $98 in the USA vs $12 in Canada
While governments are often wasteful with our tax money, the difference in the cost of healthcare between countries that have state funded systems compared to the USA, where individuals are expected to arrange their healthcare, are dramatic.
The heffalumps want us to believe that we’re much better off with small government so we have the freedom to make our own choices.
The reality looks rather more like they want us to reject big government because we’re weaker alone.
Like a pride of lions on the Afican plains looking to separate an individual gazelle or zebra from a larger group, heffalumps want us to believe we’re better off on our own so it’s easier for them to predate us.
That’s just the way I see it of course.
Maybe you believe that you’ll be better off with private healthcare.
Still, for all that, I also have sympathy with some of the concerns that many people have about big government. It can be wasteful and inefficient. That doesn’t mean that the solution is to shrink it to make it less wasteful.
Why don’t we make it better run and more efficient to make it less wasteful instead?
- Beavers rice, someone thought the interwebs needed this page – https://www.starpilwax.com/blogs/news/are-you-in-the-know-with-the-new-bikini-trends ↩︎
- If you’d referred to yourself as a pet parent or little Tiddles as your fur baby, you’d have been laughed out of town. ↩︎
- These prices are from a 2018 article – https://www.pharmaceutical-technology.com/features/us-most-expensive-drugs-uk-prices/ ↩︎
- These prices are from a 2021 study – https://fortune.com/2023/01/13/insulin-us-costs-7-times-canada-california-suing-makers-scheming-illegally-increase-price/ ↩︎