So You Want Small Government, Eh? Here’s What That Actually Looks Like

Reducing the size of the government means reducing the number of jobs it provides. Is that necessarily a good thing?

Photo by Andy Feliciotti on Unsplash

Every four years, Americans go to the polls. And every four years, there are a handful of politicians that make unrealistic promises in an attempt to garner your vote.

One such promise is the pursuit of a smaller government.

Republicans, in particular, fancy the idea that the government is too big. And to be fair, they aren’t wrong. It seems like there’s a government agency tasked with addressing any sort of issue you can imagine, including researching shrimp walking on treadmills.

The idea of small government — more responsible government — sounds great in theory. Most rational people would advocate for a government that spends their tax dollars wisely.

But in practice, small government isn’t a realistic solution.

What you and every politician pandering for your vote might not realize is that getting to a smaller government means changing the role of the government itself. It would require eliminating hundreds of thousands — if not millions — of jobs to get there.

That’s an interesting paradox to consider when many political leaders stump on their ability to create jobs — not destroy them.

The government is the behemoth it is today because it is the most important employer in our country. This article will dive into this lesser-known fact in greater depth. Particularly how eliminating jobs would affect the economy writ large.

Looking at this through the context of the current technological and digital transformation underway, it’s important to acknowledge the reality of what the government is — not just as we wish it to be.

The government is the largest employer in the country.

When you think of the government, you probably imagine well-dressed politicians running around the halls of Congress, slinking off to closed-door meetings with lobbyists and lawyers. In reality, “the government” is a vast bureaucracy of departments, agencies, and programs. It’s responsible for not just creating laws but implementing them.

To do that, the government has to employ people. Individuals across the government approve budgets, facilitate contracts, manage projects, and work with vendors to procure equipment or finalize leases. Through this work, government employees ensure regulations are followed and your taxes are paid.

What you might not realize is that the government is also the country’s largest employer. According to the St. Louis Fed, the working population in the United States is about 209 million people. Of that number, 2 million are employed by the federal government. By comparison, Walmart employs 1.6 million people in the United States, while Amazon employs around 1 million. That means the government employs as many people as the two largest private employers in the United States — combined.

That figure, of course, just accounts for civilians directly employed by the U.S. government. When you add in active-duty military personnel, government contractors, and subcontractors, the real payroll is much, much larger than 2 million people.

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Getting to small government requires eliminating government programs and the people they employ.

Small government advocates talk a big talk about “cutting” government spending. The usual trope is to demonize social welfare programs like food stamps and Medicaid. Say what you want about handouts, they actually have value in the economy. They keep government bureaucrats employed while enabling poor and lazy people to continue participating in the economy, albeit on your dime and mine.

What you might not realize is that to cut government spending, you have to cut Americans’ jobs. First, you’ll have to eliminate wasteful programs, which means giving a pink slip to all of the people responsible for running those programs.

But it isn’t just federal workers who would get the boot. Some programs, like food stamps, are jointly administered by state-run agencies. Eliminating the program would mean eliminating all of those agencies — and the jobs they provide — as well.

Now that you’ve successfully shrunk the government, you’ve also successfully eliminated a downstream source of funding to a wide range of nonprofits, small businesses, and large corporations. Without revenue, those entities will have to cut costs by eliminating jobs too.

Government programs are just the top of the economic food chain. Cuts at the top will have amplified effects as they trickle their way down into local communities.

Let’s look at food stamps to illustrate the impact of this. The U.S. Department of Agriculture administers food stamps. USDA employs 100,000 people across 29 agencies. To cut government spending by getting rid of food stamps, you’d have to eliminate the agency that manages it and lay off all of the people it employs.

When food stamps disappear, so does the spending power of 41.2 million Americans. This doesn’t just impact their bottom line, it impacts the bottom lines of the stores they shop at. Walmart, one of the largest beneficiaries of SNAP benefits, would see its revenue decline. To cut costs, it would lay off retail associates.

Without work — and without SNAP benefits themselves — those unemployed Walmart workers would stop spending money in their local economy. While some workers may find re-employment elsewhere, that’s not always the case. Towns that rely on the employment Walmart provides would dry up as displaced workers leave to find better opportunities elsewhere.

Government bureaucrats are merely the tip of the iceberg. The downstream consequences of shrinking the size of the government are far more catastrophic than anyone would want to admit.

Now, to be fair, many government programs are wasteful and unnecessary. But your opinion on a particular program doesn’t change the reality that the role of a government bureaucracy is to distribute resources across the population and it does this by employing people.

Right or wrong, a program like food stamps provides a source of income for the people it employs, not just those who benefit from it. It gives the people who manage it a paycheck, too. All of these people are participants in the economy, an economy designed around spending. Their ability to spend money directly affects the employment of other people in the community, regardless of whether or not they have a direct tie to the government program in question.

Shrinking the size of the government isn’t just about cutting government spending. It’s about cutting employment opportunities and eliminating the flow of money that keeps our economy going, too.

History tells us government employment is essential. It’s what helped America get out of the Great Depression after all.

To understand the significance of government programs, let’s go back to the Great Depression. If you remember, the stock market crashed in 1929. Millions of people not only lost their jobs, but thanks to bank runs, they lost their savings too. The social safety net we have today didn’t exist yet. Overnight, hard-working Americans were thrust into poverty, begging for food wherever they could find it.

After winning the election in 1932, Franklin Delano Roosevelt started his presidency by creating a number of public works programs, commonly referred to as the New Deal. These programs employed Americans to fix bridges, build irrigation ditches, and to stand up new government agencies like the Social Security Administration.

Between government programs and the outbreak of World War II, the federal government was the primary catalyst for putting people back to work — not private industry. This is important to consider when reckoning with the bogeyman that is big government today. It didn’t become big on its own. Something happened — a collapse of the economic system a century ago — to get us to the bloat we’re at today.

The addition of subsequent programs has only made the government larger. The question you should be asking yourself is why? Is it really because a handful of squirrely politicians want to frivolously spend your money on government handouts to lazy welfare queens? Or is it because we still haven’t learned the lessons from the corporate greed and malfeasance that brought about a depression in the first place?

If we successfully got a smaller government, who would pick up the tab to ensure Americans are gainfully employed and the consumer economy continues to run as expected?

With emerging technologies reshaping the workforce, the demand for government employment will likely grow in the years ahead.

History can’t predict the future, but it does shed light on important lessons that we will be doomed to repeat if we don’t learn them.

We are approaching the precipice of another economic collapse as big — if not bigger — than the Great Depression of the 1930s. The cost of living has far outpaced Americans’ earnings. Many Americans work multiple jobs and a side hustle but can barely afford rent, let alone other essentials like medical care or transportation. As a result, Americans have taken on tremendous amounts of debt to make ends meet.

You can’t deny the bubble that exists. The question is, who will step in to save Americans when it finally pops?

What history tells us is that it won’t be a private industry. Recognizing the impact rising labor costs are having on their bottom line, Wall Street darlings like Chipotle are already racing to automate as much of their workflows as they can.

Meanwhile, the deployment of artificial intelligence at all levels of business will fundamentally restructure the workforce, the likes of which we’ve never seen before. By the end of the decade, as many as 45 million people in the United States will be displaced because of AI.

While there’s an assumption that new jobs will be created to absorb displaced workers, that’s a fallacy. Private industry isn’t in the business of employing people; it’s in the business of generating a profit. If it can do that more efficiently sans a human workforce it will.

Who will be responsible for employing workers then? Answer: the government.

Is it possible to have a small government when the government is the country’s largest employer?

Can you cut the size of the government while simultaneously providing employment opportunities to millions of Americans who rely on it?

No, you can’t.

A small government is a government of few programs. While that would be more efficient and fiscally responsible, it simply isn’t possible. At least not until companies begin shouldering the burden of employing the people they expect to participate in the economy.

If history is any indicator, that’s not going to happen anytime soon.

Politicians who advocate for a smaller approach to government are missing the bigger picture. They fail to see the fundamental role the government plays as an employer. Reducing the size of it actually means reducing the number of available employment opportunities it provides as well.

While they may offer a grandiose vision for the government on the campaign trail, the reality is you can’t have your cake and eat it, too.

Final takeaway.

The conversation about the size and scope of government comes up every four years with every major election cycle. But this time is different.

Western civilization is undergoing a profound change that will change what our economy looks like and how we participate in it. There is reason to believe some sort of universal basic income will be created. In fact, it’s already being tested out in the Global South.

Unlike in the past, the size of government and the role it will be expected to play in the years to come actually matters now more than ever before.

We need to stop pandering to politicians and start demanding answers to hard questions. We can’t assume the jobs we need to sustain our economy will exist in the future.

Either the government will find a way to keep people employed, or it won’t. And if it doesn’t, the meaning of employment itself will change and, thus the structure of our economy as a whole.

What role will the government have in this transformation? If it becomes too small, will it have any role at all? And if it doesn’t, who will be left to advocate for people like you and me?

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