John Robson: Cutting Government Spending Is So Far Just an Aspiration

Commentary

Gosh. That was fast. Problem solved. A spokesperson for the finance minister says his call for across-the-board cuts based on finding efficiencies is “a long-term transformation of government.” And here some of us thought it meant a long-term slog through inertia and perverse incentives past the bones of umpteen failed efforts to trim fat instead of cutting programs.

Whatever it is, it will skip blithely past the welfare state. The same spokescrat promised no cuts to social programs or transfers to the provinces used primarily to fund social programs. Which is where almost all spending goes, directly or to administer same. So what of these fabled efficiencies?

Federal spending ballooned from $256 billion in Harper’s last year to $485 billion in 2024–25, or as the National Post’s Tristin Hopper rightly notes, from $331 billion inflation-adjusted dollars, and the public service has swollen from a quarter of a million in 2015 to well over a third of a million now, an increase of 110,000 people. Since you still can’t get the Canada Revenue Agency to help you on the phone, you’d at least think returning half-way to 2015 on both numbers would not cause the instant, hideous collapse either of society or the state, even if totally disinterested public sector unions say it would be the end.

On the other hand, if you don’t know why government grows so relentlessly and spends so strangely, you won’t be the one to drag us back even halfway, let alone transform how the government works. Yet it’s extraordinary, even in today’s undisciplined environment, how many people flail away at the overspending problem who seem to know nothing about its causes or history, and to have made no effort to find out.

Just for starters, the famous “across the board cuts” often resorted to by politicians who despair of finding the efficiencies they blithely touted while campaigning have the genuinely undesirable effect of doing the most harm to the operations of whichever departments actually were most efficient. But they never seem to know it.

Then there’s Milton Friedman’s famous response to a question about cutting government waste that “There’s no such category.” It seems astounding, especially from a libertarian Nobel-prize-winning economist. But any politician who doesn’t grasp his point that government operates in predictable ways that are necessarily less efficient than a successful private firm, because it cannot rely on profits and price mechanisms to dictate the allocation of resources, will gape helplessly at red tape.

Friedman understood the necessity of government. But he also understood that its necessity arose from three specific kinds of very real incentive traps: free riders, holdouts, and transaction costs. And that when the state stepped in, say on defence or creation of infrastructure, it didn’t eliminate those traps, it wrestled with them. Including when “The Procurement Ombud Proposes 5 Solutions to Solve Federal Procurement Issues.” Not because the suggestions are bad (unlike the title “Ombud”) but because they’re so obviously good that they beg the question why they weren’t done long ago.

Here I strongly recommend Anthony de Jasay’s “The State” on the incentives motivating politicians and bureaucrats, and their dangerous, frustrating consequences. But instead of studying theory or history, an astonishing number of people rush in where political economists fear to tread, including supposedly conservative or right-wing politicians pledging to run government like a business, which is as fatuous as promising to run a ship like a truck. And left-wingers convinced that as transformative agents of change, they transform things just by saying it.

If books are too hard, they could at least watch “Yes Minister” on why government operations are so persistently, comically obnoxious and expensive. Including this call for austerity coinciding with the governor general spending a third of a million bucks on a sole-sourced contract for a massive artificial skating rink. And our government going on a decade-long hiring spree yet, Blacklock’s reports, “Federal hiring is so convoluted that jobseekers wait months after filling out ‘repetitive and time-consuming questionnaires,’ says a Public Service Commission report.”

Friedman also understood that when the state barges in where no such incentive traps exist, it creates them. A famous warning, wrongly attributed to Cicero or far more often to Alexander Fraser Tytler, says democracy only lasts until citizens discover their vote is the key to the public treasury. But how many politicians or pundits have even heard the claim, let alone pondered it, that everyone has a “free rider” incentive to extract as much money from government as possible and contribute as little?

Instead, a news story on the feds promising billions in new spending on a wide range of things and a balanced operating budget by 2028–29 adds blandly that “the details of how that will be achieved are still not clear.”

Oh. That trifle? Pshaw. We’re transformatively transforming… uh… whatever it is.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.