November 13, 2024

The news this morning is about so-called government waste, driven by the claims of Trump, the new Tsar of the Empire, and those of his Rasputin-like charlatan Musk that they can cut the government's size.

This push is based on the notion that certain departments of the federal government are unnecessary. A persistent and strange view of the Republican base that somehow government has grown not through the need to respond to a complex world, but because "bureaucrats" made it expand.

First, let's look at the size of the US Federal Government.

US government spending hovers around 36% of its GDP. Cutting that amount of spending has real consequences for economic activity in the USA.

Federal spending in 2023:

• Statutory programs: $4.4T

• Discretionary non-defence: $917B

  • Veteran's benefits, eduction, transportation, health, income security, legal system, natural resources ($48B), Administrative ($59B)
• Discretionary defence: $805B

Americans are obsessed with government spending and spend a lot of money monitoring, measuring, accounting for, and discussing every dollar spent by the government. There is "waste", but every study of the rate of "waste" shows that it is more efficient that any large company that has ever existed, never mind one as large as the US Federal Government.

What Republicans (and most Democrats) do not realize is that a lot of money spent by the US government is not money collected through taxes on the American people. It is the only country in the history of the world that has been able to sustain this practice.

As an example, the Congressional Budget Office of the USA outlines the following for Budget Projections 2024:

• Outlays: $6.8 Trillion
• Revenues: $4.9 Trillion
• Deficit: $1.9 Trillion
• Total Debt: $28.2 Trillion

Nearly 28% of spending is paid for by debt that they never expect to pay back, only the interest. And much of that debt is held by foreign governments as a hedge against US-dollar price fluctuations. The rest is held by private banks and investors as a hedge against the type of capitalism that the USA sustains.

Critically, the American public also does not understand that their high public debt is part of the toolkit that the USA uses to sustain its empire.

This is not a comment on the sustainability of deficit spending in the USA. We know from history that there is an end of the road, but pretending we know where it is and when we will reach it are more complex, and outright impossible just by looking at the deficit figure.

The point is that Americans (especially CEOs) have little understanding of the economics of the American state. This is not surprising, of course. While the USA is the most complex state ever to exist, it still makes an analysis of the potential impact of the proposed policies coming from Trump Sycophants quite difficult.

It is also difficult to analyze these statements because CEOs—as a simple matter of function—do not understand the structures of even their own companies. For example, I would doubt that Musk knows how many people it takes to make one of his cars. That is not just the number of people putting things together, but the minimum number of people required to coordinate all the activities that go into making a car.

Simple measures like the "size of bureaucracy" is not a measure of anything; it is merely a proxy for the complexity of output.

Neoliberal policies to reduce the size of government simply created more government and more spending while stretching workers to their limit trying to match poorly constructed internal metrics.

Lastly, and we have been talking about this for over a decade here, you cannot apply private-sector measures of "productivity" to government services. Government services, by their very nature, do not produce products.

You can increase "efficiency of service", but that will result in either sustaining the increased throughput of private production or inefficiency increases in private production.

The easiest way to think about this is through the productivity of teaching. Most would measure this by saying teachers can teach more students in a class and increase their "productivity". The result, however, (all else being equal) is a reduction in the quality of education. Thereby reducing private sector processes when those students make it into the workplace.

You can increase the application of technology in government, just like in the private sector, and increase the productivity of certain types of social output. But automation takes investment in money and workers, so the output for government (if it is to be sustained) actually becomes less productive for private capital.

You can privatize aspects of the public sector, resulting in increased productivity of that part of the public service. However, that "productivity increase" we see from privatization is really just the short-term bump in output from wealth transfer from the public to the private sector. In the end, it is a wash for the productivity of the output of society and you actually increase the number of non-productive workers in government, who are now necessary to oversee the private operations.

All of the prescriptions presented by Trump's Sycophantic charlatans have been tried before. It was called neoliberalism. And that's fine for the numbers; there will be some short-term economic boost to the economy. But like all pumping-up of the economy, it is short-lived and will return to the previous state after the growth is used up.

In the end, this attitude is like borrowing money you cannot pay back. You may be OK this month, but next month you are further behind.

The negative impacts of this kind of unsophisticated transfer of wealth from the public to (specific) capital will be tremendous and likely unquantified over the coming years.