Public Management and Administration - Owen E.hughes

The Role of Government 91
circumstances, there were real fears that the private sector would be marginalized.
Size alone was seen as a problem rather than what government actually did.
However, as the public management reforms took hold, governments were able to
stabilize the level of spending and, in many cases, to reduce it, although demographic
effects such as the ageing of the population meant increases in some areas.
Although the size of government does vary, the concern over its scale and
efficiency led to some questioning of the effects of governmental size on the
economy as a whole. In its most extreme forms, it was argued that countries
with high levels of government activity and/or high rates of increase in the levels
of government activity would have lower growth rates. Although there are
still legitimate arguments about the proper size of government, the stridency of
a few years ago has seemingly diminished. There are two reasons for this. First,
the size of government in OECD countries has stabilized and, in many
instances, reduced. Second, and most important, there is a sense that the debate
has moved on to focus on the role of government; on the activities in which
government should or should not involve itself. Size, by itself, is far less important
than what government does.
There is no optimal level for the size of government or of what governments
do. There are only individual perspectives. Some people will feel their freedom
threatened even by a relatively small government. Others may be willing to give
up more personal freedom if this makes their material circumstances more tolerable.
Even when government spending is high, there are those who benefit.
The very high government spending in Sweden, for example, is not necessarily
wasted. It goes on social services, on assisting the disadvantaged, education,
health and child care of very high standard. For generations its citizens were
willing to trade-off high taxes for high levels of government-provided services,
but even there the levels of spending became economically unsustainable in
the 1990s.
The most common measure of government size is to look at the total amount
of government outlays as a percentage of the total economy. Contrary to some
expectations that government growth would simply continue, OECD countries
have generally controlled expenditure in recent years. There was a steady
increase in public sector outlays and receipts as a proportion of GDP in the
post-war period, but from the mid-1980s the proportion of government outlays
has stabilized in most countries and since then has started to decline.
Table 4.1 shows that some control over spending has been regained, with
general government total outlays having declined in the more recent years
shown. With the exception of Japan, which has tried to improve its recessed
economy with government spending, other countries and the OECD as a whole
demonstrate lower spending than at the high points. Table 4.1 shows the trend
over time is to stability and even reduction.
Using total outlays ignores the fact that actual government consumption is
even less than this. When transfer payments are taken out, because they are
finally spent by someone other than government, the size of government is