While one might quibble with the technicalities and the source, the Heritage Foundation's Index of Government Dependency does tell a convincing story: in the United States, as William Beach puts it "dependency on government has grown steadily and at an alarming rate in recent decades." Mark Steyn writes: "While few electorates consciously choose to leap left, a couple more steps every election, and eventually societies reach a tipping point." This appears to happen regardless of whether ruling parties are supposedly from the left or right, and regardless of the rhetoric about tax cuts, freedom, or rolling back the frontiers of state.
Does it matter? I think it does; partly because big government is generally remote government, and that is a loss in itself. But remote government is also cumbersome and inefficient. It's unresponsive to events. It can crowd out more efficient, more local ways of doing things. Being big, cumbersome and fond of one-size-fits-all policies, it generates the vulnerabilities of any monoculture. It is extremely exposed to disruptive, unanticipated events, and because of its size, the impact of its failure can be devastating. The current financial crisis is one symptom of this. Another is climate change, which in large part is a product of governments' favouring an infrastructure - and agriculture - that is entirely dependent on fossil fuels; often by subsidy, and almost universally by socialising the costs of fossil fuel use.
One answer could be Social Policy Bonds. Government would still take on the responsibility for raising revenue and targeting such desirable goals as the eradication of poverty or the end of violent political conflict. It would raise revenue to achieve such goals - something it can do very effectively. But by issuing Social Policy Bonds, it would contract out the actual achievement to the market. Organizations would be set up whose structure and activities were entirely subordinated to the targeted goals. Diverse, adaptive solutions would arise the product of our limitless ingenuity and the incentives that would be on offer. In short, by issuing Social Policy Bonds we could achieve important, broad social goals without the huge, coercive and monolithic government that we currently think is necessary.