In this post:

A few thoughts about the limitations of government
Our founding fathers
How large should government be?
How policy helps frame the debate
Where we are headed

In a recent post, "Stop the madness now!" I voiced my growing concern with the direction the country is headed. I am not alone in my concern. Despite recent improvements in the economy, most recent polls show that Americans are more alarmed now than they were early in the year when things looked rather bleak. While these concerns have manifested themselves in various ways depending in large part on political preference, it is clear much of the worry centers on jobs – or the lack thereof.

Policy makers have been wildly successful in stabilizing the economy in the U.S. and elsewhere. Given the enormity of the financial crisis, it is unrealistic to have expected a far better economic situation than the one we find ourselves in. Nevertheless, disenchantment with the economic direction has reached a fever pitch, putting the Obama Administration on its back foot.

In my view, this is not just because the economy remains weak. Americans are angry because the economic policies used to try to fix our predicament have been both unfair and opaque. They have favored special interests like finance and automakers and much of the maneuvering has been done in secret. All of this has increased distrust of government and weakened the Obama Administration.

The result of the increasing distrust of government has been a renewed questioning of the role and limitation of government in the American economy.

When thinking about government and its role and size, there are three camps of thought.

1. Big Government. Supporters of big government believe that government can do good. In this view, an increase in the size of government is not just needed but necessary in a severe economic downturn in order to fill the void left by the private sector's fragility. The large scale fiscal stimulus enacted in 2001 to lessen recession, in 2008 at the tail end of the Bush Administration, and in 2009 during the Obama Administration are examples of Big Government in action.
2. Limited Government. People in this camp believe that government must always be held in check – even in times of economic distress. If not, a self-perpetuating bureaucracy develops, with a cadre of individuals dependent on government and wedded to institutions or programs which no longer have great value. In this view, expanding government is like moving to a bigger house that must be filled with stuff, the size justifying the need for possessions rather than the need for space justifying the size.
3. Small Government. Individuals in this camp see government as a parasite which, while necessary in small measure, is always and everywhere a negative raising the specter of despotism and cronyism. In this view, government must be kept as small as possible because it feeds on society for its own benefit and on power to eventually usurp property and wealth for its own use or that of its cronies.

Our founding fathers

The United States were founded by people who were distrustful of government and looking to escape tyranny, taxes and religious persecution. So, the founding fathers were largely in the second limited government group, with many in the third small government group. We need look no further than the U.S. Constitution for evidence of this instinctive distrust of government.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense,^[1] promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

This preamble to the Constitution is a statement of purpose. It is the answer as to why the U.S exists. It answers:

1. who established the government: "We the People" (back then, white tax-paying citizens; now all women and men)
2. for what purpose we established the government: "to form a more perfect union…. and secure the Blessings of Liberty"; and
3. who benefits from this action: "ourselves and our Posterity."

The specific words were chosen carefully. The word liberty is central to this statement. Merriam-Webster describes liberty like this:

the quality or state of being free: a : the power to do as one pleases b : freedom from physical restraint c : freedom from arbitrary or despotic control d : the positive enjoyment of various social, political, or economic rights and privileges e : the power of choice.

Then there is "our Posterity" i.e. our children, children's children and their descendants and other future citizens. They are to be a chief beneficiary of government action.

I would describe this as a document affirming great respect for individual liberty but cognizant of the need to sacrifice some individual liberty for a sustainable long-term future. You and I both know this document is more of a goal than a reality, since slavery was permitted in the United States until nearly 100 years later. And Native Americans were persecuted and slaughtered and women were refused a vote until the early 20th century.