In an article entitled “Quality of Government: A Statistical Portrait,” Ed Dolan displays a positive relationship between the size and the quality of government:
It’s true that richer countries tend to have both better and larger governments, so this correlation could be driven by wealth. However, in a regression model that controls for GDP, the relationship between the size of government and the quality of government remains strong and positive.
Here, size of government means state revenue as a share of GDP. Dolan omits petro-dependent countries, because they are on their own path, but suffice it to say that some of them have a lot of revenue and poor government. (They would go in the bottom-right quadrant, which is almost empty without them.) Dolan’s measure of quality comes from the Legatum Institute and is an index of the following components:
- Rule of law
- Government integrity
- Protection of property rights
- Contract enforcement
- Protection of investor rights
- Executive constraints
- Government effectiveness
- Regulatory quality
- Government accountability
Dolan also provides suggestive evidence that “life is better in countries that have high-quality governments, and even more so when those governments are both higher-quality and larger. That is true both when a ‘better life’ is defined in terms of the satisfaction of basic human needs and when it is defined in terms of human freedom.”
This article appears on the website of the Niskanen Center, which leans libertarian or pro-market, in a pragmatic and open-minded way. Most of the nine quality measures above are ones that a market-oriented economist would endorse. When someone like me, who usually votes for the left wing of the Democratic Party, cites this kind of study from this kind of source, it can look like a kind of gotcha. “See, pro-market economists admit that government helps.” But that is actually not my motivation. I am genuinely committed to individual rights and liberty, including economic liberty, and I want to be pragmatically open to what works.
I’d acknowledge, too, that if this chart measures “quality” accurately, then the USA gets more bang for our buck than, say, Sweden. We spend less of our GDP on government yet get almost as good a government. The only reason to prefer the Swedish model would be a somewhat different definition of “quality” (which I would probably defend).
Still, it seems intuitive to me that people are more free–in all senses, including libertarian ones–in the countries at the top-right of Dolan’s chart. (See: the Nordic model.) It is also intuitive that few countries other than petro-states spend a lot and get poor government and individual freedom. So this graph should be the premise for discussions of how we can obtain both more and better government.