An underlying theme of the 2019 gubernatorial election, and the few competitive legislative races, will be the size of government in Mississippi. It just hasn’t been framed in those words.
Rather, we will hear about how much more taxpayers need to spend. We will hear how we should expand Medicaid, how we need to increase funding for education, and how we should raise the gas tax to spend more on roads and bridges. Sounds wonderful. Big problems addressed with an expansion in government, financed by taxpayers.
If you’re not in favor of these big ideas, you’re a terrible person. “How else can we move off the bottom of most rankings?,” the politicians ask.
But it all comes back to one question: How much of the economy should government control?
Contrary to what you might have heard, our government is larger than most. Fifty-five percent of the state’s economy is controlled by the government. Said another way, government is in charge of more than half of our economy.
This gives Mississippi the fifth largest government share of economic activity, behind only Alaska, Minnesota, Hawaii, and Kentucky. That’s not a good sign for a growing economy, which should be our goal (not a growing government).
Looking at our neighbors, government controlled between 47-50 percent of the economies in Alabama, Arkansas, and Louisiana. It is 43 percent in Tennessee, the most prosperous of our neighboring states.
The current economic system too often rewards political favor-seeking and lobbying rather than private sector activities. That only increases as the government grows. Therefore, the shift is from creative entrepreneurship towards lobbying and regulatory capture. Such actions benefit some companies and corporations, but they do not benefit the economy at large. Worse, such actions act as a drag on economic growth at a time when we need more private sector activity from a broader group of industries and participants.
Economic growth from the private sector unconnected to government action should be our goal, and should certainly be the goal of anyone in elected office.
Wealth does not come from the government. Government doesn’t have anything that it did not already take from someone else. All government can do is redistribute wealth from one person to another as it chooses, whether that’s a social welfare program or a corporate welfare one. Government only moves money around. It doesn’t create new wealth or build a bigger pie.
Only the private sector can do that. Individual initiative is the most powerful economic engine we have. Wealth is generated when individuals risk their own resources in hopes of meeting a need in the lives of other people or businesses, and do so in a manner that earns them a profit. That need might take the form of a new product, a more efficient service, or fresh, capital needed by a business to start or expand its operations.
It’s very easy, and very tempting, for any government official to give out tax dollars, get their picture taken, and talk about how much they are doing for you and me because of that new government initiative.
You don’t get a shovel for reducing regulations, freeing up the healthcare industry, or reforming occupational licensing. But the most helpful thing an elected official can do is be serious about pursuing policies that will make it easier for free enterprise. We’ve seen the results of our elected officials trying to manipulate, organize, and orchestrate the economy. That’s not how markets work and Mississippians are smarter than most politicians think they are.
At the end of the day, to generate sustainable, long-term growth, the only option is to grow the private sector through lower taxes and a lighter regulatory burden. It doesn’t make for a sexy campaign slogan and many people who work in government or depend on government for jobs and contracts won’t like to hear it.
We are hopeful that over the next few months, we will hear how we can grow the economy, not the government. Or at least we can hear an honest discussion about the current size and cost of our government.