The massive expansion of government over the past 50 years has generally occurred in tiny incremental steps – Rome was not destroyed in a day. The expansion has been made possible, in no small part, by a concerted effort to conceal the costs of the expansion. To identify the trend as a concerted effort is not conspiracy mongering, but rather a recognition that politicians are mostly rational people who know how best to advance an agenda that increases their power.
This concealment takes five basic forms.
Complexity – The complexity of the tax code (and government finances generally) serves many ends, one of which is to make it difficult to even discuss who pays how much in taxes. The complexity enables a deceptive terminology (“refundable tax credits”) that is impenetrable to rationally ignorant voters.
Borrowing – Everyone is happy to get to something that will be paid for by someone else. And if that someone else is too dumb to have not been born yet, well too bad for them.
Cost Dispersion (aka “nickel and diming”) – There is a reason the government does not rely simply on income taxes to fund its operations. Employment taxes, spectrum auctions, user fees, telephone surcharges, fuel taxes, estate taxes et al. are not prevalent as an efficient way to raise revenue.
Cost Shifting – In many areas the government pressures businesses to provide goods or services at or below cost to designated recipients, and to pay for the largesse by charging disfavored customers higher rates. This has historically been prevalent in medical care, college tuition, bank lending and utility bills, but seems to be continually expanding into more areas.
Cost Hiding – The effectiveness of cost shifting and cost dispersion is undercut if the middlemen try to alert customers to the fact that a portion of the bill is mandated by the government. In many areas the government has responded by passing regulations that prohibit such disclosure.
Future posts will be dedicated to highlighting examples of these phenomena.