That Government is Best Which Governs Well (Not Least)

Libertarians are fond of quoting Henry David Thoreau’s aphorism, “That government is best which governs least.” But is it really true?

In a recent post on Medium, I treat Thoreau’s aphorism as a hypothesis and put it up against some empirical measures of size and quality government.

As one measure of “governs best,” I used the Legatum Prosperity Index (LPI), which aggregates dozens of indicators, including  not just GDP per capita, but good health; access to food, clean water, shelter and education; safe communities; clean environment; and so on.

As an alternate measure of “governs best,” I used the Human Freedom Index (HFI) from the Cato Institute, which aggregates indicators of freedom of speech and religion, freedom in personal relationships, safety and security, security of property rights, freedom to trade, and so on.

As a measure of “governs least,” I used the ratio of government expenditures to GDP (SGOV) from the IMF World Economic Outlook database. As a check of that ratio, I also looked the Size of Government indicator (SoG) from Cato, which measures expenditures, taxes, and government enterprises. Both indicators of the size of government are placed on a 0 to 10 scale where 10 indicates the smallest government.

The results are not consistent with the hypothesis that small government is associated with greater prosperity or greater human freedom. Here are the scatter plots using SGOV for a sample of 143 countries. (Plots for SoG are similar, although the fit is not as tight.)

If small government does not promote prosperity and freedom, what does? The answer, it turns out, is good government. To measure the quality of government, I used a composite indicator, QGOV, which measures whether a government adheres to rule of law, maintains fair and impartial criminal justice, and is free from corruption. QGOV associates positively with both LPI and HFI, as the next scatterplots show:

My conclusion: Thoreau’s aphorism should be changed from “That government is best which governs least” to “That government is best which governs well.” Quality of government, not size of government, is the key to prosperity and freedom.

For more details on data and methodology, read this two-part series: “Freedom, Prosperity, and Big Government,” and “Quality of Government, Not Size, Is the Key to Freedom and Prosperity.”