Many economists argue that governments are not efficient. This claim originates from the idea that governments are sovereign and do not have to compete with anyone in order to remain in business (power). The more that I thought about this the more I realized that this argument has many weaknesses. As I thought about history I realized that government after government has had to compete in order to survive. They have had to compete militarily, they have to compete economically with rival powers, they have to compete diplomatically with both friend and foe, and they have to compete domestically to keep their citizens happy and in place. Democracy has added a whole new aspect of this competition by creating electoral systems that force politicians within a government to compete for the broad public support necessary to get and maintain office. How about we investigate each of these areas and their implications a little more fully?
The first thing that I think of when I think of government competition is the fact that governments have to fight wars. If a government cannot create a military force that is powerful enough to withstand the forces of opposing nations, then they will have to either rely on a protector, or submit to the will of their more powerful opponent. This was much the case with Western Europe during the cold war. France was one of the few Western European countries that was able to maintain a relative separation between itself and the United States because 1) the US would protect them from the Soviets automatically by protecting Germany, and 2) France developed its own nuclear arsenal independent of the United States, which allowed France to be a player independent of American or Soviet nuclear power. The United Kingdom on the other hand has been forced repeatedly to yield to American's view of how they should conduct their foreign policy. By hitching their wagon to the American star they have been able to ride the wave of American domination into the 21st century, but they often are forced to side with America for example on issues such as Iraq. This is evidence that governments have to compete militarily in order to survive independently. It could be said that the only inefficient government, militarily speaking, would be the government that has a monopoly on military power in the world, and although the United States is currently considered the world's greatest super power it still has to compete with Russian nuclear weapons, and China's sheer numbers. This means that most governments at present and throughout history will have to compete militarily creating efficient military outcomes for their home nations.
The second area of competition is economic competition. I want to approach this from a national as well as from a state level. Many people, especially in the United States, feel that the government has no incentive to create efficient economic outcomes, but I would like to analyze those claims and point out the incentives that government does have to create efficient economies. Let's start at the state level. State governments operate on a much smaller scale than the federal government which means they are able to focus on more local details. Many people see the US federal system as a huge strength built into the constitution by the founding fathers, and I agree. The states are able to focus on local issues and to apply solutions that work for them that might not work in other states. With the local populace in more control of government states are better able to compete with their neighboring states to create environments in which businesses can thrive. The reason for this competition is simple, tax revenue. Each state wants to have the best climate for business so that that they can attract more business thus raising their tax income. If a state becomes too inefficient then a neighboring state will provide a better environment and businesses will move to the efficient state. This forces individual states government to create efficient economic outcomes. At the national level we are beginning to see this same effect. Nations are becoming more and more economically interconnected through globalization and this means if your country can't do something efficiently someone else can. We see this in the outsourcing that is taking place right now. Companies are moving to areas that are more efficient for them. This means that the US will have to create a competitive environment in order to keep companies in the US.
Another argument about Federal government inefficiencies are tenderly called "pork barrel." Pork barrel is when senators and representatives tack special government funding or projects on to legislation in order to secure their vote. Basically it's a bribe from the party that wants the legislation to pass to the congressman/women voting for it. Many people see this as inefficient because it creates unnecessary spending that is not good for the nation as a whole and only benefits one constituency. This is true in some regards, but in other aspects is could be efficient because senators and representatives will be competing for the federal spending in their areas. With different congressmen/women competing for these limited resources, they should technically be able to find the most efficient outcome. This means that states which need the funding will do what they have to, to get it.
Well I'm getting bored with this topic and I'm sure that anyone who has made it this far in my post is also bored so I'm going to stop my rant now, and just sum it up like this. The question should not be "Are governments competitive?" The question should be "What things are governments competitive in?" When we find answers to those questions then we find answers to the things that government could be responsible for and effective at providing.
