Limited Government: The Public Sector in the Auto-Industrial Age, by Peter Murphy (Routledge, 230 pp., $140.00)
Unlike many sociologists, political theorists, and economists, Peter Murphy doesn’t analyze discrete problems in order to find cause-and-effect explanations. Emerging from an academic background in aesthetics, he is more interested in form, proportion, shape, and patterns, as they manifest themselves organically in societies.
In keeping with this preoccupation, he mines large datasets to perform pattern analysis, discerning how factors commonly group together in instructive ways. This methodology evades two common social science pitfalls: the propensity to simplify in such a way as to reach obvious “A causes B” explanations; and the associated problem of controlling for so many independent variables that the “A causes B” relationship is so confined and qualified as to be of little explanatory power.
Murphy’s new book, Limited Government: The Public Sector in the Auto-Industrial Age, explores the association of economic productivity and innovation with historical periods of limited governmental intervention. He devotes the first half of the book to a theoretical investigation of the notion of “pattern order”—the ratios and patterns that form spontaneously in nature, including in human societies, without apparent human agency—and how it is helped or hindered by government action. Pattern order plays a role in most human behavior, Murphy maintains:
A social media marketing company asks: what is the right mix of promotional content, owned content and curated content? Its answer: 10:30:60. Something similar applies to color schemes for interior decoration. Tripartite schemes are often aesthetically pleasing: 10 percent accent color, 30 percent secondary color, and 60 percent primary color . . . 10:30:60 is also a way of proportioning by volume cement, sand and aggregate in a concrete mix for building foundations.
Evaluating state pension programs, Murphy claims that the same ratio applies to calculating the sources of private retirement income—“Ten percent of such income is typically sourced from money that is saved during a person’s working life; 30 percent from the investment returns before retirement; and 60 percent from investment returns during retirement.” Government’s conscious designs, he argues, rarely match the natural pattern-orders discernible when masses of individual decisions are assessed collectively; or, as he puts it, “purposive organization rarely matches the performance of pattern order.”
In the book’s second half, Murphy assesses government failures in health, education, and welfare. He demonstrates that, beyond a basic level, government purchase or regulation not only fails to improve outcomes but also has a deleterious effect. The United States, for example, spends the most money per capita on health care (as well as the highest amount as a percentage of GDP) but gets below-average outcomes. Singapore, on the other hand, spends less than half the per capita amount that the U.S. does, and its total health-care expenditure as a percentage of GDP is tiny compared with that of the U.S. (4.9 percent, versus 17 percent)—yet Singapore sees above-average outcomes. The issue is not the amount of money being spent but how health services are delivered. Singapore is a leader in out-of-pocket expenditure as a percentage of total health-care costs, at 61 percent. The U.S. lags far behind, at 12 percent. As Murphy explains, Singapore transitioned in 1983 from a British-style, third-party payer system to its current policy of compulsory medical-savings accounts, from which individuals pay for their own health-care expenses. These accounts represent “the taxpayer’s own money to save or spend on health,” Murphy writes, and “a positive balance in a Medisave account becomes part of a person’s estate” at death.
Singapore provides a government-funded safety net for the poor, but personal responsibility is the priority. This emphasis produces greater efficiencies and reduces wasteful bureaucracy. It also encourages innovation in health care because individual purchasers “possess diverse capacities to bargain with second-party providers, try new things, bear risks and be early adopters of technology . . . if the innovations struck between adventurous first parties and inventive second parties work, as they sometimes will, then millions of less adventurous consumers will eventually benefit.” Experiments with education and welfare bear similar fruit. Compulsory savings accounts that “ring-fence” a person’s own money to spend on essential needs are simpler and more direct than attempts at third-party government provision.
Underlying the notion of limited government, for Murphy, is epistemological skepticism—a recognition of the limits of human knowledge when crafting public policy. Those looking for a formulation of limited-government conservatism fit for our era need look no further than his illuminating work.
Peter Murphy (Photo: Ron See)