11/29/2010 12:28 pm ET Updated May 25, 2011

Escaping the Small Government Trap

Faced with myriad difficult issues, the American electorate in November turned to candidates who promised to miniaturize the size of government. This occurred despite the fact that polling data reveal that the American people believe that governmental action is required if the country's problems are to be satisfactorily resolved.

To take just one example, the problem of global climate change is understood by economists to be a classic example of market failure, requiring corrective public sector intervention. To reduce gas emissions, the government will have to act to both raise the cost of fossil fuels and to fund research and development that can lower the cost of renewable energy. Both sets of governmental actions are needed to shorten the transition away from coal, petroleum and natural gas.

And the public agrees. In a survey undertaken in mid-October 2010 by the Pew Research Center for the People and the Press, 63 percent of those polled believed that global warming was either "very serious" or "somewhat serious." Only 18 percent believed that it was "not a problem." Furthermore, of those who did believe global warming to be a problem, 46 percent believed that it required "immediate government action," as opposed to 29 percent who believed that it did not.

Even more revealing is that Republican attitudes towards government corrective policies were surprisingly supportive. Among self-identified Republicans, 73 percent agreed with requiring better fuel efficiency for cars, 64 percent with increased federal funding for research on renewable energy sources, and 55 percent with spending more on public transportation. To be sure, in each of these cases the percentage of Republicans endorsing these policies was lower than among Democrats and represented a decline from previous levels. Nevertheless, these are not the responses of people who are steadfastly anti-government.

The problem is that while the American public broadly understands that global climate change and other critical issues require public sector intervention, it does not believe that the United States government can be trusted to do the job. Again, there is broad agreement among Republicans and Democrats. While 81 percent of Democrats believe that elected officials influenced by "special interest money" is a "major problem," this view is shared by 86 percent of Republicans. Among all respondents, the top two categories identified as receiving too much attention from the government were "Wall Street" (50 percent) and "Business Leaders" (45 percent). Indeed, the poll revealed 65 percent of respondents believing that both the federal Government and Congress have a negative "effect on the way things are going in the country."

These results are consistent with a long-term trend of growing distrust in government. We are far removed from the America of 1958 when 73 percent of Americans trusted their government. That statistic stands today at 22 percent.

The American people obviously are trapped in an acute contradiction. On one hand they know that issues like global climate change can be satisfactorily addressed only at the governmental level; on the other hand they also believe that government is in the pay of special interests and is not to be trusted to serve the public's needs. Much of the electorate has responded by deciding that since the government is not trust-worthy, its size should be reduced. And so the energy bill died in the Congress -- a death caused by campaign donations of energy companies with vested interests in fossil fuels, and in the absence of a push-back from the public, convinced as the latter is that it would be quixotic to expect the government to act effectively.

The dysfunction of our political system is plain to see. It flows straight from the way we pay for our politics. People correctly believe that those who pay for electoral campaigns possess a dominant influence on legislative outcomes. Many therefore vote in accordance with the commonsense conclusion that their tax dollars should not be wasted on increasing the size and scope of the government, when only the privileged benefit from such an expansion. Yet many of these same individuals also know that addressing our problems necessitates just the opposite - a more activist role for government.

Resolving this contradiction and winning the electorate's trust in government means convincing voters that special interests can be prevented from distorting public sector policies. To free the electoral system from the choke-hold of wealthy donors requires the public funding of election campaigns. But to suggest such a role for the government triggers precisely the aversion that has emerged to all things governmental.

Neither the advocates of alternative energy nor campaign finance reformers can be successful without the other. Slowing global climate change requires the trust in an activist government that only public funding of elections can produce. But campaign finance reform can only be won if advocates demonstrate that its implementation is the best route to resolving our critical issues such as the successful transition to renewable energy.

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