07/13/2009 05:12 am ET Updated May 25, 2011

Small Government? You Mean Big Business.

For years, there's been a loud voice in American politics insisting government must shrink so liberty can grow. It sounds great. But it's what your lawyer calls a phony premise; a small government is a weak government that can't manage a big country.

Governments -- especially our government -- aren't necessarily vice-ridden parasites upon the people. Governments were created to protect the strong from each other, the weak from the strong, and the country from outside threats.

To do that, government has to be strong enough to handle any power or alliance of powers. It doesn't matter what those powers are: If a government can't stand up to them, it can't do its job. And it does that job through laws and regulations that set limits on what the powerful -- and the powerless -- can do to each other, and to society as a whole.

An example? Years ago, Saturday Night Live ran a skit with Dan Ackroyd as a sleazy toy manufacturer selling his latest product, Bag 'O Glass -- a bag of broken glass. No government regulator would allow that on a store shelf; but is the premise any more ludicrous than marketing a drug -- with FDA approval -- that includes death as a possible side-effect? Yet drugs like that are advertised on television every night, allowed on store shelves on the "limited government" premise that people can make up their own minds about things and don't need government intruding on their lives.

As far as these loudmouthed radicals are concerned, regulating business is a one-size-fits-all proposition. During 1999- 2000, for instance, then-Senator Phil Gramm pushed through Congress the Gramm-Leach-Bliley Act, and the Commodity Futures Modernization Act: The first threw down the Depression-era walls between banks, investment banks, and insurance companies; the second relieved derivatives like credit default swaps from any regulation. The result? The economic crisis.

That crisis, in fact, gave the lie to the idea that government shouldn't "interfere" in the marketplace because industries can regulate themselves. The truth is that given their head, many industries -- especially the financial industry -- will do what they think they can get away with, and chase profits right off a cliff; that's why in this area, it's government's job to lean against what Alan Greenspan called "irrational exuberance", however much Wall Street may whine that it's not being allowed to create credit and finance American business.

And if Washington had done that, it would have been a good thing, because as we've seen more than once, Wall Street only cares about short term profits and bonuses. Then, when things blow up, it turns around and extorts bailouts from us by threatening to take down the economy. Meanwhile, it wraps itself in the flag and lectures the rest of us about personal responsibility.

Let's face it: The people arguing for small government have taken us for a ride, and a lot of perfectly good people bought into the patter. Why? Small government was a package deal, wrapped in lower taxes. And who doesn't want more money in their pocket? It was brilliant tactics. The salesmen could even talk about "starving the beast" and leave the impression that when the government was finally forced into submission -- by provoking a crisis -- the result would be painless.

What a joke. Insiders reaped billions, and stuck us with the bill. Meanwhile, lost in the sales pitch was the fact that in this country, corporations have all the rights of citizens. That's right: When you shrink the government to maximize liberty, you make the world a better place for AIG.


As we said, this government isn't a parasite on the people. And tax money isn't theft -- it's the people's money, spent by the people's government, for the people's purposes. If someone wants to call that socialism, remind them this is the government of, by, and for the people. If they insist otherwise, read them the Constitution; it begins "We the people of the United States...." It doesn't say anything about making the world a better place for giant corporations.

Ben Franklin said the Founders gave us a republic -- if we can keep it. But to keep the republic, we need a strong government, and we need to be willing to pay for it. It's our moral, patriotic duty.