Harry Geels: New opportunity for a smaller and more efficient government
This column was originally written in Dutch. This is an English translation.
By Harry Geels
The former government failed to achieve an important policy goal: a 22% reduction in the number of civil servants. The new government has a second chance to work towards a smaller and more efficient government. There is a clear majority in favour of this in the new House of Representatives.
For more than thirty years, most political parties have expressed their ambition to make the government smaller, simpler and more humane. The previous government even laid this down explicitly: the civil service had to be reduced by 22% during its term of office.
In the spring of 2024, I wrote a column listing five reasons why this is urgently needed. Firstly, the self-reinforcing growth spiral of the government must be halted. Secondly, the strained labour market must be relieved. Thirdly, a smaller government results in fewer policies and thus simplifies society.
Fourthly, it improves public finances, because structural savings then become possible. And fifthly, it can reduce dependence on expensive external hiring. The new cabinet now has a new opportunity and public support is there.
Why it is not working
Nevertheless, it is proving difficult to actually reduce the size of government. There are structural reasons for this, which cannot be easily remedied by political will alone. The main reason is that the government is constantly taking on new tasks and responsibilities: increasing healthcare costs due to an ageing population, additional enforcement and supervision, European regulations, climate and energy policy, and, more recently, the international obligation to increase defence capacity.
As a result, the number of civil servants implementing policy is growing. For example, the number of civil servants performing executive tasks has risen from 82.400 in 2017 to 111,450 in 2024 (an increase of 35.5%, see Figure 1). The growth among policy officials was even stronger, at 65.8%. Moreover, these are often well-paid positions that are mostly filled by young, highly educated people.
Figure 1: Growth in civil servants by type of activity
Source: X / Jos Teunissen
Reducing the size of government is therefore a mixed bag: some tasks are simply increasing, but there are still realistic ways to achieve this, such as reducing external hiring and cutting back on management layers and policy capacity.
The new political landscape
The results of the last elections show that a large part of the House of Representatives recognises that the government needs to change. In Figure 2, I have divided the parties based on their election programmes: parties that seek a smaller government (VVD, JA21, FvD and BBB), parties that focus on a more efficient, humane or less intrusive government (PVV, D66, CDA, CU, SGP) and parties whose programmes advocate a larger role for the government (SP, GroenLinks-PvdA, Volt and Denk).
Figure 2: Different political views on government
Together, the first two groups — which want a different kind of government — represent about 80% of the House. That does not mean that everyone wants a smaller government for all tasks, but it does mean that there is broad support for simplification and modernisation. This classification ties in remarkably well with my earlier analysis of political ideologies in four quadrants: the right quadrants favour a smaller, more effective government, the centre favours a more efficient or more humane government, and the left favours more government.
Philosophical basis for a smaller government
Sociologist Max Weber pointed out that bureaucratic systems tend to expand: more rules require more coordination, which leads to more procedures, and in turn to more civil servants.
Milton Friedman then showed that when policy fails, the response is usually to deploy more civil servants to repair the failure. In his famous short lecture (on the four ways of spending money), he succinctly summarises why there are few disincentives when (other) people spend other people's money.
Friedman also distinguishes four legitimate basic functions of government: defence, policing, justice and ensuring fair rules (market regulator or referee, property rights, competition and the prevention of negative externalities). He saw healthcare and education as areas that can function privately with government subsidies, but where freedom of choice and competition can improve quality. This is a clear starting point for a reassessment of government policy.
Strike while the iron is hot
In addition, there is a growing body of empirical research showing that an ever-expanding government can ultimately slow economic growth and reduce productivity and prosperity. There is also a clear decline in marginal returns: the larger the government, the less efficient and effective it becomes and the less prosperity it generates for society. The new cabinet now has an opportunity to take a step that has long been postponed: from growth through complexity to quality through simplicity.
Moreover, we are seeing a global undercurrent of citizens who want less regulation, less bureaucracy and less supranational control. Some countries, such as the United States and Argentina, have already embraced this movement. The social zeitgeist is shifting. The question is therefore not whether the government should change, but how and how quickly.
This article contains the personal opinion of Harry Geels