How Technological Change Might Impact the Size of Government, Essay Example

Technological change has been a ubiquitous feature of the American economy for more than two centuries. Using the economic theory of regulation, explain how technological change might impact the size of government.

With rapid advances in technology, there were vast changes occurring in the government work places. Also, the technological change that is in process has dynamically changed the public expectations of services provided by the government. The regulatory processes in the American government have undergone vast change during the earlier industrial revolution and the current technological changes have had an impact similar to the industrial revolution in intensity. The various regulatory processes and services provided by the government are enhanced by technological changes. Also, the productivity and efficiencies of the government employees are enhanced as a result of the technological developments.

On important impact of technological change on the government is that it emphasizes on skilled workers whereas the old technology uses both skilled and unskilled. Hence, the obvious indication is that the size of the government is increased as a result of technological change as also evidenced in the work by (Shughart and Tollison). Also, there is a shift market equilibrium wherein the skilled professionals benefit at the expense of unskilled labour. Moreover, there is disturbance in social welfare as also the competitive equilibrium is more inclined towards the skilled labour. However, when there are budget cutbacks the growth rate of technological development reduces. Also, the technological change had posed recruitment and employee retention challenges for the government; for instance the government has to pay IT professionals on par with their competencies in a private sector company. The emergence of digital government is an important impact on the government as the government services are offered online with a click of mouse and with specifically skilled employees managing those service offerings.

According to Stigler’s theory of economic regulation, a regulator, either an agency, the government or be it any other body is likely to face pressure from both the producers as well as the end consumers; however, the pressure from the producers has been termed as ‘special interest’ pressure and the government which acts as the regulator is likely to drive the impact of the change in favour of the special interest. According to the above theory, the special interest of the producers is favoured either by providing through ‘direct subsidies’ or via ‘protectionism’. However, the producers already in the market are not in favour of ‘direct subsidies’ as they give opportunity for new entrants, hence protectionism is generally favoured.

During the 1980s, the US government endeavoured made efforts towards deregulation of the economy also owing to the impact of technological changes such as the rapid developments in information technology. According to the protectionism strategy, the government places more regulatory obligations such as occupational licences and other tariffs, on the other hand, deregulation was seen as an opportunity for new entrants and speeding of economic development owing to reduction in bureaucratic procedures. The technological change through information technology developments led to speed in government procedures and encouraged federal investments. Technological change is one of the factors that influence legislative output; given that the governmental growth and legislative output are related, the evidence that there is growth in the size of the government indicates that there has been change in legislative output causing such change in the size. There is reduction in regulatory burden for the government and technological change has been the major driver of deregulation of the US economy apart from driving social change as well. The growth of government has been made possible through technological change.