The world’s richest man, Elon Musk, has been tapped by Trump to oversee a newly-created Department of Government Efficiency (DOGE). Let that sink in.
Musk recently stated that “government spending is, like, bankrupting the country” and promised to slash $2 trillion in expenditure. “We do have an opportunity to do a once-in-a-lifetime deregulation and reduction in the size of government.” Slashing regulations will accelerate innovation in Musk’s worldview.
No one could seriously argue the US federal government is a model of efficiency. It needs a major overhaul, for sure. But it’s important to examine some common misconceptions about government debt and the origin of innovation in society. While streamlining government operations is a worthy goal, we should be careful not to undermine the vital role government plays in fostering innovation and economic development.
Musk’s assertion that the government impedes innovation overlooks the crucial role public investment plays in technological advancement. Ironically, many of the technologies that have made Musk’s ventures possible stem from government-funded research and development: the internet, GPS and touchscreen technology are but three.
We have all been thrilled to watch SpaceX’s launch vehicles return to base but it is worth remembering that the really big risks in space exploration taken by NASA engineers over the last sixty years have paved the way for commercial space application. No private sector firm would have taken on those risk until the technologies were advanced and viable new business models emerged.
While streamlining regulations for corporations is useful, as Musk has pointed out, artificial intelligence is on the cusp of unprecedented disruption of societies. Like many others, Musk has argued for more regulation – not less – and rapidly, to avoid catastrophes. And of course when it comes to regulations around, let’s say autonomous vehicles, Musk has a strong vested interest in weak regulations.
Let’s move to the matter of trimming $2 trillion to cut the debt burden. Musk’s comparison of government debt to household or corporate debt is a common but flawed analogy. Unlike households, governments like the United State that issue their own currency can never “run out of money” in a technical sense. The real constraint on government spending is not the ability to repay debt, but the potential for inflation. Large government debt isn’t necessarily a route to bankruptcy and collapse, as contended by Musk. Countries like the U.S. can sustain much greater deficits without cause for concern because debt is simply money that the government put into the economy and didn’t tax back. Let that sink in.
As the economy grows, it can support higher levels of government debt without necessarily leading to financial instability. The focus should be on productive investments that support a thriving future for Americans rather than an arbitrary debt ceiling. The question should not only be “how do we cut government spending?”, but also, how do we direct spare capacity in the economy to invest in what we want for the future: good roads, better schools, investment in biotechnology, artificial intelligence…a base on Mars. Or all of the above.
A thriving innovation ecosystem requires more than just a slash-and-burn approach to regulation; it needs modern infrastructure and a healthy, educated society. When people are freed from the constant struggle to meet basic needs, they can dedicate time and energy to creative pursuits and innovation.
Government programs that provide healthcare, education, and social safety nets create the long-term societal conditions for innovation to flourish. By ensuring that citizens have their fundamental needs met, we cultivate a society where more people can contribute to technological and social progress. This will be particularly important as artificial intelligence becomes more deeply embedded in society with profound implications for jobs in the future.
All that being said, Musk’s call for streamlining bureaucratic processes is indeed valid and welcome. The U.S. federal government has long been criticised for its inefficient and cumbersome bureaucracy, which often results in wasted time, resources, and taxpayer money. A prime example of this is the notoriously complex and time-consuming U.S. tax system.
In contrast, Scandinavian countries have made significant strides in simplifying government interactions, particularly regarding taxation. In Sweden, where I live, the tax return process is remarkably streamlined. Most taxpayers receive a pre-filled tax form that they can review and approve in a few minutes and agree by SMS. This level of simplification saves time for citizens, creates trust in government, and reduces the administrative burden on the government itself.
So, efficiency and effective governance are not mutually exclusive – in fact, they can and should go hand in hand. While the U.S. federal government is significantly larger and more complex than its Scandinavian counterparts, these principles of efficiency can scale. The key is to continuously seek ways to improve and simplify interactions between citizens and government.
As Trump’s presidency strives for a more efficient government, let’s not lose sight of the vital functions it serves in driving long-term progress and maintaining social stability. The path forward lies not in dismantling government, but in refining it to better serve the needs of a dynamic, innovative society at a time of profound transformation.
