I don't think it matters as much how great a percentage of the GDP government spends, so much as how it is spent. Is the government spending money in ways that produce net positive social return? This becomes much harder as the absolute size of the bureaucracy grows. It is harder to manage a multi-trillion dollar budget than it is to manage Sweden.
The United States has a large amount of military spending and redundant bureaucracy, so we have high taxes and low social benefit. For example, the US is usually either #1 or #2 in the world in the amount of money spent per pupil in public schools, and yet the results are not good.
You're hinting at a very interesting problem here: The absolute size of bureaucracy.
It seems ( I have no data to back this up) that the efficiency of bureaucracy decreases exponentially with it's size. This is obviously a bigger problem for large countries such as the US. There are advantages to size (setting the global agenda, advantages in areas where absolute amounts of money matter (for instance military - your military is twice as good if you spend twice the money no matter how large your population. Roughly...) . , etc.). Whether these advantages outweigh the disadvantage of a large bureaucracy I don't know.
I don't have any empirical studies to back up my point, either, but the way spending is allocated by the US government is anything but rational. I have severe doubts that adding $1 more of revenue into the system will produce greater than $1 of benefits.
There is something to be said for the design choice of federalism; pushing all possible decisions down to the smallest unit of population effected. However, our government has moved away from this since the Roosevelts time in power.
"The bureaucracy is expanding to meet the needs of the ever expanding bureaucracy." -- Quoted from Civ 4 (and google didn't find me a source straight away)
European Commission that basically runs European Union (500M people) has just around 25,000 employees [1].
This is tiny. Just to get an idea about the scale: New York City (8M people) government employs 250,000 people (though to be fair, I have no idea who is included in this total) [2].
EC seems to be doing something very right. They offer very good working conditions (pay, holidays, benefits, security), so they are able to attract good people. There is a tough competition for these civil servant jobs.
"For nine consecutive years the EU court of auditors has refused to sign off the budget. The numbers are huge. The annual EC budget is around ¤100 billion (£65 billion). The auditors cannot clear 95 per cent of that. We simply cannot tell what is happening to that money"
Do you really believe that they could get away with 95% fraudulent spending? That nobody would notice 95 billion Euro corruption?
Or to put it another way, if this is true, it means that they are able to run real EC functions with just 5 billion Euro budget. That would quite efficient indeed.
Nah, it just means (for example) instead of putting function X out to tender, they just gave it to a friend or a family member. The work still gets done, it just could just be done quicker/cheaper/better with more transparency. I don't believe it's literally the case that Neil Kinnock is socking away a billion Euros a year into his Swiss bank account. Interesting to note that practically his entire family are EC employees tho'.
Well, I have zero illusions about top dogs that got their positions by political means/connections.
My whole point was about low ranking civil servants that do the bulk of the nitty-gritty administration work and that all must pass through a highly selective competitive exams (1 in 29 applicants [1] cf. Harvard's 1 in 14 [2]).
And for these people, from my limited anecdotal evidence I got impression that they are indeed efficient, at least for bureaucracy standards.
The EC is only the inter-government stuff. To be fair, you'd have to include all the employees of all the member states' governments too; or alternatively, compare e.g. London governmental employees, though scaled to population and leaving out actual England and UK administration.
The solution to this problem is federalism, but we've drifted a ways from the balance of state and federal power that used to exist. Constituents don't care about where the things they want are coming from, and they will vote for the people who give them those things. The end result is a federal government that is ever increasing in size. It would take a massive civic education effort to fix this problem.
I agree with your first point, but I'm having trouble seeing the "advantages to size" you speak of, at least on that scale. Things like "setting the global agenda" or "military is twice as good" sound like advantages to the bureaucracy itself, not to the people it consists of. (Per your examples: at no point during my lifetime did I feel that any President spoke for me, nor did I feel our gigantic military made me any safer.)
I've seen this commercially, too: large company buys small-medium company because it's good for both companies, even though it's demonstrably bad for employees and products of both. It's a tail-wags-dog situation.
Sorry, rereading the comment I see that it could have been clearer.
What I was talking about is what economists call a true public service. This is a service that doesn't diminish in value when you add more users - a light tower is the classic example: The lighttower is as good a service to a ship whether it is the only one using it or there are a thousand others. Webpages are another good example.
Large countries have an advantage here: It costs the same to build a lighttower whether you are the US or Lichtenstein.
The military might have been a bad example though...
The United States has a large amount of military spending and redundant bureaucracy, so we have high taxes and low social benefit. For example, the US is usually either #1 or #2 in the world in the amount of money spent per pupil in public schools, and yet the results are not good.