Australians are getting poorer, and they know it. Real wages are going backwards as prices outpace pay packets. Productivity, the main driver of real wage growth, has stalled because of government policy and despite the government’s wishful projections. GDP per person keeps falling. Debt is rising.

Ask Australians how they are going and the answers are increasingly grim.

The reasons for Australia’s economic and social malaise are many and varied, but much of the answer lies closer to home than we care to admit. What Australians now demand of government is making the country both poorer and less harmonious.

In the late-1800s, the German economist Adolf Wagner observed that as national income rises, government tends to grow even faster than the economy. Wagner saw this pattern, known as the law of increasing state activity, as a characteristic of progress. What he did not anticipate is the paradox that Australia now faces. Prosperity may have fed the appetite for a larger state, but that larger state is now eroding the prosperity that built it.

The direct economic costs of bigger government are well understood. The crowding out of the private sector. The damage to productivity. The diversion of scarce resources away from production and towards lobbying and compliance. Taxes rise to fund the bureaucratic and regulatory state. But the non-economic costs can be higher because big government also crowds out civil society.

As the state takes over roles once performed by families, communities and voluntary associations, these institutions of civil society wither, and a society that depended on them grows more fragile. Followed to its end, this produces a state that governs everything because nothing else is left standing.

The engine of this process is the legislative reflex. Whenever a harm is identified, soon comes a media conference, a law, a penalty schedule, and a regulator.

The Institute of Public Affairs estimates there are now more than 370,000 federal regulatory restrictions, up 88 per cent since 2005. Cumulatively, this reflects a nation outsourcing its judgment to an ever-expanding technocracy.

The legislative reflex was on full display during Covid, and again more recently when Prime Minister Anthony Albanese and Communications Minister Anika Wells released the exposure draft of the government’s Digital Duty of Care legislation. Slickly branded ‘My Feed, My Way’, it came with a notable but dubious assurance that it was not about government control.

The harm the legislation seeks to target is real. But the question is not whether a problem exists, but what becomes of a society that concludes every problem has a legislative solution. And this is before asking whether legislation will achieve what it sets out to do.

What makes a society decent is mostly produced not by government but by what Edmund Burke called the little platoons: families, neighbourhoods, schools, clubs, congregations, communities. Their authority rests not on enforcement but on moral suasion. Nothing corrects behaviour like the disapproval of people whose regard we want to keep.

The desire to be honourable, and to be seen as such, is a more powerful and faster-acting check than any regulator or government official. As Burke wrote in 1796, ‘Manners are of more importance than laws. Upon them, in a great measure, the laws depend.’

The legislative reflex undermines this social corrective by replacing the question of what is honourable with what is legal.

A generation ago, the question of what a child watched, read or did after dark was settled at the kitchen table. Parents said no, and bore the sulking that followed. Now the question is settled in Canberra, and parents are recast as spectators to a compliance regime between a regulator and a tech company.

The under-16 social media ban was sold as backing parents in. In practice, it lets them off. A parent who can point to the law need never make the case for restraint, and a child who learns limits from a statute never learns them from the people who matter most.

The government’s social media policies and much other public policy get human nature backwards. It assumes people arrive civil and decent but are corrupted by defective institutions. Accordingly, experts must superintend the population and redesign those institutions.

Thomas Sowell called this ‘the Vision of the Anointed’, and he pointed out that the reality is the reverse. Nobody is born civilised or decent. Each generation arrives as an invasion of small barbarians who must be civilised before it is too late. Civility is not a natural condition but an achievement, produced one child at a time.

Such policy bias also helps explain the broader collapse of institutional trust. An institution earns trust by exercising judgment and bearing its cost. Strip a school, church, club or family of that authority, hand it to a government agency or government social worker, and nothing remains through which trust can be earned. The civil institution becomes ceremonial rather than formative. But the authority does not disappear, rather it migrates to government, where proper accountability does not follow.

A family answers to its members, a church to its congregation, a community to its residents. A government agency answers to a minister, who answers to a parliament, which answers to voters every three years, by which point the decision has been diffused through guidelines, frameworks, advisory panels and outsourced providers.

The result is a cycle. The state assumes a role, civil institutions atrophy, confidence in them falls, and that decline becomes the argument for an even larger state. One that, unlike the institutions it replaced, never fully bears the cost of its own misjudgements.

A society organised this way may look safer but is brittle. When the rules fail, there is less underneath. And a brittle, low-trust society is also a poorer one. Where people cannot rely on each other, they rely on rules. And rules cost money through more compliance, more litigation, and less of the trust on which enterprise depends.

Governments can make laws, but they cannot manufacture character, judgment, trust, or community. A state that keeps displacing institutions of civil society need not set out to control society, but it will get there anyway. One well-intentioned solution at a time.