The idea of small government is used to hold several concepts, and to express several fears, that are often contradictory. On its own, the concept has grown so much that it is entirely useless and cannot be meaningfully used in a policy context because it is impossible to tell what exactly it is that people are asking for when they use it. Separating out the components gives us some meaningful traction.
- Local government as opposed to centralized government. Small government is often used to argue that government should be closer to the people whenever possible.
- Government as opposed to private sector. This focuses on competition between the private sector and government for resources. Two things are worth mentioning here. You have to take transfer payments out for this conception to make sense, the government gets nothing for these transfers so it is not meaningfully competing for resources here, the competition is between those that receive transfers and those who don't, not the private sector and government. The second is that I think this rests on an idea of substitutabilty that I don't think is actually present and resource constraints that aren't as extreme as this concept holds. It makes sense at extremes but I think to a fairly large extent government employs people that find public work more congenial and will do better work than they will in the private sector. There is some competition but I think this view ignores that people are sufficiently different that the more different kinds of structure we have to employ people usefully the more we can maximize people's potential contributions.
- Government's power relative to other entities. This is probably the least frequently mentioned and the one that worries me the most. This is the government's ability to compel behavior through powerful police forces, complex regulations, and the military. This can be decreased through laws restricting the use of wiretapping, creation of oversight bodies, etc. It is generally increased by reducing the amount of laws restricting government.
- Government as a burden. This is the extent to which people experience the presence of government in tangible ways (not as background) in their daily lives. Things like the burden of filling out tax forms, regulatory burdens if you want to start a new business, the number of times you have to fill out the same forms when you move (think DMV, voter registration, changing your address with the post office), etc. These things are what makes government feel like a repressive burden. Solving these issues are often opposed by opponents of other forms of big government, a centralized database would solve a lot of paperwork issues, a more streamlined tax system would make government seem less invasive (which is a problem for those concerned about government as % of GDP), more centralization in general would make interactions with various jurisdictions easier (think of the pain of getting a speeding ticket out of town, if this was centralized there would be less need to interact with the local court).