"Every additional function undertaken by the government, is a fresh occupation imposed upon a body already overcharged with duties. A natural consequence is that most things are ill done; much not done at all, because the government is not able to do it without delays which are fatal to its purpose; that the more troublesome and less showy, of the functions undertaken, are postponed or neglected, and an excuse is always ready for the neglect; while the heads of the administration have their minds so fully taken up with official details, in however perfunctory a manner superintended, that they have no time or thought to spare for the great interests of the state, and the preparation of enlarged measures of social improvement."

John Stuart Mill's observation, in his seminal "Principles of Political Economy", rings even truer today than in 1848 because the scope of Government intervention in our everyday lives has grown far beyond the dreams of even the Baader-Meinhof gang. Governments no longer try to nationalise every corner shop in sight, but instead are bent on wasting our money on futile attempts to administer everything else, from the world's climate to what five year olds should eat for breakfast. The banks aren't being taken into 'public control', but our private lives are and very few people seem to think this is strange. President Sarkozy may be taking on the work-shy, strike-happy trade unions in France, but twenty years after Mrs Thatcher fell from power, the British state employs 5.78 million people. The modern caring sharing State no longer thinks of us as serfs, instead it treats us like children, although no amount of politically correct rhetoric alters the fact that the largest of social trends are merely the products of the smallest of individual actions.

Information technology has given the modern state information gathering capabilities far beyond anything Mill (or sometimes even Erich Honecker) could have dreamed of, but the same computer systems create an irresistible temptation for them to meddle in our lives and provide for mishaps of massive proportions. What is saddest about these endless and inevitable data loss scandals is how banal their causes turn out to be, far from highly confidential information being stolen by dashing spies driving Aston Martins after thrilling chases round the most photogenic capitals of Europe, it's simply now lost in the post. To misquote another great writer, for the British Labour government to have lost discs containing the details of millions of child benefit claimants may be regarded as a misfortune, to have lost discs covering every learner driver in the land looks like carelessness.

Hayek argued that any government run by dictat from on high inevitably fails because of the isolation (and consequent paranoia) of its leaders, just as Xenophon did in Hiero over 2500 years ago. Despite this, we still believe that the next political leader, be they called Rudd, Brown or even Hillary Clinton, will make the roses bloom in winter, despite the overwhelming evidence of history and the certainty we'll be ridiculing them before they've decided which curtains they'd like in their new office. Even Churchill, who turned the tide of war, was a wash up when it came to domestic politics.

As this is a business forum, should Government be run by businessmen rather than politicians? Politicians certainly appeal to managerial competence, rather than ideological certitude these days, despite the fact that the inevitable pitfalls of MacMillan's Events, dear boy, events' will inevitably irretrievably dent any claim to competence before they begin to tarnish a true believer's ideological zeal. In reality, managerial experience is dependent on specific expertise, a football manager couldn't manage a hospital anymore than the head of a supermarket could manage a nuclear submarine, and so businessmen do worse in politics than even politicians themselves once the brutal media spotlight falls upon them.

Businesses can teach overbearing Governments at least one thing however. Most firms have learned to divest themselves of a useless hierarchy of 'B Ark' middle managers to improve their efficiency and flexibility over the last quarter of a century while Governments have employed ever more people at ever higher costs to fulfil ever more functions which not only produce nothing tangible in reality but aren't even understandable in theory. The public appointments page of a national newspaper defies belief not only for the salaries on offer, but the entirely nebulous quality of the 'jobs' advertised. Despite the high profile of the Richard Bransons and Bill Gates of this world, the everyday success of a business is increasingly a function of network governance, rather than all powerful Grand Poobahs, and yet political parties seem to stress the godlike merits of their leader ever more, Kevin Rudd was clearly marketed as Labor's selling point, not the Labor Party itself or even the policies (what policies?) it espoused in the campaign. Gordon Brown aspired to be Stalin, but now, as Vince Cable pointed out to general merriment in the House of Commons, he's Mr Bean.

Government may be the enemy of both individual freedom and economic competence, but this is not to disparage democracy itself, quite the opposite in fact. As Tocqueville noted "Democracy does not provide people with the most skillful of governments, but it does that which the most skillful governments often cannot do; it spreads throughout the body social a restless activity, superabundant force, and energy never found elsewhere."

In the end the free market works because it maximises the amount of information available and minimises the power of any one person to impose their own ignorance or prejudices on everyone else. It is the wisdom of crowd’s writ large. It creates order, innovation, diversity and progress without planning or design and so is the engine of economics just as evolution is in nature and democracy is for politics. Free trade also fosters a real national and worldwide 'community', something which politicians are so good at talking about while indulging in divisive, vote grubbing communalism at every turn.

More than two centuries ago Adam Smith observed that a healthy economy requires but three things - the division of labour, free trade and the unfettered ability of individuals to pursue their own interest. We enjoy the highest quality of life of anyone in history, and we do, because Governments have generally failed in their attempts to hamstring, denigrate and deny these three pillars of every successful nation. So, if it shouldn't nationalise bicycles, spoon feed us supper and tell the weather what to do, what should Government spend its money on then?

Education for one, of course, except Britain's Labour Government was first elected on a mantra of 'education, education, education' in 1997 and this report (pdf) produced by The Primary Review reveals that "£500m was spent on the National Literacy Strategy with almost no impact on reading levels." What then? Here's a suggestion to the Government, any Government, at the start of any year. Take New Years Day off and play with your children. On January the Second give the police force a pay rise and then kick them out of the canteen back onto the street, on January the Third double the size of the navy and on the fourth collect all the money you've saved by not spending it on everything else and give it back to the people who've earned it to decide for themselves what to spend it on.

Remember you're not God, and he only worked seven days, so take the rest of the year off.