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Thomas Paine was an ardent revolutionary who hated the British monarchy. When the revolution was won and the Treaty of Paris signed, he wanted a government that was as far from a King as possible, with all power concentrated in the states and localities. His philosophy as written about in this quote was consistent throughout his adult life, both during the war and in the years after.
Government was not to be trusted. Power would corrupt if concentrated into too few hands. He believed it was best to limit it as much as possible while still allowing it to provide the basic functions for the people.
Paine is basically saying that he is not terribly fond of government, and that, when it is working and functioning as intended, it is still something he considers "evil"--a necessary evil--one that we need to have around so that things can function better.
On the other hand, when the government in NOT working and/or functioning as it is intended, it becomes an INTOLERABLE evil, one that will make the constituents miserable and an evil that will make everyone's lives worse.
Thomas Paine was an advocate of the patriot cause, his beliefs were rooted in the political philosophies of Locke, Montesquieu and Rosseau. However, it must not be overlooked that much of Paine's passion for liberty and the American cause was inspired by his personal resentment towards his native England. The first part of the quote could be explained as follows; Paine distrusted government, he believed that all governments were flawed and inherently corrupt. However, he understood that governments were a 'fact of life' in civilized society. The second part of the quote is a warning for those who are being governed...pay close attention to your government, check your government's actions, be possessive of your rights...because if you are not government can make your life an intolerable one.
Paine's contemporary, Thomas Jefferson, likened government to a fire -- if small, contained, and well-tended, it was most useful and beneficial; large, expansive and neglected, it was most destructive. I'm not sure if Paine paraphrased Jefferson, or vice-versa.
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