Dead Men Left

Wednesday, March 23, 2005

Emerging consensus

Cast your mind back, if you can, to 1997 and the debate on public expenditure. New Labour, in order to cement its reputation for "prudence", made a commitment to maintain Tory public spending levels for the first two years of a Labour government. Gordon Brown duly stuck to this pledge, and we are still living with the effects of two further years of neglect and deterioration. Labour, under public pressure, has since been forced to run and catch up; but what is interesting is that, as it has done so, the debate has shifted entirely.

The purported £35bn Tory "cut" isn't a cut at all. The Tories are planning to also increase public expenditure, but by somewhat less than Labour. The argument has inverted itself, from reducing public spending, to boosting it. Labour's 1997 pledge would, in these circumstances, be electoral suicide. A new consensus has emerged.

Martin Wolf in the FT writes (subscription required):

According to the Organisation for Economic Co-operation and Development (whose data have the merit of comparability), the share of general government spending in UK gross domestic product is forecast to rise from 37.5 per cent in 2000 to 45.2 per cent in 2006. No significant country will have a comparable rise in the spending share (see chart). Many will even have falling shares of government spending. The UK's rising spending will bring the country from fifth lowest of the 22 countries shown in the charts (after Ireland, Switzerland, the US and Australia) to ninth. Its share will remain below the eurozone's 47.7 per cent in 2006, though it will be well above the weighted average for all OECD members, at 40.4 per cent.

He goes on to present a few graphs which, very easily, make the none-too-surprising point that increased public expenditure has no effect on growth. His conclusion, however, bears repeating:

In making the decision on what to put into the public sector and how much to spend on it, we have to place substantial weight on underlying social and political values. Bue we must also ask, first, what we must do through the government (defence and law and order, for example); second, what we want, fo reasons of social solidarity, to do through the government (provision of basic incomes for all, of universal education and of basic health services, for instance); third, whether we wish to pay for services through general taxation or user fees; fourth, what is the least costly way of raising revenue; and, finally, whether we want services to be paid for and provided by the government or merely paid for by the government and provided by competitive private suppliers.

Thus, the liberal paradigm in all its glory: supposedly grand questions about "underlying social and political values" are reduced to a shopping-list. Broad questions about the type of society we live in - how just it is, how democratic it is - disappear entirely, replaced by a pick 'n' mix of discrete policy questions. This is to reduce the minimal democracy we have to the status of a supermarket.