No Tom, this is what *you* want

The reality is that neither Sunak nor the Tories or Britain’s wider political class have woken up to the essential truth of the pandemic: Britain needs structurally higher government spending and that means permanently higher taxes, too.

This is the same thing Polly has been wailing about for decades. That Britain should have a larger state, paid for with more tax, like parts of Europe.

It’s a vision that the British haven’t bought into over those decades either. We do, after all, keep voting in people who don’t do it.

16 thoughts on “No Tom, this is what *you* want”

  1. You could argue that Boomers were the last of the Social Democrats. High tax/big state stuff is nowadays championed primarily by public sector self-interest and the bottom 20pct. That said, I wonder at the percentage of people who are net takers rather than givers (70/30?).

  2. “We do, after all, keep voting in people who don’t do it.”

    You’re fucking serious, aren’t you? You may vote in people who promise not to do it, but…

  3. Rob Peter to pay Paul. Paul has more votes. We can’t afford the welfare state we keep promising ourselves. And culturally we have morphed into a country that wants nanny to protect them from all reality.

  4. *The Guardian* needs structurally higher government spending so that the money it gets from public sector job adverts and the extra sales it gets from those arm-twisted into buying The Guardian in order to read those in order to apply for those cushy jobs and the boost its advertising rates gets from those additional sales can jointly bail out its structural deficit.
    The rest of us do *not* need it. The country as a whole – and particularly the poor – did far better under Churchill etc post-51 than under Attlee 1945-51, far betterunder Thatcher than Wilson/Callaghan, far better under Cameron than under Brown (except for, in the latter case, the top decile who were in aggregate noticeably worse off).
    Tom Kibasi is advocating policies to specifically benefit his employer at our expense.

  5. @BiS – my initial reaction was the same but up til 2019, state spending as a proportion of GDP was falling in the UK, from 46.3% in 2010 to 39.3% in 2019. That’s all fucked into a cocked hat now I grant you.

    Same figure for France in 2019 was 55.6% and the eurozone average was 47.1%.

    UK got as low as 35ish% in the early 90s but New Labour took it up to 40% and then we had the GFC spending.

    Christ only know what it will be after the COVID derangement and the Green lunacy.

  6. . . . the money it gets from public sector job adverts and the extra sales it gets from those arm-twisted into buying The Guardian in order to read those in order to apply for those cushy jobs and the boost its advertising rates gets from those additional sales can jointly bail out its structural deficit.

    Does that public sector job advertising still occur, and if so, why? How difficult can a public sector jobs website on .gov be?

  7. When economists talk about tax and spending they’re usually very careful to split out two separate things – government spending on goods and services, and transfer payments as part of the welfare state. And the two have very different implications.

    You can have a country which is deeply neoliberal and small-state but has high tax to pay for an extensive welfare system for example. That can still be distortionary in some ways (among both welfare recipients and taxed earners it reduces incentives to work), while also having positive effects on social welfare (eg the UK “triple lock” has basically resulted in a net transfer to pensioners from the young, and one benefit of this transfer has been a large reduction in pensioners living in poverty – a group for whom going out to work was often not a realistic option). There are pros and cons about welfare policies that need to be weighed up, and debates to be had about how it should be targeted, but few people would want the welfare state abolished in its entirety, even if they wanted it reduced to more of an insurance safety net. It’s a very different set of questions though compared to “should the government run the railways and telecoms?”, how much to spend/”invest” on physical infrastructure versus human capital and so on.

    When politicians and journalists talk about this though, the distinction is almost never made – it all just gets lumped together as “tax and spend”. Timmy is one of the very few people who gets editorials into the mainstream press which mention this distinction. Even relatively well-informed people seem to conflate the two at will.

    I wish I knew why that was – is it simply a lack of economic training in the wider population? A distinction that’s so narrow that most people who are aware of it don’t think it’s worth arguing the toss about? Our level of political debate – and perhaps even the economic competence with which we are governed – would be rather higher if more people grasped the two are separate things with potentially very different desiderata attached.

  8. @ MBE
    Well said!
    Part of the problem is the media focus on sound-bites.
    Your excellent second paragraph is twelve lines long. What TV presenter would try to get that into a sound-bite?

  9. @john77

    Cheers! And even that had several big simplifications, e.g. Chris Dillow has long been a supporter of the triple lock on the grounds that it’s good for young people – perhaps counter-intuitively, but having a higher state pension to look forward to means, in principle, they need to save less into private pensions. (He acknowledges they’re paying more taxes for the privilege, but his argument is they effectively get a better deal from the welfare state than they do from a fund manager.) See https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/08/in-defence-of-the-triple-lock.html or more recently https://www.theguardian.com/commentisfree/2020/jul/03/scrapping-pensions-triple-lock-young-people

    But you don’t need to examine the fine details of the complexity to see there’s a difference worth making between transfer payments and government purchases of goods and services. And interestingly there have been UK Conservatives in recent years who’ve been in favour of a generous welfare system (e.g. with the triple lock, and though there were arguments about how narrowly it should be targeted and how withdrawl should work as people’s earnings improve, Iain Duncan Smith has been an active proponent of working-age benefits being more generous) but it arguably hasn’t been accompanied by a neo-Thatcherite zeal to slash the size of government spending. Perhaps if it had been, the welfare state versus public spending issues might have become a bit more decoupled in the media. I’m not convinced it is the right choice for this country, or particularly in lines with the wishes of the population, but I still think it’s a shame Timmy’s idea for a book never a came off – he wanted to write one about how surprisingly neoliberal the Scandinavians are and I don’t think he ever got the backing for it. “Becoming more Scandinavian” is probably more politically palatable in this country than “unleashing Thatcher Mark 2”.

  10. Bloke in North Dorset

    MBE,

    You can have a country which is deeply neoliberal and small-state but has high tax to pay for an extensive welfare system for example.

    I spend a fair bit of time when these issues come up elsewhere pointing out that Sweden and Denmark fit that bill. Its really hard trying to get some people to listen to the argument that they aren’t socialist even though there’s some really good stuff out there from Swedes on that subject.

    In answer to your question about why the MSM and politicians don’t make a distinction between welfare and the rest of government spending, John has a good point and its mostly because they don’t want to make that distinction because that will shift the debate and they may have to concede their opponents might have a point. As it happens I was discussing that subject with BoM4 last night following retweeting Chis Dillow’s latest post on the drivel of the “national credit card” and pointing out it was a good read. (Chris really is interesting when he drops the tribal Labour stuff).

    A case in point is the way discussions on reform of healthcare are always reduced to selling the NHS to Donald Trump* because they know that the average person is rationally ignorant when it comes to politics. The soundbite culture means that they’ll never have to justify that claim, even if the the interviewer wanted to ask them for more information, let alone get in to a deeper argument about other healthcare systems. I’ve found it interesting that Germany has been held up as a model in the response to Covid yet nobody wants to go any deeper and ask why and start make healthcare system comparisons.

    So when the broader issue of the size of the state is raised its now easy for statists to just imply government spending is all welfare and healthcare in their soundbite knowing they never get questioned or made to justify their point. They also know they have the status quo bias and we have to justify any change. As an aside, I think that’s why they were so poor on the EU referendum. They, statists and remainers, thought that all they had to do was claim in their soundbites everyone who wanted to leave was a thick, racist bigot and the job was done. They were rarely questioned on the nuances and so never had to make any other argument for the EU they just blustered and the discussion moved on.

    And if the Tories ever get round to trying do something about the size of the state they’ve always got Washington Monument Syndrome to fall back on.

    *I suppose they’ll have to revert to just “selling the NHS” now they’ve lost that bogeyman.

  11. “He acknowledges they’re paying more taxes for the privilege, but his argument is they effectively get a better deal from the welfare state than they do from a fund manager”

    This argument depends on us being able to trust the government years down the track. A lot of people approaching what used to be the official retirement age might have rather cynical views on this

  12. “but few people would want the welfare state abolished in its entirety”

    Gamecock meekly raises his hand . . . .

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