Government’s real role is limited

ECONOMIC PERSPECTIVES 141 - October 2023

President Ronald Reagan said the nine most terrifying words in the English language are: “I’m from the government and I’m here to help”. He may not have appreciated the full truth of that observation. 

Most of us could agree that the role of government includes protecting citizens’ lives, property and civil freedoms from external threat. But that hardly extends to protecting people from the consequences of indulging in follies of their own free will. As soon as the state exceeds this limitation – always for the noblest motives – you can bet that we have taken one more step on the road to tyranny, for these reasons: (i) the government’s involvement in how we choose to live will be tainted by its own political objectives, such as retaining power; (ii) government’s view of what’s best for its citizens may not align with their own views; and (iii) government can bring limitless resources to bear in imposing its will – even when they have taxed us into penury they are able to create more money by conjuring it out of thin air.

Take an example: at the Conservatives’ annual conference last month the Prime Minister announced: ”I want to build a better and brighter future for our children, so that’s why I want to stamp out smoking for good. These changes will mean our kids will never be able to buy a cigarette, preventing them getting hooked and protecting their health both now and in the future.”

If that doesn’t frighten you, it should. Note his use of “I”, for example. Is he going to perform all this magic single-handed? What an ego! He’ll “stamp out…..”; they “will never be able to…..”; “preventing them…..” Etc. You can almost hear it uttered by any of the flawed dictators that litter the globe today. Of course we want a better and brighter future for our children, but why must its provision depend on conflicted politicians to provide it? What happened to that diminishing resource – common sense? Or parental guidance? Interfering surrogates can certainly blight our lives, but to reverse the damage all that’s needed is for them to stop what they’re doing.

Individual choices? The state has taken over

We never know what‘s next on their intrusive agenda. We’ve seen it with the obesity obsession, alcohol and tobacco. The state’s fervent drive to ensure its citizens conform knows no limits. It’s always for their own good, as we saw with lockdowns, and its subtext is always to protect the health service. If everyone was so determined to protect the NHS, they would hardly dare use it. 

The number of people who smoke has fallen by two thirds since 1974, when smoking was at its peak. But much of that reduction is attributable to the dissemination of  reputably-sourced information rather than an outright ban.  When members of a better-informed public are permitted to make their own choices, they will act in their own best interests without coercion – as was demonstrated when Sweden refused to follow the herd and decided not to lock down the entire country. 

In smoking’s case, few will choose to contract lung cancer. If, despite being aware of probable consequences, some still wish to smoke, so be it – but they should not expect the generality of taxpayers to pay for their subsequent treatment. They should contribute to their own charity, like “Alcoholics Anonymous”, which is a self-supporting charity funded by members’ voluntary contributions and the sale of approved literature.

A ”nanny-state” in the making

A culture in which individuals take responsibility for their own actions is the antithesis of (and antidote to) spoon-fed “nannyism”. Let’s spell it out: Britain has become a nation of “net recipients”, or welfare-dependents. Over half the population now receives more from the state than they contribute in taxes – clearly an unsustainable situation. 

There will be many readers who simply don’t believe this. The Office of National Statistics (ONS) has recently reported that 36 million adults live in households where cash benefits and benefits-in-kind (imputed value of government spending on health, schools and so on) exceeded the amount of taxes they paid – and it would have been even worse had ONS treated furlough payments as a “benefit”, not as household income. Following the post-lockdown return to normality the “net recipient” ratio fell by only 1.2pc. “Bounce back stronger”? It never happened - 53.8pc of the population receives more from the state than it contributes.

Yet the crazy reaction of politicians to this desperate picture is to seek ways of raising still more in taxation, already at its highest level in 80 years. The preferable – and rational – response is surely to reduce government spending - a task that must begin by cutting the horrendous levels of waste. 

Bust Councils

We have recently read that Birmingham City Council is bankrupt - another way of saying that its financial commitments, notably £760 million in unpaid “equal pay” claims, exceed its actual and prospective income. Several other councils have either declared bankruptcy or are on the brink of doing so. 

Croydon Council has filed its own declaration of bankruptcy for the third time in two years. Councils of Hackney, Thurrock, Woking, Northamptonshire and six others have had to file similar notices, and Kent, Stoke-on-Trent, Woking and Surrey Heath now confront the risk of having to issue bankruptcy notes. They cite a variety of contributing causes: spiralling demands for social care and children’s services, new funding formulas and poor investments.   

Such outcomes in the private sector would be rewarded by deeply stigmatised job losses and being investigated for serious financial wrongdoing. But in the public sector there are no comparable sanctions – councils carry on as if bankruptcy is a normal circumstance that merely triggers a demand for more bail-out cash from the Treasury in an inescapable process of debt-creation. You may imagine that quantitative easing has stopped. Bankruptcy is a different style of money-printing, but has the same result. 

These debts will never be repaid but will be elevated to form part of the “National Debt”! Which doesn’t mean it’s been written-off and can be forgotten. No – they have a counter-party – you!

EMILE WOOLF – OCTOBER 2023