Shrink the state: a leftist aim

David Semple thinks the left should join American tea parties, which protest against high taxes. I think I agree. The desire to shrink the state should be a leftist aim. I say so for four reasons.
1. Big government cannot be redistributive government. If the state is raising 40% of GDP in taxes, it must tax the worst off, simply because the rich, even in the UK and US, aren’t that rich or plentiful.
This pdf gives us the numbers. Table 2 shows that the tax system - leaving aside benefits - actually adds to inequality. This is because direct taxes cut the Gini coefficient by 4 percentage points, but indirect taxes add 5 points to it. And table 21 shows that the poorest fifth of households with children pay a higher proportion of their income in taxes than the richest 10%: 37.2% against 33%.
2. A big state hurts the worst off. Right-wing nut jobs might pose as victims of “ZaNuLabour.”  But whether we look at Purnell’s welfare plans, repressive anti-immigration laws or the policing of protests, it is ordinary people who are the real victims of an overly powerful state: newspaper sellers, poor foreigners, the unemployed and ill.  The left should be on their side.
3. When the state has lots of power, there’ll be a big fight to control it. And it’s the rich and powerful that win such fights. Why do you think banks get big bail-outs whilst ordinary workers are flung onto the dole with little compensation?
4. Belief in big government rests upon the notion that there’s an elite of leaders which has the wisdom and know-how to manage our affairs from the top-down; this is why New Labour found common cause with corporate bosses - both share the same ideology. But it is an utterly anti-egalitarian notion. It is also utterly wrong.

Comments

[Jackart]

Hallelujah, Brother.

[Morten]

Oh, really? So there is a positve correlation between Gini coefficient and inequality?

Funny how Denmark has the lowest Gini and highest taxes:
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

[Morten]

My comment should read, 'positive correlation between Gini coefficient and taxes'. Sorry about the typos.

[RobW]

Rather bizarre idea. Surely it would just turn lefties into liberals?

[Tom P]

I wouldn't mind seeing a left-wing TaxPayers Alliance. Something that focused on genuine waste and inefficiency at taxpayers' expense, without being refracted through a right-libertarian ideology and suggesting that anything done by the public sector is inherently shit.

[dearieme]

"it is ordinary people who are the real victims of an overly powerful state: ... The left should be on their side." But then it wouldn't be the "left" that Britain is familiar with.

[Andrew Duffin]

There is more rejoicing in Heaven over one sinner who repents...

[Bishop Hill]

Tom P

Isn't it true to say that anything done by the public sector is shit? Is there a government department that you can point at and say "They're doing a great job"?

[Bishop Hill]

Tom P

Isn't it true to say that anything done by the public sector is shit? Is there a government department that you can point at and say "They're doing a great job"?

[john b]

On aggregate, DfT, DoH and DCSF aren't doing a bad job (transport, health and education outcomes all better than 10 years ago). MoJ and HMRC, less so.

[Francis Sedgemore]

Re. Morten Josefsen's comment...

Directly comparing Denmark with the UK makes little sense given the radically different tax systems operated by these two states. The British tax system is absurdly complex, and highly indirect in comparison with that of Denmark. The median income in Denmark is relatively high compared with the UK, where wages are increasingly depressed, and the rigidly banded income, national insurance and council tax system hits the lowest paid the hardest.

I lived in Denmark for the best part of three years, and while I do think that taxes over there are too high, I was much happier overall with the system in Denmark than I am with UK taxes. The Danish bureaucracy is so much more efficient and transparent than in Britain. Again, this is relatively speaking, and there is much to criticise about Denmark. Eating work lunchtime sandwiches with a knife and fork, for example. How degenerate can you get?

[Matthew]

Chris, no matter how many times you say this:

Big government cannot be redistributive government.

it won't be true. 'Excluding benefits', ie what the money that is being taxed is spent on, is simply silly.

[David Semple]

Sorry Chris, I think you missed my point. I'm not arguing for a small state (at least, in this instance); I'm arguing for a more redistributive system, via the reduction of taxes on workers, and increase of taxes such as Estate Taxes, Corporate Tax, Capital Gains tax and so on to cover the subsequent shortfall.

Thanks for the link nevertheless!

[Bob B]

"Funny how Denmark has the lowest Gini and highest taxes"

Quite so. We ought to weigh in the balance against S&M's analysis:

Richard Wilkinson and Kate Picket: The Spirit Level - Why More Equal Societies Almost Always Do Better (Allen Lane 2009)

And try: Globalisation and the reform of the European social models, prepared by André Sapir for the think-tank Bruegel and presented at the ECOFIN Informal Meeting in Manchester on 9 September 2005, which argued that there is not one European social model, but rather four - the Nordic, Anglo-Saxon, Mediterranean and the Continental:

• The Nordic model (welfare state, high level of social protection, high level of taxation, extensive intervention in the labour market, mostly in the form of job-seeking incentives)
• The Anglo-Saxon system (more limited collective provision of social protection merely to cushion the impact of events that would lead to poverty)
• The continental model (provision of social assistance through public insurance-based systems; limited role of the market in the provision of social assistance)
• The Mediterranean social welfare system (high legal employment protection; lower levels of unemployment benefits; spending concentrated on pensions)

http://www.euractiv.com/Article?tcmuri=tcm:29-146338-16&type=News

On Sapir's analysis, only the Anglo-Saxon and Nordic models are sustainable over the longer term. His full paper on: Globalisation and the Reform of European Social Models, is here:
http://www.bruegel.org/Public/Publication_detail.php?ID=1169&publicationID=1255

Mind you, I was surprised to read in Thursday's FT that public spending in real terms in Britain has increased by 50% since 1999.

[Bob B]

The fairly abstract argument for - or against - aiming for a smaller state tends to get blurred with another more fundamental argument about the extent of waste in public spending. Consider a few examples:

Stopping truancy from schools is surely a good idea, not least as a crime prevention measure, but:

"Truancy rates in England's secondary schools rose by over 10% last year [2004], according to government figures. Despite £900m spent on anti-truancy initiatives, the annual figures show the highest truancy rates since 1994."
http://news.bbc.co.uk/1/hi/education/4265536.stm

"The government's flagship Sure Start programme is setting back the behaviour and development of young children in the most alienated households, according to the first big national evaluation of the scheme. Though the £3bn programme is benefiting some poor families, the government commissioned study published yesterday concluded that children of teenage mothers and unemployed or lone parents did worse in Sure Start areas than those in similarly deprived communities elsewhere."
http://politics.guardian.co.uk/publicservices/story/0,11032,1654721,00.html

[Bob B]

How about adult literacy and skills?

"A cross-party group said as many as 17.8 million over-18s had poor literacy and 23.8m had numeracy skills below the level needed to get a good GCSE.

"In a report, the Commons public accounts select committee said the country still had an 'unacceptably high number of people who cannot read, write and count adequately' - despite some £5bn being spent on training between 2001 and 2007.

"It means Britain is still lagging far behind other developed nations for standards in the basics, the study said.

"According to the latest available figures, Britain was ranked 14th in a global skills league table."
http://www.telegraph.co.uk/education/educationnews/4372738/Almost-24-million-adults-with-poor-numeracy-skills-say-MPs.html

With persistent skill shortages in Britain and a poor historic legacy of vocational training, the notion of an e-university to upgrade skills for industry was an attractive at the right time:

"A failed government scheme to offer UK university courses online has been branded a 'disgraceful waste' by MPs.

"The e-University was scrapped last year, having attracted only 900 students at a cost of £50m."
http://news.bbc.co.uk/1/hi/education/4311791.stm

We used to say with irony in the civil service, a million here and a million there and pretty soon we're talking serious money but that's long since past. Nowadays, it's a billion here and a billion there and we're talking serious money.

[ad]

"Belief in big government rests upon the notion that there’s an elite of leaders which has the wisdom and know-how to manage our affairs from the top-down"

I don't think you are going to win this argument within the Left. The Left contains far too many people who know how wonderful life would be for everyone if only they made all the decisions, instead of evil Tories, or easily led working-class people.

[kardinal birkutzki]

Ever thought of joining the tory party?

[Sam]

jon b:

Education outcomes better than 10 years ago? On what metric? Sure, the number of kids getting 5 A-C grades at GCSE increases year on year but, how shall I put this? There are two ways of generating an increased number of passes, and I think I know which one is involved here.

How about simply the number of kids who are able to read and write? http://www.guardian.co.uk/uk/2007/nov/29/schools.booksnews

Are today's university entrants better prepared than those 10 years ago? I know nobody who would claim that they are, and many who claim that they are not.

Are employers rejoicing over the increased capabilities of school leavers? Not as such, no.

[Charles Wheeler]

How silly. While lower income earners pay a greater proportion og their income in direct and indirect taxes than top earners, they draw far more out of the system than they put in. There's nothing the right would relish more than dismantling tax-based healthcare, education, pension provision, social security to let the individual sink or swim.

[Rocio]

me parece muy interesante blog gracias por los temas de gran interes que publican.
http://respuesta-rapida.net

[Alderson Warm-Fork]

I'm inclined to agree broadly, though I think 'shrinking' should specify which dimensions.

Most obviously, there's a reduction in the tasks performed directly by the state, and a reduction in the resources the state devotes to its tasks.

The important difference is that the tasks which the state would stop doing if it shrank in the first sense are often its most benign and redistributive ones, while the least benign ones, and the ones that leftists should be most unhappy about, are the core of its nature and so will always be retained - policing, "law" enforcement, surveillance, war, etc.

Shrinking the state's ability to wage war, prepare for nuclear armageddon, control protests, surveil us, etc. would be great, but difficult.

But in practice shrinking it will tend to mean cutting back on other functions, while leaving its most important pro-capitalist ones intact.

[Rocio]

esta muy bueno su blog me gusto.
http://respuesta-rapida.net

[Tristan]

Absolutely.
Its sad to see so many people here attacking you for it.

On the specific instance - the left should be joining in. They could take the moral high ground here, not only can they protest against the bailouts of failed capitalists, they can protest against the taxation to fund the military and the wars the US is currently engaged in.
They can protest against the use of tax money to imprison victims of the 'war on drugs' and other non-criminals.

[sean]

What kind of Tea do you take brother? With Milk?