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?

[Alderson Warm-Fork]

No! No milk. Running an industry where living things are treated as property, and disposed of violently when they outlive their profitability, is inevitably inhumane and unjust.

[Neil]

WWCD?

(By which I mean, how are taxes in China?)

[Brittanicus]

You will never get a true accounting from our government, politicians or the national press, on what illegal aliens are costing US taxpayers? It spirals into hundreds of billions of dollars. All we get in many cases is demonstrations demanding rights, foreign flag waving and a unceasing amount of criminal activity nationwide. Many do come here to work and some pay taxes, but not enough to cover the extraordinary costs applied to free medical care, education, housing and a whole host of undisclosed government handouts. Through a large loophole in IRS tax regulation Earned Income Tax Credit (EITC). An obscene amount of money is returned to low income workers, states financial analyst and economist Edwin Rubinstein in his book. In 2007, more than 23 million households received more than $47 billion in the EITC payments. Much of the so-called "tax relief" goes to people who never paid a cent in taxes. Pariah employers should be paying for all these services, but instead are extracted from taxpayers exhausted wallets and purses. It's equally absurd and disgraceful when Americans needing social help and denied under current laws. No money from the Stimulus/Omnibus packages should be available to illegal aliens, who broke our laws.

Now the Obama administration is opening a can of worms by pushing for another AMNESTY. If the 1986 Immigration and Control Act had been rigidly enforced, instead of being intentionally ignored or just downright dropped, we would not be in this organized chaos caused by the K street lobbyists? Now the the Democratic hierarchy is running rampant, looking to appease minorities---we can expect the worst? With disgraceful legislators like Sen. Harry Reid, Speaker Nancy Pelosi that snuffed E-Verify, ostracized the real ID act, the regular police detainment 247(g) program. Anything that contradicts their open border agenda, it's dead mostly in the Senate chambers. There is to much information to unfold in commenting, so go to these sites: VDARE, FAIRUS, JUDICIALWATCH, NUMBERSUSA, AMERICANPATROL, CAPSWEB & ALIPAC. The stakes are sky high-- because Amnesty means, access of millions to more welfare for the uneducated, low income newcomers. In conclusion--WE ALL KNOW MILLIONS MORE WILL COME, LOOKING FOR A THIRD AMNESTY?

[Sun Bear]

Leftists should aim to shrink the federal government and move the power back to local and state governments. It is much easier to influence change at this level then at the federal level were money and lobbying can easily influence the concentration of power.

[Bob B]

Never mind the many multi-party reports of the HoC Public Accounts Committee about wasteful public spending, for the present, shouldn't we worry even more about this?

"Officers from Scotland Yard’s antiterror squad searched the computer seized from [Damian Green's] parliamentary office using the key words 'Shami Chakrabarti' – even though the Liberty director had nothing to do with the leaking of Home Office documents that prompted the investigation."
http://www.timesonline.co.uk/tol/news/politics/article6116023.ece

According to mounting evidence, the police are out of control.

[Ezra]

@Morten Citing a normative statistical invention hardly counts as a counter argument.

[Neil Harding]

Chris argues that the rich and powerful will always win over the priorities of state expenditure so a big state is a bad state. This may be true under the first-past-the-post system where only 20% of voters are needed to win power, which is why taxes are more regressive in the US and UK. It is no coincidence that the Nordic countries have the most proportional electoral systems - There, consent of the majority is needed to set taxation which is why direct taxes are preferred over more regressive indirect taxes and they have more efficient public spending as well as higher spending on the priorities of the poor such as health, education, transport etc and less on the short sighted priorities of the wealthy - military spending and building more prisons. Harvard have done a study on this - http://neilharding.blogspot.com/2005/10/proportional-representation-pr-best.html - (see point no. 6).

[Mr, Divine]

Got to agree with you and Tristan.

For start, reduce VAT by 5 % and pay for it by reducing military expenditure by 20 percent. Any extra reduce tax on booze and ciggies .. a big chunk of working class expenditure.

Why not?

[produzione video aziendali lombardia]

Quite interesting and informative. Thanks for sharing.

[kinglear]

My understanding of the word "shrink" has to do with psychoanalysis. It would be a very good idea for a state in its present disfuntional mode...

[tony blair]

test

[John]

I agree in principle, though my real view is that all taxation is theft.

Some of the comments above come from those leftists who have a stake in the system, they are teachers or lecturers and they receive some rewards from this. It is not in their interests to question the system, they fear it, they may lose their gravy train.

The Billionaires have had a bailout, the rest of us still have to slave away to pay for them. They call Hitler's pre-war Germany "a war economy", lets be fair the US is a war economy Silicon Valley would not exist if it was not for the military tax dollars it receives and war wether cold (Soviets) or warm asymmetrical (Terrorism) is absolutely necessary for the system to continue. Welfare to the rich and a little trickles down to the rest who pay the taxes, interest and debts.

[guthrie]

I count myself as left, certainly more so than labour and many lib dems, and duuhhhhhhh, obviously the state has to get less powerful. Or rather, it has to remain more powerful than other actors, such as international corporations and the very rich, but do so whilst being more democratic and transparent.
The centralising tendencies have to be reversed, and the tens of billions wasted on databases, IT systems, initiatives that don't do anything, illegal wars, surveillance, subsidies to companies which pocket them as profit, consultants, the NHS and its internal market or whatever they have these days, the PFI/PPP, constant monitoring of outcomes and too much managerialism etc etc, have to be stopped.

[John Freeland]

Lot's of "ifs" and "whens" in Chris's post.

" 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."

All of that attributable to high taxes? C'mon. It's not the taxes but the manner in which they are spent.

[John Freeland]

"it is ordinary people who are the real victims of an overly powerful state"

That so? During the Bolshevik Revolution was it ordinary people who lost their property while the intellectuals, financial elite and monarchs went on their merry ways?

And in Nazi Germany, you think it was bankers and college professors who wore the Brown Shirts?

And Pol Pot? You think the business and intellectual elite had him in their pockets?