For the record: the public sector does add value
I knew it would happen: I just say the public sector adds value and the far right come out in force accusing me of every economic crime imaginable.
Is it worth responding to such people? Candidly, I frequently doubt it: they don’t understand, don’t care and don’t want to do either; that I know. So why bother? Largely because, as Dennis Howlett points out the 90-9-1 rule pretty much works. 90% of people who read this blog lurk unseen (and that’s OK with me, 9% pop up very occasionally and 1% contribute a lot. This comment is for the 90%.
Why do I say that the public sector generates wealth? The glaringly obvious answer is it does. In my own life my birth, education (throughout) and health have been state provided. And I value them.
In the last few years the births of my sons (both complicated) were in state hospitals. Subsequently I can say without a shadow of a doubt the life of one of my sons was unambiguously saved by the NHS. If that is not value, what is? My mother died in hospital after 11 months of NHS care: I hate the think how much the NHS has spent in caring for my in-laws over the last few years. Not only would we have been bankrupt without the NHS, they could have suffered considerably I expect. Again I define that as the most phenomenal added value.
As I also define the police, fire and security services as adding value to my life. And knowing there is a social safety net, which I have not ever needed I admit, but which friends and family most certainly have definitely adds value.
Then there’s the state old age pension: never to be ignored in any financial calculation.
Add on to that health and safety – which means I dare drive a car, travel in a plane and buy a cup of coffee.
Or international development – which partners and supports the charities I choose to support and often provides them with the access they need to do their work.
And what about the arts? I get enormous enjoyment from art which could only happen with state support.
I could go on, and on. But if you cannot see that this lot adds up to added value then it is very clear that you are either blind or choose to be so.
None of which says the private sector is inappropriate (why are these commentators so black and white when the world is always grey?). When there is room for excess capacity then the market can operate – which there is not in health, education and so on if the supply is to be universal. When it can operate I am happy for it to do so – subject always to the fact that it needs to be constrained because the idea that it allocates resources efficiently is wrong: the votes in the system are not allocated efficiently to start with as they are unevenly distributed. That is why regulation and taxation has to tackle this problem. If not too many yachts would be produced and even more would starve to death. On no definition anyone could create is that efficient.
But I stick to my point: a great deal of what we value most is provided by the state. That is why we care about it. That is why we voluntarily pay for it through tax – and vote to do so. That price is at least as well set as one distorted by the impact of advertising.
And value added has nothing to do with the ownership structure of the organisation supplying a service – or even how it is paid for at the end of the day. You cannot, for example, make a nurse and added value supplier by transferring them to the private sector. But if you restricted the supply of their service to large sections of the population as a result (as happens in the US, for example) you can most certainly reduce well being by doing so.
So those who comment blatantly, and for reasons of outdated and outmoded ideology argue otherwise.
Which is why we need a new economics. Which is why I am working on it.
Richard-
Well food and shelter will fairly clearly be taken care of by technology and productivity advances. Education - I`d imagine that the internet and improved technology will allow education to become rather cheaper and more convienient than it has been in the past - but you`re right - I can`t prove any of this. I don`t think it`s unreasonable to assume that there will be advances in productivity in these areas though.
Regarding the widening wealth divide, I`d say that the difference (in real, rather than crude monetary terms) between a starving man and a man with food is always going to be greater than the difference between two men with enough food, one of whom takes his holidays in Barbados. In fact once certain fundamental needs and rights are taken care of the differences are actually rather insignificant.
To put this in the form of your original analogy - why should we worry about how much froth someone else has in their cup when we have coffee?
You ignore demographics. rising living standards, advances in education
Rising living standards? Fancy analysing that?
Advances in education? I did my first degree at Cambridge, and I can tell you that it is utterly embarrassing how standards declined between 1900 and when I took my degree. I regard understanding Latin as being fundamental to a decent education and yet although all my predecessors knew Latin I have never studied it or been given to opportunity to do so. What could be more valuable than understanding the rise, decline and fall of an entire culture? And nobody knows about it any more - including me. I am well annoyed at the advances in education - looks to me like dumbing down.
“The state pension can’t be afforded? How is an ageing population to be managed then? I guarantee private pensions can’t pay. Are you planning they all starve?”
Richard - get this, I am one of the “all” you describe. Do you think the current pension is that great? I would love a decent pension when I retire. Just because I don’t think it will happen doesn’t mean I wouldn’t like it to happen. It just means I think it would be reckless to rely on it. We are in the same boat - it’s the Titanic. The difference between you and me is that I suggest the boat should have liferafts - you suggest its too big for anything to go wrong. I hope you’re right. But…
Of course the current pension is not great
Better than now’t though
And it should be enhanced
And trust me - there is no lifeboat - just one earth
We can only manage it together - not in isolation, by cooperation, not in competition
Richard
“have you ntoiced the breakdown in the conventional family?”
There are good arguments that the requirements of the neo-liberal economic model actively encourage the breakdown of family units, increases in crime and the prison population and many other social ills.
Shame that the possibility of creating a European-style of popular social capitalism is prevented by the ruling American-style of global capitalism.
Richard, where do you think carbon consumption should be?
Interesting question in amongst this lot. Is tax theft? Of course you are right that it is not, particularly given the narrow legal definition of theft. But what about the morality of governments raising taxes for which they have no mandate? I am thinking specifically of the recent changes to income tax rates - the abolition of the 10% band, and the raising of the top rate to 50%. It would be difficult to argue that the Government has a legitimate mandate for either of these changes, and it would be equally difficult to argue that they will solve any of the problems that Brown (and to a lesser extent Darling) argue they were made for. On the other hand both changes have created a lot of negative press.
The other interesting theme is the morality of the current spending in excess of taxation. I have heard some refer to this as theft on future generations - I have some sympathy with this argument.
You claim to represent tax justice, so I am interested in your views on the justice and morality of some of the taxation practices of government.