to everyone’s benefit. Condorcet had wisely observed that, “[i]t will always be cheaper for the Treasury to put the poor in a position to buy corn, than to bring the price of corn down to within the reach of the poor.” 8 By 1960 this thesis had become de facto government policy throughout the West.
A generation or two later, these attitudes must seem curious indeed. For three decades following the war, economists, politicians, commentators and citizens all agreed that high public expenditure, administered by local or national authorities with considerable latitude to regulate economic life at many levels, was good policy. Dissenters were regarded as either curiosities from a forgotten past—mad ideologues pursuing unworldly theorems—or else self-interested advocates of private advantage over public well-being. The market was kept in its place, the state accorded a central role in peoples’ lives and social services given precedent over other government expenditure—except, partially, in the American case where military outlays continued to grow apace.
How could this have been? Even if we were willing to concede that such collectivist goals and practices were admirable in principle, we should today regard them as inefficient—because of their diversion of private funds into public purposes—and in any case dangerously likely to hand economic and social resources to “bureaucrats”, “politicians” and “big government”. Why were our parents and our grandparents so little troubled by such considerations? Why did they so readily concede initiative to the public sector and hand over private wealth in pursuit of collective goals?
COMMUNITY, TRUST AND COMMON PURPOSE
“To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature.”
—ADAM SMITH
A ll collective undertakings require trust. From the games that children play to complex social institutions, humans cannot work together unless they suspend their suspicion of one another. One person holds the rope, another jumps. One person steadies the ladder, another climbs. Why? In part because we hope for reciprocity, but in part from what is clearly a natural propensity to work in cooperation to collective advantage.
Taxation is a revealing illustration of this truth. When we pay taxes, we make quite a lot of assumptions about our fellow citizens. In the first instance, we assume that they will pay their taxes too, or else we would feel unfairly burdened and would in due course withhold our own contributions. Secondly, we trust those we have placed in temporary authority over us to collect and spend the cash responsibly. After all, by the time we discover that they have embezzled or wasted it, we shall have lost a lot of money.
Thirdly, most taxation goes towards either paying off past debt or investing in future expenditures. Accordingly, there is an implicit relationship of trust and mutuality between past taxpayers and present beneficiaries, present taxpayers and past and future recipients—and of course future taxpayers who will cover the cost of our outlays today. We are thus condemned to trust not only people we don’t know today, but people we could never have known and people we shall never know, with all of whom we have a complicated relationship of mutual interest.
The same point applies to public expenditure. If we raise taxes or put up a bond to pay for a school in our home district, the chances are that other people (and other peoples’ children) will be the chief beneficiaries. The same applies to public investment in light rail systems, long-term educational and research projects, medical science, social security contributions and any other collective expenditure whose pay-off may lie years away. So why do we go to the trouble of putting up the money? Because others have put up money in the past for us and, usually
A generation or two later, these attitudes must seem curious indeed. For three decades following the war, economists, politicians, commentators and citizens all agreed that high public expenditure, administered by local or national authorities with considerable latitude to regulate economic life at many levels, was good policy. Dissenters were regarded as either curiosities from a forgotten past—mad ideologues pursuing unworldly theorems—or else self-interested advocates of private advantage over public well-being. The market was kept in its place, the state accorded a central role in peoples’ lives and social services given precedent over other government expenditure—except, partially, in the American case where military outlays continued to grow apace.
How could this have been? Even if we were willing to concede that such collectivist goals and practices were admirable in principle, we should today regard them as inefficient—because of their diversion of private funds into public purposes—and in any case dangerously likely to hand economic and social resources to “bureaucrats”, “politicians” and “big government”. Why were our parents and our grandparents so little troubled by such considerations? Why did they so readily concede initiative to the public sector and hand over private wealth in pursuit of collective goals?
COMMUNITY, TRUST AND COMMON PURPOSE
“To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature.”
—ADAM SMITH
A ll collective undertakings require trust. From the games that children play to complex social institutions, humans cannot work together unless they suspend their suspicion of one another. One person holds the rope, another jumps. One person steadies the ladder, another climbs. Why? In part because we hope for reciprocity, but in part from what is clearly a natural propensity to work in cooperation to collective advantage.
Taxation is a revealing illustration of this truth. When we pay taxes, we make quite a lot of assumptions about our fellow citizens. In the first instance, we assume that they will pay their taxes too, or else we would feel unfairly burdened and would in due course withhold our own contributions. Secondly, we trust those we have placed in temporary authority over us to collect and spend the cash responsibly. After all, by the time we discover that they have embezzled or wasted it, we shall have lost a lot of money.
Thirdly, most taxation goes towards either paying off past debt or investing in future expenditures. Accordingly, there is an implicit relationship of trust and mutuality between past taxpayers and present beneficiaries, present taxpayers and past and future recipients—and of course future taxpayers who will cover the cost of our outlays today. We are thus condemned to trust not only people we don’t know today, but people we could never have known and people we shall never know, with all of whom we have a complicated relationship of mutual interest.
The same point applies to public expenditure. If we raise taxes or put up a bond to pay for a school in our home district, the chances are that other people (and other peoples’ children) will be the chief beneficiaries. The same applies to public investment in light rail systems, long-term educational and research projects, medical science, social security contributions and any other collective expenditure whose pay-off may lie years away. So why do we go to the trouble of putting up the money? Because others have put up money in the past for us and, usually
Similar Books
