Here’s an item from the Guardian:
Drawing on IMF figures published last week, the graph compares what will happen to government spending in Britain up to 2017 with the outlook for Germany and the US. And what it shows is that the UK will plunge from public spending on a par with Germany in 2009, to spending less than the US by 2017. Had France, Sweden or Canada been included on this graph, the UK would still come bottom. If George Osborne gets his way, within the next five years, Britain will have a smaller public sector than any other major developed nation.
Fan or critic, nearly everyone now agrees that this government wants to shrink the state, but very few take on board what that means. This graph shows just how radical those ministerial plans are. Particularly striking is the fact that Britain will end up spending less as a proportion of its national income than even the US, the international byword for a decrepit public sector.
Here is the IMF data.
Country G/GDP (2013, IMF)
Australia 35.33%
Canada 41.66%
New Zealand 32.76%
Switzerland 33.44%
UK 44.43%
US 40.47%
Asia:
Hong Kong 18.69%
Japan 40.56%
Singapore 17.88%
South Korea 20.80%
Taiwan 21.05%
Why stop at 40%. Why not shoot for 33% to 35%, and end up with the even more “decrepit” public services of Australia and Switzerland?
Seriously, the idea that “decrepit” public services are a simple function of government spending as a share of GDP is beyond absurd. Obviously it may play some role, but there is much more involved. Here is some data for Britain and Singapore, the country with the lowest government spending:
Country Life expectancy PISA scores Infrastructure quality
Britain 80.42 years 1507 5.3
US 79.56 years 1476 5.8
Singapore 84.38 years 1666 6.6
So the Britain comes in about the same as the US and far below Singapore, which spends 17.88% of GDP. Do I think these are good ways of comparing public services? Of course not, I’m not stupid. Rather I provide them because they are the sorts of metrics that others use. Did I cherry pick? In life expectancy the top 4 countries (excluding tiny places with less than 1 million) are Japan, Singapore, Hong Kong and Switzerland, all of which spend less than Britain. Singapore is 3rd in the world in infrastructure, trailing small government Hong Kong and Switzerland. Hong Kong is number 2 in Pisa scores, and Switzerland also scores well above the UK. Asian countries might do well in life expectancy due to racial/diet factors (Asians live longer than whites even in America.) But what about Denmark, where life expectancy is only 79.09. Are we to assume they have even more “decrepit public services” than the US?
Of course this is comparing apples and oranges to some extent; many of the successful countries are small. But the UK is much smaller than the US. Closer in population to Canada or Australia. Yet both of those countries get by with much lower government spending than the UK, without “decrepit public services.” The US is a sort of bogeyman used by non-Americans on the left to scare voters into supporting bloated government sectors.
Some criticize conservatives for pointing to Singapore, a (supposedly) dictatorial regime. (It’s not really, but let’s accept that for the sake of argument.) The Asian data suggests the small government sector there has little to do with a lack of democracy—both Taiwan and Korea also have small government. And of course there is no country in the world that is more democratic than Switzerland, which spends far less than even the US. So I don’t buy the “voters prefer big government” argument made by liberals who don’t understand that poll results do NOT measure “public opinion,” because there is no such thing as public opinion. I can get anywhere from 20% to 60% in Gov/GDP preferences depending on how I word a poll question. Whenever you come across a blogger saying “the voters will vote GOP but actually agree with the Dems of the issues,” just change channels, you are wasting your time reading that stuff.
America does need better public services, but as the New York case shows higher taxes are not the answer. Rather we need to lower taxes, and then spend the money more wisely. Britain should do the same. I believe 20% of GDP is enough in principle, but given the constraints of politics the UK might want to shoot for a less ambitious target, say the 33% to 35% you see in places like Switzerland and Australia. Unfortunately, even that number is probably out of reach.
The main focus on Britain should be spending their funds more wisely.
PS. How about developing countries? Brazil has a GDP per person of $10,773 ($12,528 PPP). Costa Rica has a GDP/person of $10,166 ($12,874 PPP). Pretty similar. But Brazil has public spending of 39.1% of GDP whereas Costa Rica only spends 18.2%. So Costa Rica presumably has lousy public services. Yet it somehow achieves a Human Development Index rating of .773, well above Brazil’s .730. There are “anomalies” all over the map. It’s not about money; it’s about competence.
PPS. I’ve added the excellent Britmouse to my blogroll, as well as Giles Wilkes, who also has some sympathy for market monetarism (although he disagrees with me on the optimal size of the UK government.) At Marcus Nunes’ blog, Mark Sadowski has a very good guest post on Simon Wren-Lewis’s views on fiscal austerity. Benjamin Cole also does good stuff over there. Philip Greenspun has an amusing post on the view that we work so hard because we are poor:
At the same time, it does seem odd that people work so hard. My parents were Harvard graduates and my father had a great job with the Federal Trade Commission. The five of us shared a 1500 square foot house in Bethesda, Maryland with a black and white TV. My dad rode the Metrobus to work. Mom drove a dark green 1970 Chevrolet station wagon with black vinyl seats and no air-conditioning that broke down on the New Jersey turnpike every few trips to see the cousins. Putting a kid wearing shorts into the car on an August afternoon was bona fide child abuse that could result in first degree leg burns. (Note to youngsters reading this blog: the car did not break down due to advanced age; even fairly new cars in the old days were not as reliable as a 12-year-old Honda Accord would be today.) We attended public school and read books from the library. Our cavities were filled by a dentist who didn’t use novocaine for pediatric patients because it was too expensive and time-consuming. Kids in our (prosperous) neighborhood generally took between 0 and 2 commercial airline flights through high school graduation. We all shared a rotary-dial telephone. I don’t remember any family discussions over why my Dad didn’t take a second job or my Mom a full-time job so that we could have fancier stuff, a bigger house, or elaborate vacations like the lobbyists took their families on (even then lobbying the government was a great way to make money for all concerned!).
My dentist didn’t use novocaine either. That’s what made me a utilitarian.
HT: Jim Ancona