Monday, September 13, 2010

The Coalition and cutting the size of the state

Julian Glover had an article in the Guardian this morning that is well worth reading:

Why be spooked by social democrat squawking? The coalition should shrug its shoulders and confess: the charge its enemies lay at its door is broadly correct. This is an ideological government with a plan for a smaller, less centralised and more liberal state.

The left dreads the obvious fact that spending cuts are central to this plan – and they are. The left senses that the government is staging a cultural revolution against social democracy – and it is. The coalition does not want to make mild adjustments to the old order. It intends to smash it.

What I object to is not so much the size of the state as the reach of the state. I am happy to see any amount spent on education, but I reject the Labour assumption that progress consists in more and more areas of life being managed or supervised by the state. That is why I have written so many columns critical of New Labour annexation of the family, for instance.

Glover was on BBC Radio 4's The World Tonight debating the issues he raised with Sunder Katwala from the Fabian Society. Katwala argued that we must maintain the size of the state in order to ensure fairness, but the position is more complicated than he allowed.

As the last 13 years have shown, a growth in the size of the state is not necessarily accompanied by a more equal distribution of wealth.

Anyway, this is the issue that Liberal Democrats should be debating.


Sunder Katwala said...

I blogged about the Julian Glover article here, noting that Nick Clegg's adviser Richard Reeves has previously pointed out why the attempt to reduce inequality by cutting redistribution will increase inequality.

On your point about Labour's record on inequality, I would observe three things.

Firstly, you need a counterfactual. Would inequality have been greater or less without the increased state redistribution and spending? The IFS analysis gives a clear answer. Stuart White has done a fair summary of the positive and negative aspects of the record.

The UK did better on child poverty than any other country (except Mexico) in this period.The detailed study by Prof Jane Waldfogel of Columbia is a good review of the evidence there.

Secondly, the increased public spending has important pro-poor distributional effects, beyond income in the value of services. New Fabian research published by the TUC shows that, with the most detailed analysis of who gains from public service provision yet. Discretionary choices to shrink the state beyond what is necessary (such as Osborne's one-term elimination of the deficit) are almost certainly regressive if we care about the distribution of services as well as cash.

Thirdly, both historic and comparative data suggests a strong link between the scale of state redistribution and levels of inequality. Cameron, following Reagan, has argued that the big state is the cause of poverty. This should predict very low poverty in small state societies (such as the US), and the highest poverty where states are larger (such as Sweden). Social democrats and social liberals may be less surprised that the opposite is true.

There are important liberal arguments about the nature, location and accountability of the state, but the leadership of the Coalition often appears as or more motivated as much by a shrinking state as a principle in itself.

Jonathan Calder said...


On your last point I agree with Julian Glover and disagree with you. The Coalition has emphasised the need to cut the deficit rather than discussed what the reach of the state should be.

There is indeed a debate to be had about that, but Labour does not seem interested in having it. The public sector unions are now its power base and it is no mood to ask hard questions of them.

Nick O said...

Hmmm. Pundits talking to pundits about articles by other pundits is not one of my favourite things, but as you say there is a debate to be had.

It strikes me that it`s very easy to talk about `the state` as if it was one big amorphous being, but what does that mean if you get down to details rather than trading in generalisations ?

Just to take one example I know a bit about, no doubt the Department of Transport, who I worked for at one time, counts as part of `the state`. Certainly it`s staffed by Civil Servants paid at public expense, but what do they do ? Are they just `pencil pushers` filling their pockets with the people`s paperclips whilst counting the hours till the next bout of tea and cakes ?

Hardly. Department of Transport (Central) comprises only 1,700 people. Some are policy types, but others are specialist accident investigators employed in the Air, Rail and Marine Accident Investigation Branches. The rest of the Department is divided into (I think) seven Agencies. The staff of these include Coastguards, Vehicle Inspectors and others. Most DTp staff do at least some work related to safety and/or law enforcement, often at personal risk of accident and/or assault. At least two of the DTp Agencies actually turn a profit (DSA and DVLA), so targetting them for cuts is something only a politician could think was clever.

In case anyone thinks I`m just arguing for special treatment for my old mates, I`m not. They`re more than capable of looking after themselves ! My point is that loose talk about `the state` is almost always the province of people who don`t actually know what they`re talking about.

Nick O said...

Just to clarify, my closing remark was aimed at Julian Glover, whose article explicitly related to `the state` in all it`s forms, rather than Jonathan and Sunder, who seem to be concerned mainly with arguments specifically about the state and the alleviation of poverty.

Apologies if I was a tad ambiguous.