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Friday, 12th February 2010

The social, moral, and economic case for smaller government

Fraser Nelson 1:49pm

Ten days on and Danny Finkelstein still seems to be upset with me for my Keith Joseph lecture, where I said the Tories risked being ensnared by Brown's 'investment v cuts' rhetoric. For reasons that I'm still not quite sure of, Danny hates the idea of cuts. He may have (and I hope he didn't) take it personally when I said it was precisely this attitude amongst the Conservatives that created the climate for the fiscal crisis Britain is now facing.

Over the last decade, Brown increased spending by 16 percent of GDP (see graph below)- not only faster than any developed country, but faster than any major country of the postwar period. Why? What was the rush? Germany and Japan in the 30s jacked up their state spending to a similar degree, but they had their reasons. What was Britain's reason? Simply because Brown spotted that the Tories had imploded intellectually. They were utterly disorientated, and in the 2005 election proposed to increase spending, and the tax burden, still further.

In 2007, it got to the stage where Brown - at the peak of the boom - had a 3 percent deficit and got away with it because the Tories did not dare propose to reverse any of his wasteful spending. Brown calculated, correctly, that he faced a one-off opportunity to jack up spending and that it would be a one-way process. Because even if the Tories were in power, they would still be fearful of reversing the state power grab of the last decade. This, of course, was what Keith Joseph described as the Ratchet effect.

Danny points to Nick Robinson's recent swing seat dispatches. The word 'cuts' still makes swing voters wince, he says. He throws it back to me:

"Some voters seemed remarkably unsure about the impact of cuts on their own lives. These people need to shape up, in my opinion. I mean, haven't they read Fraser Nelson's Keith Joseph lecture for goodness sake? It's been more than a week since he delivered it, so they've no excuse.

They would quickly realise that all their doubts are for the birds. Sir Keith, apparently, would have given them short shrift. These voters need to get a little boldness is what I say."

What I would like to see - and, indeed, what David Cameron is already doing - is a Conservative government explaining that state spending will bankrupt the country and bankrupt families. It has to be cut back, because the debt burden is increasing at a rate shown by our CoffeeHouse debt clock (and is even higher if you include things like PFI and the bank debts).

Keith Joseph would not, of course, have 'given them short shrift'. He would have explained the social, moral and economic case for smaller, cheaper government because he believed in it.  I am mystified as to why some an articulate, intelligent Conservative such as Danny should be so passionately opposed to this case being made.

Filed under: Conservatives (2071 more articles) , Debt crisis (83 more articles) , Public finances (703 more articles) , Recession (172 more articles) , Spending cuts (600 more articles) , Spending plans (81 more articles) , UK politics (4903 more articles)

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Chris lancashire

February 12th, 2010 2:05pm Report this comment

I am a committed believer in small government, low taxation and giving people the freedom to run their own lives.

However, at this point in time, going into an election promising swingeing cuts (hopefully followed by lower taxes) will lose votes. Remember that Blair got elected by promising to follow Tory spending plans for 3 years so as not to frighten voters. Thus, Cameron needs to make reassuring noises and then, as with Labour before him, do exactly the opposite.

Patricia Shaw

February 12th, 2010 2:05pm Report this comment

Nice to see a little hissyfitting handbagging between you and finkelsteeny. Don't underestimate the attraction of repulsion. You should get your M&S shirts off and sell tickets.

Vulture

February 12th, 2010 2:17pm Report this comment

Never mind abt what Finkers thinks of your economic pieces Fraser. What abt the many finkers on Coffee Houuse who are also upset with you - for not posting your twice promised piece on Neathergate?

Now, you read these posts. You are not dumb. Yet you are silent. What are we to conclude from your Omerta? That you are acting under someone's - Dave? The Barclay Bros? Andrew Neil? - orders to keep schtum abt a scandal that is worrying many millions of people.

But its OK: the Telegraph had led with the story. The Mail has followed it up. Stepehen Glover has devoted a whole column to it. So has Mel P - semi-detached of this parish.

So why won't/can't you? Do you really consider that a deliberate plan to change the ethnic compositoion of this country is beneath you and unworthy of comment? If you do, you might tell us why. But you won't. That is most peculiar.

Rosie

February 12th, 2010 2:17pm Report this comment

You can now answer my question posed a while ago on the Wall.Is the unacknowledged debt (PFI, PPI, unfunded public pensions etc.) part of The National Debt at the top of the page, and if not (as I assume), has anybody such as the Taxpayers' Alliance or the IFS estimated it??

JP

February 12th, 2010 2:24pm Report this comment

This is all very laudable, but the voting public at large needs it condensed into one easily grasped sentence.
Great Britain is in the hands of the Reciever.

stephen

February 12th, 2010 2:29pm Report this comment

Should not Boy George just this point accross[the graph says it all] rather than gesture politics and gimmicks like a Green Bank. Do the Tories really have the urge to win and is our Dave strong enough to reshuffle some of his more immature and ineffective colleagues ahead of the election. IMHO the general public may still feel the Brown/Darling team may be better at running the economy than our Dave and especially Boy George!

jockstrap

February 12th, 2010 2:46pm Report this comment

keith joseph was aman of HIS TIME, Smaller goverment is good like greed, but in your world no bank bailout, 300 mps, 100 elected senate, no expenses wars, no monachy, no meps, no boris, now find a tory leaders who has balls to do above

J H Holloway

February 12th, 2010 3:11pm Report this comment

What Hugo Young thought of young DF...

The Hugo Young Papers - pg 483

Daniel Finkelstein - Cafe Pelican - 4 June 1996

‘HY judged DF - his next interviewee - to be the ultimate policy geek: ‘rimless specs, oval face, young mind, cocky and yet unsure, seeking the approval of older men. We must have met years ago (c1985) at the Tawney Society, when he was [David] Owen’s young man. Still looks back admiringly on Owen whom he now describes as a man who “wants right-wing policies and a left-wing party” - which neither DO nor DF seems to think expresses the fullness of his absurdity. DF’s solution was to join the Tories, where he is now head of research department.

All in all, rather an unimpressive young man. Perfectly decent, and on the ball, and aware of what his job must be. But rather agitated - not a lot of bottom, I felt. Not a repository of wisdom. Very keen on working out his own positions, and telling you he had done so - most of all, how he had made the switch from left to right and how this was entirely justified by real events. But I don’t think he will go all that far.’

Giles Wilkes

February 12th, 2010 3:15pm Report this comment

Oh Fraser, you are being SO FOOLED BY RATIOS. You need to stop and work out what a splurge really means, and contrast it with what has really happened.

To help you out I wrote a blogpost specifically for this sort of mistake:

http://liberalconspiracy.org/2010/02/12/did-a-labour-spending-splurge-really-take-place/

Craig Strachan

February 12th, 2010 3:35pm Report this comment

Maybe something to do with Danny being an Owenite?

AAE

February 12th, 2010 3:55pm Report this comment

The first lesson of psychotherapy is: If you always do what you always did, you always get what you always got.
Did Pinko Finko ever visit the old East Germany? We're more than half-way there, with tax at levels that amount to state theft, and the enmeshment of our lives in censorship and criminalisation of behaviour that is no business of a benign government (by the way, why shouldn't a policewoman leave her children with an off-duty colleague?). The good sense of change could be enacted more easily than is consensually thought. Leave the EU and all the crippling regulation that comes, at enormous financial cost, with it, cut VAT totally, cut green taxes and all those other taxes designed to make us behave like good comrades, cut the strangle-hold of virtual state monopolies, cut business and personal taxation, and sit back and watch the inward investment slop over the white cliffs of Dover. Being small and independent with the ability of being able to duck and dive in the global economy could be our biggest advantage. Being different from the others would be our biggest strength. What exactly is Government doing so wonderfully today, that it wasn't able to do 8 years ago with half the money? An eloquent and economically sound case put repeatedly for small government and cuts could remove the terrible manipulation through fear of good people by bad people who can't even be honest about their real agenda.

Nicholas

February 12th, 2010 4:09pm Report this comment

AAE. Brilliant, but I fear too radical for the "post-bureaucratic" bureaucrats who want to inflict even more bureaucracy on us in the name of reducing bureaucracy. Only when people start fighting back and disobeying their stupid edicts will they get the message. And I think that time is not far from now. Mass civil disobedience is a far more effective weapon against a bloated, incompetent, cash-starved and malevolent bureaucracy than civil unrest or demonstrations.

The British were ever stubborn, rebellious and suspicious of authority. It's time we found our roots. Resistance is coming home.

Natasha

February 12th, 2010 4:13pm Report this comment

What you consistently fail to grasp is that the economic and political case for reducing the deficit has to be reconciled with the need to win the general election. You seem to assume, for example, that all public sector employees are non-Tory voters, and that consequently the Tories have nothing to fear by alienating them. On the contrary, many of them are floating voters and could make the difference between an overall majority and a hung parliament. So it simply doesn't make sense to leave them wondering if they are going to be made redundant by a Tory government.

Also, has it occurred to you that most voters have absolutely no idea what you are talking about when you make the case for what you call "smaller government". Do you mean fewer policemen on the streets? Fewer doctors and nurses? Fewer teachers, street sweepers etc. etc.?

You clearly have an idealised conception of the proper function of government that owes more to Thomas Hobbes and Adam Smith than to the complex reality of modern society. Sure, we all want fewer bureaucrats. The problem is, one person's bureaucrat is another person's essential service.

You should also remember that Margaret Thatcher, when confronted with the assertion that she believed in "small" government, immediately rebutted it by stating her belief in "strong" government. How can the party of law and order and the armed forces believe in small government?

Neoliberalism will be the death of the Conservative Party.

Michael Sweeney

February 12th, 2010 4:18pm Report this comment

This is an interesting spat between two commentators I admire. While I accept Fraser's argument, the Fink's view is more likely to be held by Tory central command. My view is our attitudes to Govt size and spending right now is like attitudes to Trades Unions in the late '60s. Most know we have a problem, but if it's confronted head on many voters will recoil and Cameron could end up like Ted Heath, turfed out in no time and regarded as a failure. Clearly we can't go on like we are, but when many voters work out what a Govt spending reduction means for them they won't like it. The Tories are treading carefully.

mitcheltj

February 12th, 2010 4:28pm Report this comment

Chris Lancashire - you are surely right. The problem with cuts is that whilst many be, in principle, be in favour, when it comes to specifics, the benefit is spread over many and the pain over a few, and those affected will scream and shout the loudest - look at what's happening in Greece.

If Cameron wants to win, he should stick to broad principles and avoid specifics as far as he is able. Once he gets in, he can change his tune pleading circumstance whatever.

However, he'll need a lot of luck to succeed and get a second term. I've felt for a long time that Brown is really aiming at the election after next, when he calculates that circumstances will have overwhelmed Cameron and he'll be back - a bit like Wilson in he 1970s - and the same fate may await Obama. Thatcher and Blair won repeatedly mainly through a combination of luck and a divided opposition.

As long as the public is susceptible to being bribed with its own money, and we have politicians with little integrity, competence, vision or courage and the ability to lead, the public sector will swallow up an ever growing slice of GDP and the likes of Brown and Balls will prosper - I dont like to think about this as it makes me deeply pessimistic about the future. I cant see a way out - and if they extend the vote to 16 year olds.....

Simon Denis

February 12th, 2010 4:38pm Report this comment

Classical liberalism is the life force of the right - "neoliberalism" is an insulting slur, designed to suggest that the golden age of absolutely free markets can only be partially restored. It should be restored in its entirety. Only bureaucrats can benefit from socialism. The moral case for cuts, therefore, is clear and the message is this: that Brown's client state should be the more cheaply sustained if we paid its members the dole, rather than handing them fat salaries for doing either nothing at all or various degrees of damage to the economy. For all those bossyboots and miniHarmans rightly thrown out of their offices - I refuse to call their activities "work" - there would be seven righteous men whose lower taxes would stimulate lasting growth. The message must be cut, cut and cut again - only the parasites and quangocrats need tremble.

PAUL GILBOY

February 12th, 2010 5:03pm Report this comment

The social moral and economic case for smaller government just rolls off the tongue and makes perfect common sense but when you have a business job or a family and, people all around you are being made bankrupt or redundant, the logic does not make sense.

I watched Nick Robinson link fro Funky Drinkensteins blog and at this precise moment people need reassurance, the economy is too fragile, and the Tories must make the case for bringing down the deficit without a blood bath.

People are not stupid they know what needs to be done; even if they do not understand economics they know it was Mr Browns fault.

But, Its too early for philosophical musings and, the case for smaller government will be made but, not just yet, we need time between this precarious moment which calls for practical solutions to bring us back down, down from the precipice, and a vision to make sure it does not happen again.

This is where the conservatives must stand and, ask for the trust to deliver it because Mr Brown clearly cannot.

Nicholas

February 12th, 2010 5:10pm Report this comment

Natasha: "The problem is, one person's bureaucrat is another person's essential service."

Yes, usually the bureaucrat's spouse.

You clearly have an idealised conception of the bloated wastage of the current improper function of government that owes more to Gramski and Honecker than to the complex unreality, if not surrealism, of modern society imposed by 13 years of barmy socialist dogma.

Public sector floating voters (if they really exist - they all look/sound like socialists to me) wondering if they will be made redundant? Join the reality of private sector Britain that has been forced to face that risk for the last two decades.

"Neoliberalism"? No, just the liberalism we used to enjoy as a people before New Labour spread its disgusting shadow over the land.

Tim Carpenter LPUK

February 12th, 2010 5:57pm Report this comment

AAE,

One should not cut VAT, but cut Income Tax, beginning with the poor.

Income Tax is a cost on UK employment and businesses alone, whereas VAT is a cost on UK consumption. UK exports would not be taxed and sales of imported goods are taxed the same as UK domestic sales. This shifts the advantage towards our domestic production and export.

Deep cuts in EXPENDITURE need to be made while significant efficiencies implemented to dramatically lower the cost of delivery.

We could see a need to "ring fence" Nurses and beds, but not "ring fence" the NHS. "ring fence" police beat-hours, not their budgets.

It is all a matter of priority. We cannot afford the current expenditure and growth in debt, so things must give. There is no use throwing your toys out the pram, it cannot be afforded. Period.

Any union who wants continued expenditure to "protect jobs" is being selfish and must be called that openly.

We have prime functions to preserve - defence, Rule of Law (Police, courts, prisons), care for the elderly and mentally ill. After that, it is a matter of priorities and those at the bottom (your archetypal 5-a-day consultants) will just have to realise they fall off until we can afford such luxuries. Under a Libertarian Government, even when we could, that sort of decision will be one for each individual to donate to, not some State to extort by force and threat of imprisonment.

Jimmimack

February 12th, 2010 8:26pm Report this comment

Fraser, Whither Neather?

NickW

February 12th, 2010 9:05pm Report this comment

I have recently had a Child Support Liability Order awarded against me for an assessment that the CSA had previously withdrawn. No one in the CSA has a clue what they are doing and they simply couldn't care less.

It is not going to be feasible to reduce government expenditure unless Government divests itself of functions, and that divestment of functions has to precede manpower reductions.

It will simply not be possible for less and less people to do the work that Brown has invented for them. Many Statutory functions of Government are already a sick joke with delays, mistakes, incompetence and abuse of Statutory powers. Very soon, there will be no respect for the law anywhere, a state of affairs which would be disastrous for everybody.

strapworld

February 12th, 2010 9:33pm Report this comment

Four posts on your spat with another journalist.

None on a matter that worries the people.

With Neather came two promises to put pen to paper. The delay was excused because of researching figures etc! Then nothing.

Now Migrationwatch, via the Freedom of Information Act proved that Neather was spot on. Will Mr Nelson now write the promised article? Nope. The man is obviously frit!

Unless of course he has decided to place it within the News of the World this Sunday.

Where is Fraser Nelson? He normally answers questions or observations made in comments in his blogs. None this week.

Obviously being an editor has got to his head OR he is hoping to be given asafe tory seat and will not do or say anything that will upset that man of rusting iron clad promises Cameron.

Ken

February 13th, 2010 10:43am Report this comment

@Strapworld Feb 12 9.33pm
Here's a steer:
"We ask him specifically about immigration, after a previously unpublished document disclosed this week the extent to which the public was misled by Labour about its deliberate policy of encouraging substantial numbers of migrants to enter the country. Mr Hague took a robust line on the issue when he led his party in the 2001 election, but is not about to do so now. He says the party should stick to its priorities: protecting the NHS, reforming education, sorting out the economy. “We must not change that strategy and that means in the campaign itself those issues have to be to the fore. So if you are saying the Conservatives should make immigration a front-page issue then I say no. It would be a distraction to fight the election on immigration.” (BenBrogan/Hague- Telegraph)

strapworld

February 13th, 2010 5:01pm Report this comment

Ken, Thanks for that. Totally amazing isnt it. Tories presented with an amazing fact of duplicity, which affects the indigenous population AND those immigrants brought here on a social experiment and they choose to IGNORE it!

How can any red bloodied anglo saxon vote for any of the so called 'major' parties?

But it does prove, to those like myself who believe Mr Nelson is playing for a safe seat and will write nothing to upset the heir to bliar!

Archie

February 14th, 2010 5:42am Report this comment

What strapworld keeps saying!

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