Why ‘starving the beast’ may not work
James Forsyth 6:34pm
Steven F. Hayward’s audit of the state of American conservatism, which David Brooks judges to be one of the best magazine articles of the year, argues that the Reaganite ‘starve the beast
strategy’ has failed to halt the growth of government. Hayward writes:
Hayward’s argument is that the ‘starve the beast’ strategy of cutting back on government revenues ‘may make the problem of unrestrained spending growth worse, suggesting that a “serve the check” strategy might be a more effective means of curbing the growth of government spending. The simple explanation for this seeming paradox is that the starve-the-beast strategy currently allows Americans to receive a dollar in government services while only having to pay 60 cents for it.’‘Thirty years after the arrival of the Reagan Revolution, government is bigger than ever. The Reagan years appear to have been little more than a mild speed bump in the progress of ever-larger government. The regulatory state advances relentlessly on every front. The soaring national debt threatens economic oblivion sooner or later. In short, the Reagan era, for all that was accomplished, was not an analogue to the New Deal era. In fact, the much-vaunted Reagan Revolution was not revolutionary and failed to alter the nation's basic long-term political trajectory.’
Hayward goes on to make the case for this ‘serve the check’ strategy:
In the current circumstances, I’m not persuaded that tax hikes are what the US economy needs. But Hayward is surely right that the best way to reduce the size of government is to make people pay for it now rather than just let them just palm the cost off onto future generations.‘Requiring the American people to actually pay for all of the government they receive is, as Niskanen and others have convincingly argued, the most effective way to limit its growth. Right now the anti-tax bias of the Right results in shifting costs onto future generations who do not vote in today's elections, and enables liberals to defend against spending restraints very cheaply. Instead of starving the beast, conservatives should serve the check.’
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Paul Danon
December 20th, 2011 7:12pm Report this comment"Serving the check" doesn't mean anything in British English, but, on the matter of getting people to pay for government, a better way than taxation could be fees for things such as health, education and libraries. Government would soon be out-competed by business.
Nicholas
December 20th, 2011 9:04pm Report this commentMy Big Fat, Expensive, Socialist, Euro-Government and The Elephant in the Room.
RIP Mr Reagan.
strapworld
December 20th, 2011 9:12pm Report this commentI agree broadly with Paul Danon. But would draw the line at Libraries. I want young people to be able to read, write and debate when they leave school. To deny them the opportunity to use libraries is a step backwards in my opinion.
But, yesterday I attended my NHS dentist. it cost me £12. What a ridiculously small amount and I would like to know what they claim from government. I think Dentistry and GP's should follow the path of opticians and we should all have to pay. Perhaps then people would bother to turn up for their appointments and thus save GP's time and money. It is one way to make people more socially responsible.
I am coming round to the view that we hand out far too many benefits and they should be stopped completely. Open workhouses again. Goodness that will get the left blowing gaskets.
wrinkled weasel
December 20th, 2011 10:33pm Report this commentTalk about starving, about 1 in 7 Americans claims food stamps, that's about 45 million citizens. This represents an increase of 74% since 2007.
We are not talking about some tin pot dictatorship or failed state, we are talking about the world's leading superpower.
The program worked once, but is now subject to wide abuse. The American psyche is now so used to the idea that Taco Bell are lobbying to be included in the scheme. (Cooked foods are currently exempted) And surprise surprise they are not driven by a sudden attack of social conscience. Food Stamps has spiraled out of control due to a failure to grasp inconvenient truths about the land of dreams.
Reagan lived in the days of Marlboro Man and cheap gasoline. The present incumbent is to busy with hot potatoes to suggest a reality check.
Malfleur
December 20th, 2011 11:21pm Report this commentIs this a check, or a cheque,or a czech? I think we should be told.
Cromwell
December 20th, 2011 11:36pm Report this commentWell said James.
This is the reason why the pensions 'deal' with the Public Sector is such a poor one.
It doesn't serve the check. In particular it doesnt serve the check to the beneficiaries and make them pay for their pensions.
Instead our children and grandchildren will pay for them.
Cameron and Alexander should be ashamed.
Dave B
December 21st, 2011 12:22am Report this commentI'm very much in favour of a balanced budget law for the UK.
Germany has one, I think we should copy it.
http://www.nationalreview.com/corner/281737/germanys-latest-fiscal-adjustment-success-veronique-de-rugy
Roy
December 21st, 2011 1:07am Report this commentThe odd administration, the odd war or so, the odd 9/11. Then you get an heroic socialist who knows every damn thing. What is failing America as it is failing Britain; the engine room of the economy has been sent to one of the many cheap labour countries of Asia. With the labour now unwanted, we have to pay to keep alive the populace so they may keep reproducing to further the dilemma.
Erica Blair
December 21st, 2011 2:22am Report this commentWho would have thought that policies that closed down labour-intensive industries would lead to unemployment.
Nice to see the answer to the subsequent problems would be to starve the victims.
Tarka the Rotter
December 21st, 2011 9:08am Report this commentWhy Erica, state-instigated famine is the Great Socialist Way...Stalin did it, Mao did it...Fabian eugenicists love it...
TomTom
December 21st, 2011 9:36am Report this commentReagan did NOT shrink the Federal Government - he expanded it by creating a bloated Defence Sector which became a national joke for overcharging and corruption. US industry was skewed towards Defence which was why GE took over RCA to gets its defence assets and spewed out the consumer side. It is why Lester Crown of General Dynamics was able to get away with so much.
Reagan slashed social spending but built a Welfare State for Contractors. George Bush did much the same but rewarded the truly rich with tax cuts. LBJ funded the Vietnam War through inflation and Dollar Debasement so Nixon had to go off Gold and then the real credit explosion began.
The US Government is a black hole sucking in all taxpayers save the Very Rich who have Congressional Opt Out Clauses. Reagan did not shrink the US Government Machinery, that is a myth
TomTom
December 21st, 2011 9:37am Report this comment"Germany has one, I think we should copy it."
Essentially that is Gordon Brown's "Golden Rule" and as in Germany it is rubbish. In Germany they have fiddled it for years which is why the country cannot cut spending
davy
December 21st, 2011 9:45am Report this commentYes, Erica, I agree. The steam engine has a lot to answer for, making all those poor loom workers in the mills redundant. Technology is evil.
Dave B
December 21st, 2011 11:27am Report this comment@TomTom
The law only dates from 2009:
"...in 2009 Germany adopted an amendment to its constitution to introduce a balanced-budget provision at both the federal and the Länder (state) levels. From 2016, it will be illegal for the federal government to run a deficit of more than 0.35 percent of GDP. From 2020, the federal states will not be allowed to run any deficit at all."
http://www.nationalreview.com/corner/281737/germanys-latest-fiscal-adjustment-success-veronique-de-rugy
Dave B
December 21st, 2011 12:11pm Report this commentSweden has a balanced budget law.
"Sweden introduced a fiscal rule in 2000 which targets a government surplus of 1% of GDP on average over the business cycle. A multi-annual expenditure ceiling for central government expenditures and a balanced budget rule for local government supports this target. A Fiscal Policy Council was established in 2007 to assess adherence to the surplus target and increase transparency and insight into fiscal policy. Recently, the government has introduced a temporary safety margin of 1% of GDP on the top of the formal 1% surplus target."
http://www.oecd.org/dataoecd/36/50/47860760.pdf
http://www.economonitor.com/dolanecon/2011/07/31/how-smart-fiscal-rules-keep-swedens-budget-in-balance/
Dave B
December 21st, 2011 12:33pm Report this commentThe Clinton-era "pay-go" type rule might be a good start.
"Under the PAYGO rules a new proposal must either be "budget neutral" or offset with savings derived from existing funds.[1] The goal of this is to require those in control of the budget to engage in the diligence of prioritizing expenses and exercising fiscal restraint."
http://en.wikipedia.org/wiki/PAYGO
Dave B
December 21st, 2011 12:35pm Report this comment@TomTom
Sorry, I see your point. The German law is a refinement of a pre-existing law.
http://www.economist.com/economics/by-invitation/guest-contributions/intelligent_fiscal_rule_can_overcome_time_inconsistency
TomTom
December 21st, 2011 1:23pm Report this commentDave B, yes that was in 2009 but the other Law stated it could not borrow more than it invested. This addition to the Verfassung Art. 109, 115, is covered in Art 143d but the get out clause is "exceptional economic circumstances" just as the EU Commission tried with bailing out Greece.
Further "Der Bund kann im Zeitraum vom 1. Januar 2011 bis zum 31. Dezember 2015 von der Vorgabe des Artikels 115 Absatz 2 Satz 2 abweichen."
The Federal Government can breach this Debt Brake between 2011 and 2015 which they are doing nicely paying twice as much into ESM 8.6 billion Euros this year as originally planned.
Further, Germany is on the hook for at least 500 billion Euros for the ECB Bailout. These people are comedians
John Moss
December 21st, 2011 7:10pm Report this comment"Starve the beast isn't working".....
Has it ever been tried?
Herbert Thornton
December 22nd, 2011 12:10am Report this comment'....the starve-the-beast strategy currently allows Americans to receive a dollar in government services while only having to pay 60 cents for it.’?
That's only partly true. It would be more accurate to say that the current strategy allows the American government to SPEND a dollar on government services while Americans PAY 60 cents for it but get services that are really WORTH only 40 cents.
Remittance Man
December 22nd, 2011 6:07am Report this commentWhile I don't doubt that Hayward's "serve the check[sic]" approach would help, it would be impossible to apply this approach universally. One cannot send the Navy around debt collecting every time we go to war for example.
To cover those expenses taxation is obviously needed, but an excellent way to reinforce the "how much you pay" message would be to simplify the Byzantine tax laws. Axe all the piddling little ones and roll as much as possible into the big two (Income Tax and Companies Tax). Then simplify the method of calculating these - flat taxes would be the ideal.
If parliament forced the government to do that I'm guessing the desire to continuously expand what HMG does would soon be curtailed.
Minnie Ovens
December 22nd, 2011 12:17pm Report this commentThe greatest battle of the 21st Century most likely will be The People versus The State.
Benton Marder
December 24th, 2011 10:43am Report this commentAs long as The Beast can borrow, The Beast will eat us out of house and home. The Beast knows no restraint. The Beast is a hog. One has to take a stick and beat it on the snout---hard and repeatedly.
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