Back in 1958 J. K. Galbraith’s The Affluent Society was published. The main thesis of this book was that the reason that goverment services were no good was that not enough money was spent on them, hence there was “private affluence and public squalor”.
The thesis was clearly false even when it was first published, as government spending on such things as education was at an all time record high in 1958 – both in the United States and in all other nations.
However, since 1958 the thesis has been shown to be utter nonsense. As government spending on such things as education has exploded in the United States (and in many other nations) and the standards of such things as government education have declined.
Of course one can attack the above as resting on empiricism, and I would accept that economics should not be based on empiricism (I accept the “Austrian School” view that economics is based on the logic of human action). However, J.K. Galbraith always claimed to be a supporter of empiricism – and so as the years went by (with rising government spending and falling standards in the “public services”) he should have admitted that his theory is false and he has never admitted that his theory is false.
Now J.K. Galbraith seems to have changed his name and come to live in London. In an article in thursday’s “Evening Standard” Simon Jenkins claimed that the reason that “public services” were no good in London was because not enough money was spent on them.
Simon Jenkins (previously known for his support of the London “dome” and other money wasting absurdities), thus ignored both the logical arguments against government spending and the experience of the last several decades of rising government spending and falling standards.
Instead Jenkins declared that everyone should believe him because “I am no socialist” and because he was willing to pay more money to local government himself.
Of course nothing stops this man giving government (local or national) more money now, if he wishes to do this he can – but what has that got to do with other people being forced to give government more money?
As for “I am no socialist” – well “so what?” How is this an argument? Even J.K. Galbraith came out with better stuff than this (perhaps, if they are the same man, age is taking its toll – after all I believe that Galbraith was born in 1908).
The article also made other odd claims. For example there was a claim that the government headed by Mr Blair had not increased taxes – which it has, including taxes on wealthy people (Simon Jenkins was very keen that taxes on the wealthy be increased – he seemed to be unaware that very high taxes on high earners reduce revenue over time).
The article also claimed that a “Nordic” system of collecting income taxes on a national level and then dishing it out to local governments would improve “local democracy”.
This is odd on two levels. Firstly because this is rather like what already happens in Britain – income tax is set by the national government, but much local government spending is paid for by grants from national government (there is endless argument about how fair these grants are, for example with claims that Conservative party controlled councils are discriminated against by the Labour party government, but such arguments need not concern us here).
Secondly, is it not odd to think that the above helps “local democracy”? Surely if one believed in “local democracy” the income tax should be set by local councils? Of course taxpayers (apart from Simon Jenkins) would tend to leave high government spending areas over time – and such councils would go bankrupt, but this would at least be “democratic”.
The tax eaters of London would get to democratically drive out the taxpayers (both individuals and companies) if that is what they wished to do (and the voting stats were on their side), and they would get to democratically starve.
However, central government dishing out subsidies is hardly a matter of ‘local democracy’.