I think I’m like the majority of people in not having any fixed ideological position about whether the state should be large or small, writes Professor Simon Wren-Lewis.
The state is clearly good at doing some things, and bad at doing others. In between there is a large and diverse set of activities which may or may not be better achieved through state direction or control, and they really need to be looked at item by item on their merits.
My first major problem with small state people is that they are not prepared to look at these items on their merits. Instead they have a blanket ideological distaste for all things to do with government.The evidence that government is ‘always the problem’ is just not there. The idea that private sector activity is always welfare enhancing and is best left alone was blown out of the water by the financial crisis.
My second major difficulty with many small state people, like George Osborne, is that they are using fear of a debt crisis (a possibility which for the UK and US is non-existent) to achieve their ends. This is political deceit on a grand scale.
My third major problem follows from the second: reducing government spending during a liquidity trap recession does real harm. It wastes resources on a huge scale.
If you want to know how – and see Professor Wren-Lewis trashing the small-state thinking of Torygraph assistant editor Jeremy Warner into the bargain – visit Mainly Macro.
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