Modern Government: Just Spend More, No One Gets Less. Huh?

Modern Government: Just Spend More, No One Gets Less. Huh? By Chris Kenny, commenting on the current Australian federal election.

Government programs and expenditure are overwhelming our economy and our society. The interventions and spending have rapidly reached the highest levels since the war; and we pretend this is sustainable.

For every problem, real or perceived, every grievance, every gripe and every itch that needs to be scratched, we see the offer of a government solution. Labor is worse, to be sure, but the Coalition too, has been sucked ever deeper down this cul-de-sac. …

How about that covid response?

After a pandemic period in which government has restricted how many people we could have in our homes, banned us from travelling overseas, blocked our citizens from returning home, prevented travel across state borders, closed businesses, imposed curfews, locked down states, mandated vaccines, barred people from funerals, prohibited singing and dancing, chased people from parks and beaches, prosecuted dissenters and kept children from school, you might have thought we would have had enough of being over-governed.

But many seem to see this overbearing Covid-19 response as proof that government knows best, and does best. We have quickly progressed from the worrying infantilism of the nanny state to the dark authoritarianism of unlimited state mandates. …

We surrender agency, shunning personal responsibility, enterprise and self-reliance. We look to the state for more, always more. …

Dog parks:

This was brought into focus brilliantly this week during a National Press Club debate between Josh Frydenberg and Labor Treasury spokesman Jim Chalmers that canvassed weighty issues such as inflation, interest rates, unemployment figures and fiscal strategies.

Then Shane Wright … asked a cheeky question aimed primarily at pork-barrelling. Wright said he had taken his dog, Scully, for a run that morning without incurring any expense to taxpayers, but he noticed the Coalition was promising $320,000 for a dog park in the marginal seat of La Trobe, and Labor was promising $200,000 to upgrade two dog parks in the seat of Macquarie.

He asked why this was a good use of taxpayers’ money and whether there was any productivity gain to be made from this spending. A brilliant point, well made, bringing laughter from the audience.

But this example goes deeper than rank pork-barrelling and marginal seat campaigning; why on earth is the federal government involved in funding dog parks? We have local governments to look after such matters, we have state governments that dip into this territory, too, and now Canberra, with its prescribed areas of responsibility such as defence, external affairs, taxation and currency, sticks its slobbering snout into dog parks. …

What would government do if spending was effectively unlimited?

Whatever your priorities in this country, whatever your desires, there will be a politician at some level of government – probably all three – willing to throw other people’s money at it. …

Both major parties have long agreed government expenditure should not exceed 25 per cent of gross domestic product but it topped 31.5 per cent during the pandemic and remains more than 27 per cent for the next two years. … The Coalition at least is committed to cap taxation revenues at 23.9 per cent of GDP but Labor refuses to adopt that ceiling, which only raises questions about unspoken post-election plans.

Much of the money spent by governments is borrowed, and some of it is effectively printed. Everyone in government worked out a few years ago that government debts are never going to be paid back in a meaningful way. At best, some debt will be repaid in sharply deflated dollars.

Therefore, why shouldn’t the government just spend like crazy to buy votes? This is in fact what has happened in the last decade, throughout the west. Elections have become a series of promises on how to spend this apparent bonanza.

The giveaway: no spending promise ever results in someone else getting less, or some other spending disappearing. It’s only more.

This is the magic of modern monetary theory (MMT). Sheer nonsense of course. It merely allows the government to commandeer ever higher percentages of society’s real productive capacity into its vote buying schemes. This only makes us all poorer in the long run. And the money system will break under all the debt — almost there.