From Professor Wren-Lewis' Mainly Macro blog:
The imaginary world of small state people
And from the Washington Post:“In the end, you are either a big-state person, or a small-state person, and what big-state people hate about austerity is that its primary purpose is to shrink the size of government spending.”
So said Jeremy Warner (assistant editor of the UK’s Daily Telegraph) last year. Jeremy is a small state person, and I think many other small state people think like this. But the statement is wrong. There are a large number of people - I suspect the vast majority - who do not have any prior view about the size of the state.
In many ways the bipolar view harks back to a bygone age, where - at least in Europe - there actually was a large constituency on the left that wanted a large state as a matter of principle. In the UK that constituency lost all its influence with Margaret Thatcher and New Labour, and it has also lost its influence in the rest of Europe. However this decline in the influence of big state people on the left was matched by a rise to power on the right of those who want a small state as a matter of principle. George Osborne’s plan for the UK over the next few years is the apotheosis of this neoliberal view.
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. 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....MORE
Government for the strongest
As Lincoln might have said had the Gettysburg Address been written 150 years later and sponsored by Facebook, the GOOG and Uber et al: "The government of the 1%, by the 1%, for the 1% shall not perish from the earth."Intellectually undemanding progressives, excited by the likes of Sen. Elizabeth Warren (D-Mass.) — advocate of the downtrodden and the Export-Import Bank — have at last noticed something obvious: Big government, which has become gargantuan in response to progressives’ promptings, serves the strong. It is responsive to factions sufficiently sophisticated and moneyed to understand and manipulate its complexity.Hence Democrats, the principal creators of this complexity, receive more than 70 percent of lawyers’ political contributions. Yet progressives, refusing to see this defect — big government captured by big interests — as systemic, want to make government an ever more muscular engine of regulation and redistribution. Were progressives serious about what used to preoccupy America’s left — entrenched elites, crony capitalism and other impediments to upward mobility — they would study “The New Class Conflict,” by Joel Kotkin, a lifelong Democrat.
The American majority that believes life will be worse for the next few decades — more than double the number who believe things will be better — senses that 95 percent of income gains from 2009-2012 went to the wealthiest 1 percent. This, Kotkin believes, reflects the “growing alliance between the ultra-wealthy and the instruments of state power.” In 2012, Barack Obama carried eight of America’s 10 wealthiest counties.
In the 1880s, Kotkin says, Cornelius Vanderbilt’s railroad revenues were larger than the federal government’s revenues. That was the old economy. This is the new: In 2013, the combined ad revenue of all American newspapers was smaller than Google’s; so was magazine revenue. In 2013, Google’s market capitalization was six times that of GM, but Google had one-fifth as many employees. The fortunes of those Kotkin calls “the new Oligarchs” are based “primarily on the sale of essentially ephemeral goods: media, advertising and entertainment.”....MORE
By-the-bye, the "Government of the peeps, for the peeps..." formulation was not original to Lincoln. It is first seen in
Purvey's "Great Prologue", 1395-97
See Wikiquote
But see also Eugene Volokh
Climateer Investing: come for the political brickbats, stay for the obscure history.
And bearish directional calls on petroleum.
