3.5.2 Scope of Government Spend
There are economic disagreements on the scope of government spend, arising from the differences between individualists and collectivists
There is some government spending in every economic system, as described earlier (3.2.3). It is fiercely contested by many of the taxpayers who fund it. It must never be regarded as a ‘blank cheque’ because those who pay the most should be able to feel that the expenditure is justifiable. Public money should not be wasted.
In the British Parliament, for example, the Public Accounts Committee “examines the value for money of Government projects, programmes and service delivery. Drawing on the work of the National Audit Office the Committee holds government officials to account for the economy, efficiency and effectiveness of public spending.”
Decisions on the scope of government spend are taken politically, as described later (6.7.1), but economic factors must be considered. Both individualists and collectivists have economic arguments that they can put forward to support their preferences, as shown in newspaper reports ahead of the UK budget in 2024. There were sharp differences between the individualist argument in the Sunday Telegraph and the collectivist viewpoint in the Observer, for example.
The different viewpoints are described in the following sub-sections:
● It is possible for private individuals and companies to provide everything that a State might provide, with each person being responsible for paying their own way (3.5.2.1). Individualists prefer such policies, arguing that private enterprise is more immediately responsive to people’s needs than any government can be, and is more efficient. It is also argued that low taxes will stimulate economic growth.
● A collectivist model requires the collection of taxes to fund transfer payments and public services, so that the government can invest in people and public infrastructure (3.5.2.2). It is argued that government investment in people can improve national productivity, and also that it is necessary to prepare the economy to take advantage of future opportunities.
These economic disagreements on the scope of government spend are restricted by economic realities that politicians of either ideology must take account of (3.5.2.3). And a viable economy requires elements of both individualism and collectivism, so compromise is necessary.
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/352f.htm.