Hi Arthur,
At 10:51 06/02/03 -0500, you wrote:
>Was Hamish McRae formerly with the Economist?
I don't think so. I think you may be confusing him with Norman Macrae
(spelling?) who wrote, as I remember, that classic Economist survey of
Japan some 35 years ago or so that electrified business people in the West
that a powerful new competitotr was on the scene. (I remember the MD of
Massey-Ferguson rushing round the place and giving everyone a copy!)
Norman Macrae carried on writing for one of the broadsheet papers (and was
syndicated into US newspapers) until he was quite old. I think he died
about 5-10 years ago. He was very much a free trader and he was probably
the first who sowed doubts in my mind about the left-wing view of things
that I then held. (A painful process, changing one's views after a lifetime!)
Unlike Norman Macrae, Hamish McRae is as middle of the road politically as
it's possible to be. I don't think I have ever read a political comment of
his after reading two books of his and several years of reading his
journalistic stuff.
Keith
>
>-----Original Message-----
>From: Keith Hudson [mailto:[EMAIL PROTECTED]]
>Sent: Thursday, February 06, 2003 3:18 AM
>To: [EMAIL PROTECTED]
>Subject: [Futurework] Inevitable decline in public spending
>
>
>This week our Chancellor, Gordon Brown, made a strong speech extolling
>public services-- attempting to justify the fact that the present
>government is falling into its old Labour Party habits of increasing public
>expenditure again after being good boys for the past six years.
>
>In an interesting article in yesterday's Independent, its economic editor,
>Hamish McRae, as politically even-handed a commentator as any, advanced
>three reasons why high levels of public expenditure in developed countries
>are bound to fail. I'll abstract from his article and the following might
>interest some of those who like to consider real social trends rather than
>hypothetical ones.
>
>1. If public services improve, they do so only slowly because they are not
>customer driven, and compare badly with the general quality of private
>sector services which, like the provision of private goods, is improving
>constantly. Indeed, the more diverse our needs and aspirations, the more
>complicated are the tasks of meeting those needs, and the more that public
>services will fail;
>
>2. Demographic changes towards older populations in all developed countries
>means that the proportion of people of working age who have to pay the bulk
>of the taxation needed to support public services is declining. Urging
>people to retire later will help to alleviate the growing shortfall, but
>this only slows down the developing problem and doesn't solve it;
>
>3. As societies get richer, they tend to spend more money on four main
>activities and all these are growing steadily: leisure, financial services,
>health care and education. The last two are largely in the hands of the
>state (in England and the EU, if not in America) but where is the extra
>taxation to come from? The people who want more of the latter two services
>cannot afford to be taxed any more, and those who might be able to pay more
>taxes are disinclined to subsidise increasingly inefficient public services
>because they want to spend more on the first two private sectors.
>
>As McRae writes at the end of his article:
>" . . . politicians in every developed country will have to rethink the
>whole role of the state over the next few years. And the question they
>should seek to answer is not the theoretical one of the optimal boundary
>between state and market. Rather it is the practical one: what works?"
>
>Hamish McRae is quite right: we can't possibly decide here and now what
>might be the optimum balance between public and private spending in due
>course. Most importantly, we don't know what the demographic structure of
>tomorrow's society will be and, in particular, the fertility rate. Nor do
>we know how or whether developed countries will resist powerful waves of
>migration from the undeveloped world and what effect these will have on the
>skills and taxation potential of their host populations.
>
>However, I think it's possible to discern two-way trends which indicate the
>sort of figure for public services (as % of GDP) that will be more usual in
>developed countries during the next 50 years or so. In the Scandinavian
>countries, where public expenditure is at about 45-50%, they are trying
>hard to reduce it -- transfer costs are too high and are holding back
>economic growth. In the EU (Germany and France in particular), politicians
>would like to reduce present levels of 40-45% to more like 35-40% because
>enterprise and new start-ups are being inhibited. So far, they are being
>prevented from doing so by strong unions -- mainly industrial workers in
>Germany and civil service unions in France. England is dithering at about
>40%, and Japan and America are also dithering, but at a lower figure --
>about 30%. The public expenditures of most tiger economies in Asia,
>including China, are at about 15-20% of GDP but are encouraging private
>development of education and health rather than state services, though they
>know they will have to start state pensions sometime soon. Their public
>expenditures will probably rise to, say, about 25-30%.
>
>So it looks to me as though the public expenditures of most developed
>countries will finally end up at about 30% in about 50 years' time. This
>is, of course, assuming that another energy technology will come along
>which will be as cheap as our present one. Economies expand or contract in
>lockstep with the cost of energy, so if our grandchildren don't have as
>cheap a technology as oil or gas is now, then all the above forecasts can
>be thrown out of the window.
>
>Keith Hudson
----------------------------------------------------------------------------
------------
Keith Hudson, General Editor, Handlo Music, http://www.handlo.com
6 Upper Camden Place, Bath BA1 5HX, England
Tel: +44 1225 312622; Fax: +44 1225 447727; mailto:[EMAIL PROTECTED]
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