Thursday, June 03, 2004

Old chestnuts and hard questions

David Farrar trots out the old chestnut of "tax-cuts equals higher government revenue" to defend a shrinking of government. Sigh. As I said to KiwiPundit months ago, you can prove anything with the miracle of compound interest. Meanwhile, in the comments, Jordan Carter asks the hard question: what would David cut or privatise? Tertiary education? Schools? Hospitals? Superannuation? Or benefits?

At the moment, core government spending (excluding SOE activities) is around 32% of GDP - and it's not enough to provide the public services that we want. Reducing it to 20%, as David advocates, will require not just cuts, but the elimination of some or all of these services. A gradual reduction, by refusing to grow the tax base with the economy, will result in a death by neglect and starvation rather than an active killing off of government services - but it will be a death just the same.

Now, the right can argue till the cows come home that providing health, education and welfare is not the proper role of government, and that these services should be provided by the private sector for private profit, but it's fairly clear the electorate doesn't agree. The social consensus in New Zealand is that these are core functions of government, and that a government that fails to adequetely provide in these areas is a failure. New Zealanders do not want a nightwatchman state; we want one that actually does something.