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There is no such thing as the state
Samuel Brittan The Financial Times 17/12/04

I have been reflecting on why I become increasingly irritated by each successive Budget statement, pre-Budget report and similar pronouncements. Maybe there are a few high-minded people who are able disinterestedly to consider them in the light of questions such as whether Gordon Brown has forsaken prudence or whether his forecasts are realistic. But this is to miss the flavour of such occasions. Both the chancellor's speeches and the media reporting of them are dominated by reports of hand-outs of various kinds. We may hear of a Budget for the old, for the young, for education, for science, for business, for the poor or, increasingly, for "Middle England". Although the detail may vary, the flavour is pretty much the same whichever party is in power and whoever is the chancellor.

Years ago the really austere could avoid this circus by reading just the official Budget documents at their leisure. But all hope of this is now gone. If you want to find out the exact changes proposed for, say, income tax rates or allowances, you have to wade through pages of propagandist prose and then search under headings such as "encouraging enterprise" or "building a fairer society".

Look at some of the items in the official Treasury summary of this year's pre-Budget report. Nearly all consist of the handing over of money from some citizens for the benefit of others: some conditionally, such as credits related to skills or returning to work, and some unconditionally, such as the winter fuel allowance for the elderly, which does not depend on the needs of the recipients. It is tempting to call the process "bribing ourselves with our own money".

It is not my purpose to attack all these transfers. Indeed, I have written in support of in-work credits and so-called baby bonds. But none of them reflects the personal generosity of the politician at the dispatch box and it is childish to discuss them in these terms. Only someone like the Sultan of Brunei could exhibit personal generosity in financing such transfers.

Margaret Thatcher aroused furious reactions when she said there was no such thing as society. I would prefer to say with the poet W. H. Auden:

There is no such thing as the state

And no one exists alone.


What is called "the state" is simply a mechanism by which citizens can provide collectively for items such as defence and security, which cannot readily be provided either through the market or through voluntary co-operation. It is also a mechanism for transferring claims to income or property from one citizen to another.

The question is how much one set of citizens should transfer to another set. The transfers may require a complicated administrative mechanism, although not one as complicated as that provided by the present accumulated mix of goodies.

Such transfers cannot be ruled out a priori. Neo-liberals rightly say that income does not belong to the state. But to say this does not rule out transfers effected by government machinery. In any case, neo-liberals have yet to provide a theory of just property rights; and most of them are reduced to exegesis of the writings of John Locke, a 17th-century philosopher whose teachings need massaging before they can be applied to today's problems.

One immediate difficulty with the whole complex structure we have built is that many of the transfers are not just from the better off to the less well off, or from the more fortunate to the handicapped. Some of them simply cancel out, such as those of the income tax payer who also receives the winter fuel allowance. Others are transfers from one stage of life to another by the same individual or family. Both processes are called "churning".

To say this does not dispose of matters. Suppose someone has not made adequate provision for old age or periods of ill health. In a civilised, affluent society he or she should not be left to perish in the gutter. The genuine liberal (neo or otherwise) should ask: what is the minimum standard we wish to provide even for those who have been improvident or unlucky in their personal affairs?

Transfers going too far beyond this point are expressions of government paternalism by those who claim to know what is best for us. And minimum income provisions have their own problems. The existence of a basic minimum acts as a disincentive to work or save; and there is nothing much that can be done about this other than a gradual cut-off of benefits, which inevitably increases effective marginal tax rates at the lower to middle end of the spectrum.

Even at this time of year, adults could do well to remind themselves that there is no such thing as Santa Claus, Good King Wenceslas or any similar provider.

To adapt a famous remark of President John Kennedy, we should ask not what the state can do for us, but what we should do for each other.

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