Wednesday, 24 December 2003

Same old Labour

Professor Sir Donald Mackay has written an interesting analysis of Labour's economic policy - old and new:
One of the most influential economic tracts of the 1970s was entitled: Britain’s Economic Problem - Too Few Producers. Written by two Oxbridge economists, it argued that the UK’s poor economic performance was largely a consequence of a structural imbalance between the market and non-market sectors of the economy.
Prof Mackay thinks that Labour hasn't learnt the lesson of the 1970s. The same "structural imbalances" have returned.

The Labour government, thinks Prof Mackay,

... needs structural reform of public services to accompany increased funding, and a realisation that squeezing the market sector is no substitute for such reform. That simply compounds the underlying problem of how we can generate the additional resources to finance improved non-market services. Hence the borrowing spree on which the Chancellor is now embarked.

The experience recalls unhappier times. A friend summed it up neatly. Having listened to my lamentation, he remarked sagely: "New Labour - Same Problem."

Of course I think that only a tiny proportion of government activity can be justified - almost all of those "non-market services" should be, well, marketised. If the state is to continue to fund "public" services there is no earthly reason why it should also operate them. The running of schools and hospitals must be taken out of the hands of state employees if we are ever to see any improvement in Britain's education and health.