The state of the structural deficit requires cuts to spending if we are to avoid going bust. Only someone bereft of the facts and a rational mind could argue anything different. As Allister Heath of City AM pointed out last week “reasonable people can disagree about what the priorities should be; but nobody can deny that the government is spending close to 20 per cent more than it is collecting in tax. Countries that go on like that for too long eventually go bust.”
Supporters of a minimal state can on the whole admit that cutting isn’t in every instance going to lead to more positive outcomes than we currently have. Stopping spending is really only part of the battle. The more important job is freeing people from the plethora of regulations thwarting those who have the drive and ideas to increase the economic pie. We have all been living on borrowed money for too long in an overregulated economy and society estranged from its tradition of self-help.
The immediate concern is to ensure that the current government does indeed cut public spending while reforming public services. However, the larger challenge is to ensure that more people in the country have a better understanding of the economic way of thinking. A while back Allister Heath called on Goldman Sachs to spend £1bn on financial and economic education. Sadly, I’m not so sure it’s entirely in Goldman’s interest to have a population that understands finance too well. As such, the work of the Adam Smith Institute and others remains vital.
Perhaps there is room for some optimism though. Recent popular economics books by authors such as Steven Levitt, Tim Harford, Peter Leeson and Nassim Nicholas Taleb show that there is an appetite for the pretty robust works that explore the economic way of thinking. More importantly economics on the internet is a place where obfuscation is pounced upon by smart amateurs that are as likely to be better informed than the expert. If students increasingly eschew the mass media and get their economic education from such websites as The Library of Economics and Liberty, Marginal Revolution, Coordination Problem, Think Markets and David Friedman’s Ideas rather than the mass media, this country would be both intellectually and materially richer for it.