The Coalition Programme: A New Vision for Britain or Politics as Usual?

The Coalition programme includes restructuring public provision through reforms and cuts which will take public spending in the Britain below that in the US. This article explores whether the Coalition agenda is best understood as a new approach to Britain's deep‐seated economic short‐comings or simply as the normal politics of gaining and retaining power. It analyses the current government's programme, identifies the common features across the range of policies and discusses how they are likely to develop as they encounter set‐backs.     

Modeling spending preferences & public policy

Understanding preferences over government spending is important for understanding electoral behavior and many other aspects of the political world. Using data on relative preferences for more or less spending across different issue areas, we estimate the general spending preferences of individuals and congressional candidates along a left-right spending dimension. Our modeling approach also allows us to estimate the location of policies on this same dimension, permitting direct comparison of people's spending preferences with where they perceive policy to be. We find that public shows very low levels of polarization on spending preferences, even across characteristics like partisanship, ideology, or income level. The distribution of candidates' spending preferences shows much more sorting by party, but candidates are significantly less polarized than is contemporary voting in Congress.     

“Public goods”: An exercise in calibration

This paper considers a measure of the “publicness” of goods and services implicit in responses that individuals make when asked about public sector spending. At the limit, all consumers consume equal amounts of a public good. Thus any differences between an individual's self-interest preferences and public-interest preferences cannot be based on differential provision, but only on differences in the individual's public- and self-interest utility functions. If we rule out the latter, self-interest and public-interest preferences for a pure public good are identical. Using sample survey data it is possible to calibrate the public good content of different public goods.     

The Gnomes of Washington: Four Myths of the 1976 IMF Crisis

The IMF settlement of December 1976 looms large in popular and partisan views of the politics of the 1970s. It is argued here that conventional academic wisdom has come to embody several misleading myths about its impact on economic policy. Evidence is presented to challenge four such myths which suggest that the IMF forced the Labour government to launch an attack on public spending, introduce cash limits to control public spending, introduce monetary targets and abandon the pursuit of full employment through demand management.
Although the language of the [IMF] negotiations reflected the arcane terms of international finance… the decisions required of the British Government were profoundly political… behind the technical financial decisions lay fundamental differences over the appropriate balance between the private and public sectors, the priority between capital accumulation and social welfare, the relative weight to be given to incentives and equality… What was at issue was the future shape of the political economy of Great Britain.¹     

Influencing Public Opinion of Space Policy: Programmatic Effects Versus Education Effects

The public is generally supportive of space policy, but less supportive of spending for the National Aeronautics and Space Administration (NASA) compared to other government programs. Previous research has helped identify who is more likely to be supportive of NASA spending, but not why. This study seeks to understand the causal mechanisms that influence support for NASA. Using natural between-survey and induced within-survey experiments, this study attempts to identify factors influencing changes in public support for NASA spending. Short-term programmatic and related media effects appear to have no influence on public support for NASA spending. However, correcting information asymmetries in regard to NASA's budget appears to have a significant positive effect on public support for NASA spending. The findings speak to the importance of the public being well informed on policy issues in order to make a correct policy choice, and demonstrate that individual programmatic aspects may not be as important as overall agency direction.     

Why the BBC Matters: Memo to the New Parliament about a Unique British Institution

The new Parliament will be asked at some point to make critical decisions about the BBC's future at a time when it is facing full‐frontal assaults from competitors who view the BBC as a major barrier to their own advancement. Whether it be newspaper groups seeking to monetise their online activities, commercial children's channels, terrestrial competitors or the owners of music radio stations, media conglomerates rail against the BBC's size and public funding with increasing regularity. Our aim is to remind our legislators of the vital contribution this institution makes to British life: from a journalism inscribed with values of fairness, integrity and impartiality—and valued throughout the world for its professional engagement with foreign affairs—to its creative commitment to British story‐telling, music, comedy, arts and children's programmes, the BBC's contribution to our democratic and cultural welfare is immense. It is a beacon for Britain, which provides social glue for its citizens at a time of fragmenting audiences and identities, within a uniquely non‐commercial space, accountable to both Parliament and its licence payers. It may distort the market, much as the National Health Service distorts the market for health care, but is held in high esteem by the British public and is admired throughout the world. This article explains why the BBC is a national treasure that underpins our creative economy as well as our cultural vitality, and argues that it must be protected from those who argue self‐interestedly for its diminution.     

Better Off Out? Britain and Europe

The largest ever rebellion of Conservative MPs on Europe took place in October 2011 with 81 Conservative MPs defying the Conservative whip to vote for a referendum on Britain's continued membership of the European Union. This resurgence of dissent over Europe has been fuelled by the crisis in the eurozone. The Conservative party is now an overwhelmingly Eurosceptic party, but Conservative Eurosceptics are divided over whether the Government should use the opportunity of the eurozone crisis to take Britain out of the European Union, or whether it should seek to negotiate a looser arrangement, or do nothing at all. Conservative policy on Europe has been further complicated by the coalition with the Liberal Democrats, and by the consequences for the British economy if the eurozone disintegrates. Public opinion is also divided. British policy on the European Union remains ambivalent and muddled because British aims are inconsistent, and because there is no consensus on where Britain's interests truly lie.     

The bigger the better? Evidence of the effect of government size on life satisfaction around the world

This paper empirically analyzes whether government size is conducive or detrimental to life satisfaction in a cross-section of 74 countries. We thus provide a test of the longstanding dispute between standard neoclassical economic theory and public choice theory. According to the neoclassical view, governments play unambiguously positive roles for individuals' quality of life, while the theory of public choice has been developed to understand why governments often choose excessive involvement in – and regulation of – the economy, thereby harming their citizens' quality of life. Our results show that life satisfaction decreases with higher government consumption. For low, middle income, and male people, this result is stronger when the government is leftwing, while government consumption appears to be less harmful for women when the government is perceived to be effective. Government capital formation and social spending have no significant impact on life satisfaction.     

Democracy,creeping socialism,and ideological socialism in rent-seeking societies

Rent-seeking societies suffer from a serious distortion of incentives. Incentives to engage in distributional struggles, to seek contrived transfers are strong, but incentives to engage in productive work are too weak. Stagnation and some unemployment should be expected. Long lasting democracies within unchanged borders create a permissive environment for rent-seeking. The provision of rents very much depends on government. The stronger the governmental involvement in the economy, the higher social security spending, the more rents the government is likely to generate. Therefore, creeping socialism understood as increased government control of the economy should reinforce the rent-seeking society and the corresponding negative effects on growth and employment. Whether such creeping socialism is backed by ideological socialism or not should make little difference for growth or employment. These ideas have been tested and partially supported by a 19 nation sample of industrial democracies, using data from the sixties and seventies. By and large, the rent-seeking approach is fairly successful in explaining national differences in economic growth rates, but receives ambiguous support or less for unemployment. Olson's (1982, 1983) proposition about the negative impact of long lasting democracy within unchanged borders on economic growth is much better supported than the growth-retarding effects of government revenues or social security spending are.     

State and Capital in Sweden: The Importance of Corporatist Arrangements

In what way does corporatist representation change the behaviour of participating organizations? The classical question is whether the interest organizations' representatives are captured or not. Sweden is one of the countries in which the class-based interest organizations are heavily represented in the central public administration. The importance of corporatist arrangement in this area in Sweden is due to the fact that the task of implementing government policy is largely given to semi-independent directorates. Since the early 1970s, the major business organization in Sweden has been strongly demanding cuts in public spending. As it is represented in some of the most important, and expanding, public agencies of the Swedish welfare state, it could be expected that their representatives would demand a decrease in the agencies' yearly budget proposals. During a ten-year period (1974–1983), there is no sign of such behaviour of the business organization's representatives in these corporatist institutions. On the contrary, business in Sweden can be said to have been more generous with the taxpayers' money than both Social Democratic and bourgeois governments have found possible. Assuming that both its general demand for cuts in public spending and its specific action in the corporatist institutions are rational, it is discussed how this seemingly contradictory behaviour of Swedish business can be explained. The starting point for the debate about corporatism is the organizations' increasing influence on the state. The Confederation's standpoint is that this influence has now reached such a level that there is need for a change On various occasions. representatives of other interest organizations have also emphasized the importance of keeping a clear-cut distinction between the area of political responsibility and the area of the organizations' responsibility. In political issues it is the politicians' duty to weigh up the different judgments and standpoints and to come to a common public interest. The interest organizations' task is to pursue their special interests. These interest organizations should not take part in decisions in the political sector. I f this were to happen the special interests would have too much influence on the political decisions.     

The impact of parties,economic growth,and public sector expansion: A comparison of long-term dynamics in the Scandinavian and Anglo-American democracies

Abstract. This paper discusses (1) the extent to which the partisan composition of government affects economic policies and macroeconomic outcomes, and (2) the interrelationship between public spending, taxation and economic growth. These two issues are connected. Since target variables and instruments affect each other reciprocally, the specification of the partisan model should encompass both a reaction function and an outcome function. A pooled vector autoregressive model suggests that during the last century left–wing governments in the United States, Britain and Canada have reinforced the growth of both public spending and GNP. Only public sector expansion is affected by partisanship in Denmark, Norway and Sweden. In the Anglo–American countries changes in spending occur before changes in economic growth in terms of a lagged crowding out effect. Spending and revenues appear to affect each other reciprocally. By contrast, public sector expansion in Scandinavia stimulates growth, while taxation leads spending.     

On the (relative) unimportance of a balanced budget

This paper explores the reasoning underlying Milton Friedman's preference for a small, unbalanced budget over a large, balanced one. Because the marginal return from government spending is less than the marginal cost (measured in terms of the amount of income private individuals remain free to spend), government expenditures have more of an adverse impact on the economy in his view than does the method of financing that spending. Using a panel data set comprising the 50 states plus the District of Columbia, we report evidence from the years 1967 through 1992 that growth rates in income per capita tend to be higher in states with smaller public sectors. Moreover, we find that while both deficits and taxes reduce the rate of income growth in a state, the negative impact of government spending is considerably larger at the margin.     

‘Spending Wisely: Principles for a Good Spending Review': The First Report of the Fabian Commission on Future Spending Choices

This article examines the work of the Fabian Society Commission on Future Spending Choices published in June 2013. The Commission is undoubtedly the most detailed and ambitious attempt by a centre‐left think‐tank to analyse the structure of UK public spending since Labour's 2010 defeat. The Commission makes an eloquent case for a strategic approach to UK public spending, filling the substantial void in thinking on the centre‐left since Labour's 2010 defeat. Inevitably, the proposals raise fundamental questions about the capacity of the British state and the constitutional framework of the UK political system to accommodate a long‐term, future‐orientated approach to public expenditure, which deserve to be properly aired and debated.     

Public Opinion and Military Intervention: Afghanistan,Iraq and Libya

Britain has participated in several military interventions of varying duration, extent and political controversy in recent years. This article analyses public opinion towards the most recent intervention in Libya in 2011, looking at three different aspects of the topic. First, it examines differences in cross‐national attitudes towards military action in Libya amongst NATO countries. Secondly, it then looks in detail at which social groups were more or less likely to approve of British involvement, comparing this with group attitudes towards Britain's role in Afghanistan and Iraq. Thirdly, it assesses how public opinion shifted during the course of the action in Libya, looking at three key indicators of the popular mood: whether Britain was right or wrong to take military action; how well the war is going; and assessments of David Cameron's handling of the conflict. Broader reflections are then made about public opinion towards British involvement in future military action.     

Social spending,partisan bias and vote choice. Evidence from the US

Most models in political science and political economy assume that benefiting from public spending increases the likelihood of voting for the government. However, we do not have much empirical evidence on the conditions under which recipients of public spending reward governments for their public transfers. This article studies the electoral implications of welfare spending cuts in the early years of the Reagan Presidency, when public spending changes were particularly pronounced. Using 1982 NES data, this paper demonstrates that voters who lost public benefits punished Reagan but this only occurred when they identified with the Democratic Party. By contrast, benefit recipients not affected by government cuts were more likely to support Reagan, but again this was only significant among voters identifying with the party of government. This paper thus finds that governments cannot automatically “buy” votes by using welfare spending, the influence of which is instead cushioned by party identification.     

From myth to reality: Globalisation and public spending in OECD countries revisited

The prevailing but not unchallenged 'conventional wisdom' in the literature dealing with the impact of globalisation on public spending is that the effects of increased openness can be compensated through the welfare state. Repeatedly, studies have found little evidence for a 'race to the bottom' in taxation or spending. This research note shows that it is premature to conclude that globalisation has no negative impact on public spending. By extending the period of observation into the 2000s, by looking at changes in openness and spending instead of their levels, and by disentangling the effects of openness in the cross-sectional and over-time dimensions of variation, this article shows that the association between increased openness and spending is clearly negative. Although the contribution of this research note is mainly empirical, some theoretical arguments are presented, emphasising the long-term nature and complexity of policy making in the politics of globalisation.     

In Maryland, Fiscal Discipline Is the Budget Limit

Maryland does not limit spending or revenues pursuant to a constitutional or statutory formula. It has developed a unique response to fiscal difficulties, which does not abdicate fiscal policy to formulas as happens under traditional limitation regimes The process used in Maryland is called Spending Affordability, and it serves to cause policymakers to prospectively focus on the relationship of public spending to the state's economy without altering the budget-making process. This article examines the Spending Affordability model in use in Maryland.     

Fiscal Policy Composition,Public Debt,and Economic Activity

This paper uses a dynamic general equilibrium model i) toinvestigate how changes to different spending and revenue items of the budgetaffect economic activity and public finance; and ii) to evaluate thewelfare costs of alternative fiscal policy maneuvers. The paper shows that,unlike an increase in government purchases of final goods, an increasein public employment and transfers can have a contractionary effect onthe economy in the same way as a rise in tax rates. It also suggests thatfiscal adjustments implemented by cutting spending items increasehouseholds' welfare and are more effective in reducing the primary deficitand public debt than are increases in tax rates.     

Easy Money: Tax Exporting and State Support for Higher Education

There is a substantial literature that assesses the effects of tax‐exporting capacities on the tax structures and aggregate spending levels that state governments choose to implement, but no work exists that isolates the effects of state tax exporting on higher education spending. Using state‐level data for 1989, 1995, 2002, and 2007, we estimate for the median voter in each state the change in the marginal cost of higher education subsidization generated by tax exportation, and calculate the increased higher education spending that results. We consider three types of spending: state appropriations to public universities as well as need‐ and non‐need‐based aid awarded to in‐state students. We find that neither type of aid is responsive to the marginal cost, or tax price, faced by the median voter. However, the median voter's price elasticity of demand for state appropriations is statistically significant and negative. We find that the median voter's tax price is substantially reduced by the presence of prominent mining and tourism industries and by the federal deductibility offset available to firms. Thus, these tax‐exporting capacities exert upward pressure on voter demand for state appropriations to public universities.     

“The Big Society,” Public Expenditure,and Volunteering

The debate on volunteering has paid insufficient attention to the relationship between public spending and volunteering. The importance of this relationship is highlighted by the British government's “Big Society” plan, which asserts that an increase in volunteering will compensate for the withdrawal of public agencies and spending. This idea is based on the widely held belief that a high degree of government intervention decreases voluntary activities. This article uses a multidisciplinary approach to improve understanding of how public spending affects the decision to volunteer. A theoretical model conceptualizes this relationship in terms of time donation by employed individuals. The model is tested empirically through an econometric analysis of two survey data sets and interpretative analysis of narratives of local volunteers and public professionals. The results suggest that volunteering is likely to decline when government intervention decreases and that a collaborative approach to sustaining volunteering is needed.