Tuesday, April 18, 2006

Mr Prime Minister: Sack Your Researchers!

Prime Minister John Howard addresses the Menzies Research Centre at Parliament House last night (presumably his speech writers have access to the best of Australia’s researchers) - from The Australian, Canberra, Australia, 19 April):

Cut & paste: Lean but not mean government for Australian families”

“Earlier this year, I described government in Australia as lean but not mean. Our people seem to like it that way. A limited and prudent state, yes. A nanny state, definitely not. But Australians have always believed in something more than Adam Smith's nightwatchman state. And in an age when civilised nations are engaged in a global struggle against terrorism, when comprehensive health and school systems are every citizen's birthright and when that citizen is living more than twice as long as one born when The Wealth of Nations was published, I dare say Smith would not be surprised.”

Given that Adam Smith didn’t believe in a ‘night-watchman state’ either, I am not surprised that John Howard’s believes in ‘something more’ than this view he ascribes wrongly to Adam Smith.

Smith believed in a an expanded role for the 18th-century British state and one that was much bigger than the grossly over-interfering state he lived under. Some careless readers in the 19th century attributed to him the ‘night watchman’ image of the state, presumably from secondary quotations from his severe critique of the mercantile policies of British (and before 1707, English) governments in which he expressed views uncompromisingly advocating in Book IV of ‘Wealth of Nations’ that the state stopped legislating for policies that intervened in labour, capital-stock markets and the activities of merchants and manufacturers in commercial society.

But that is only one half of his views on the appropriate role of the state in the economy. In book V of ‘Wealth of Nations’ he went on to support the traditional role of the state in the defence of the people from the violent oppressions of neighbouring states, which cost 5 per cent of national income in Marlborough’s time and 15 per cent by the end of the 18th century.

To defence he added what would have been an enormous increase in government expenditure in his suggestion for the construction, staffing and maintenance of a school in every UK parish educate a literate and numerate population, even with a contribution levied on parents according to their income (from a penny per poor child upwards). He also saw the need to fund a justice system to allow for trial by jury, habeas corpus, and an independent judiciary, with appropriate jails (including penal colonies like New South Wales) for those in breach of the law, as legislated by a parliament under the separation of powers.

Perhaps his biggest item for public expenditure (with, where appropriate, private management) was the building of a transport infra-structure in the form of passable roads, canals, bridges and harbours, partly funded by tolls on users. He took almost for granted that local councils would manage street pavements, lighting and refuse collections and disposal (these last items were known quaintly in Smith’s time as ‘police’).

Now these items may not cause much comment in the 21st century but the 18th century was a whole lot different. There was no way that such a public investment and maintenance agenda could be funded without a substantial investment and, thereby, a substantial increase in public expenditure and, consequently, in taxation revenue. None of this squares with the notion of Smith supporting the false image of it being a ‘night-watchman’ state.

Mr Howard, or his many researchers, should have known these facts about Adam Smith before he delivered his speech.

[Read Prime Minister Howard’s speech at: http://www.theaustralian.news.com.au/story/0,20867,18854164-7583,00.html]


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