It Didn’t Work For The Soviets, It Won’t Work For Us

The way to get ourselves out of our present economic difficulties is not to emulate the Soviet Union. That bloated, inefficient command economy rightly collapsed and died more than two decades ago and is only missed by the likes of Vladimir Putin and hard-line Stalinists. Oh, and Keynesians apparently. They want us to adopt the very same policies of state intervention.

The problem with Keynsians and communists alike is they don’t trust the people. We can’t be trusted to spend our own money on things we regard as a priority. No, they have to take our money from us in higher taxation and spend it on what they think are higher priorities. That way the economy will generate more revenue and they’ll be able to tax that too and spend still more money on things they think are important. On our behalf. In our name. Without our consent.

We were pretty much a command economy not so long ago. The government owned companies that made cars, trucks and ships, that ran the telephone service, ran the trains, ran the buses, ran the economy into the ground. Talking of ground, the government even dug for coal. The government built the roads, built the railway lines, built airports. The government owned the houses that ordinary working people lived in. The government ran the hospitals when they were ill, ran the schools their children went to. The government even ran radio and television stations. The list goes on.

Thank God for Thatcher.

Some things should be run by the government for and on behalf of all the people. But generating the country’s wealth is best left to us. The government simply has to get out of the way and Thatcher did us an enormous service by privatizing whatever was not the government’s business.

“Austerity” is a misnomer. It should be called “Liberation”. It is the process of the government getting out of our way and liberating us from state control. However it is under threat at the moment from those who believe it is not working and cannot work. They want to increase taxes, to take more out of our pockets and reduce the amount of money we have to spend, which means, of course, we will spend less. Only they’re not so daft as to announce they want to increase taxes, no, they simply say they want to increase government spending. As if we don’t know where the money is coming from. Increasing taxes and taking money away from us will increase austerity, not reduce it.

How can we possibly be better off with less money coming in?

If you want us to be better off, reduce the taxes we have to pay. Cut VAT or increase the tax threshold. Leave more money in our pockets.

It won’t feel so austere then.

4 thoughts on “It Didn’t Work For The Soviets, It Won’t Work For Us

  1. This seems to be lacking in a number of respects.

    1. You have neither demonstrated how the government is always so much better than the private sector at running certain things, or what precise things the government should and should not be running.

    2. You have not dealt with certain possible objections, like the inevitable fact that cuts in government without private sector growth to match (which so far seems to have been lacking). increases unemployment and thus spending power, which isn’t good for an economy in recession. Or the bigger Keynesian idea that stimulus spending can be good in a recession.

    • Thank you for reading and commenting.

      1) It’s not really possible to make that case in a brief blog, all I can do is point to some of the more obvious cases where an economy is run by the government and they all have one thing in common – they don’t work. Most of the basket-case countries have centrally run economies.

      2) There will inevitably be a lag between cutting back on a government’s involvement in economic activity and the private sector taking up the slack. It may be years, not weeks or months, but if we never start we will forever be stuck in a downward spiral of government running the economy. All that stimulus spending does is increase the government’s involvement.

      • 1. I suppose blogs need not be short though; nevertheless, if you prefer to keep your posts short, some things needs must be left out.

        The reason I say this is there seems to be an implicit assumption amongst free market advocates that all government involvement beyond a certain bare minimum is a bad thing, and simply pointing to examples of history, whilst it supports your case slightly, is not proof. A counter-example can undermine the principle.

        2. And if that time lag is years, it will have serious knock-on effects for those who are out of work and struggling to make ends meet. In which time they are less in the habits of good employment and could perhaps have had to lose their homes, putting them in a worse position.

        I’ve read one Keynesian argument recently to the effect that that cuts should happen, but in times of prosperity. Starting now may not always be the best time.

        On a side note what is your view of the bank bailouts as government intervention? Should they have simply been allowed to fail and not be a burden to the taxpayer or were the consequences (in terms either of public unrest, people being unable to access their savings or even keep them) too great?

        • On the bank bailouts, I think the governments got themselves into an impossible situation – through neglect – and had little alternative. That said, did the bailouts work? We still have the banks but they seem to be carrying on much as before, the only difference being that they’re much less likely to lend to those who need the money which was one of the justifications for giving the bailouts in the first place.

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