In Britain today, the state is everywhere; a menacing omnipresence demanding to supervise and control what we do, and tax us whether we do something wrong (like enjoying a sugary snack) or something right (like putting in some overtime at work). Government is now so intertwined in every aspect of our lives that we have become both dependent on authorities to manage our lives for us, and blind to the detrimental effects of the pervasive rules, regulation, levies and taxes affecting our every move.
Government intrusion not only robs us of individual choice and authority over our lives and property, taxes and tolls create market distortions, leading to what in economic terms are labelled deadweight loss: a loss of economic efficiency. Polices that favours one constituency inherently disadvantages another. Picking winners means picking losers. One man’s subsidy is another man’s tax. Unintended consequences abound.
- Minimum wage legislation locks people in poverty and dependency. In the UK, the £7.50 minimum wage implies that 43.6 hours work (the average British working week) must pay £327. The alternative, jobseekers allowance, is currently £73.10/ week, less than a quarter. Even if other benefits accrue, the benefits cap for a single person outside London caps the amount received at £257.69 per week (in London it is £296.35).
- Government regulation, stipulating a far higher carer/child ration then other countries, makes child care in the UK the 2nd most expensive in the world (after Switzerland).
- Environmental policies such as the Climate Change Levy, the Energy Company Obligation, the Warm Homes Discount and the Carbon Price Floor have increased costs. Today, government imposed environmental costs account for 15-20% of energy prices, versus only 4% just 7 years ago.
- The ubiquitous housing crisis could be alleviated by relaxing the UK’s notoriously strict planning system and allowing development of the green belts surrounding major towns and cities (not to mention the role played by the BoE’s policies of low interest rates and QE). A recent initiative saw stamp duty lowered for most first-time buyers, but predictably the scheme acted (like the help-to-buy scheme) to increase the price of qualifying properties, amplifying the very problem the policy was designed to alleviate.
- Behaviour altering taxes are not only nanny-state over-reach, but work to increase the cost of living and lower quality of life. Recently the government introduced a sugar tax in a bid to contain the growing obesity epidemic. While justifiable from a fiscal standpoint – one major disadvantage with a public health care system is that it saddles the tax payer with the financial burden of other people’s unhealthy lifestyle choices – making sugar more expensive is hardly a boon to the citizenry. In Scotland, customers stocked up on the beloved Irn-Bru soft drink before government forced the hand of the drink’s producer, AG Barr’s, who responded to the tax by changing the recipe to keep the price down.
Government is everywhere, and so are the effects of the myriad of interventions. The ill effects are intermittently highlighted in the public debate, but the focus is generally only on the obvious benefits a policy is designed to deliver: minimum wages are described as a ‘wage hike for the country’; planning rules ‘protects the environment’; sugar taxes ‘encourages a healthy life style’… unsurprisingly, a gullible public continues to look to government for solutions whenever a problem arises.
Across the world, limited government was abandoned as an ideal many years ago. Today, when government has been granted authority to intrude in all we do, the state has become so intertwined in our daily lives that we have become dependent on it; in its role as guardian, it has quashed our ability to act independently and we now readily accept intrusions in our lives that in times past would have been regarded as unacceptable over-reach. As the remit of the state grows, our individual liberty retreats to make room. It is high time to change course and empower the people to take responsibility for their own lives.