Ronald Reagan famously claimed that ‘government is not the solution to our problems, government is the problem’.
David Cameron clearly has some sympathy with this view. At the Tory Party Conference two years ago, the then leader of the Opposition suggested that government ‘got too big, promised too much and pretended that it had all the answers’.
No doubt, when the Conservatives meet again in Manchester in October, the prime minister will reiterate his preference for a Big Society over Big Government. Shrinking the state works for the party both philosophically and economically given the state of the public finances.
And yet, in many respects, the role of government and state institutions is becoming more important to our lives. In times of crisis it is the state we look to for protection and advice and to ensure that something is done.
As Tony Travers points out in PF's October cover feature, it’s not just some banks that are too big to fail but the state itself. When rioters attacked England’s cities, we turned to the state for help. Ministers rushed back from their holidays to offer leadership and support to terrified residents and shopkeepers.
The same point applies to the government’s role in dealing with the banking crisis, terrorist attacks and the eurozone bail-outs. With Business Secretary Vince Cable suggesting that we face the ‘economic equivalent of war’ there’s an argument to be made for more government, not less.
Shrinking the state, by over-zealous cutting or outsourcing of services, runs the risk of more public sector failures and a growing disillusionment with the way we are governed. It could also threaten any hopes of an economic revival.
Last month unemployment passed the 2.5 million mark, with the loss of 111,000 public sector jobs in the three months to June. Meanwhile, the International Monetary Fund downgraded its growth estimates for the UK to 1.1% in 2011 and 1.6% in 2012.
The clamour for a ‘Plan B’ is growing stronger by the day, with Jonathan Portes, director of the National Institute of Economic and Social Research, telling PF that the government shouldn’t be ‘running scared’ of ratings agencies.
Rumblings of a £5bn boost to capital spending suggest that this discussion is now taking place at the heart of the coalition. Perhaps it’s time to admit that government can sometimes be the solution to and not the cause of our problems.
