An article in this week’s Economist neatly encapsulates much of what we Austrians in the UK have been trying to impress upon our readers and acquaintances: rampant government spending is producing negative returns, distorting the economy, and driving up costs - all of which are compounding the woes in the productive private sector.
Citing an analysis of government expenditure by the Office for National Statistics – an institution which tends to be more friendly to the Neuesarbeitspartei’s view of things than the more forensic National Audit Office - the magazine reports that much of the money pouring into the public services is simply contributing to rising costs.
No problem, you say, trumpeting the ‘on message’ soundbite of many a junior minister – this is an achievement: ‘key’ workers are being paid more, as was promised.
But, alas, higher wages and more spending on other inputs are not making workers more productive. Quite the reverse: the public sector is becoming less efficient. Shocking!
While it seems the actual volume of government output has risen only modestly – gaining 14% between 1997 and 2002 – that modest 2.7% a year increase cost us Brits a cool 40% extra in money terms
Much of the money, writes the Economist, is ‘disappearing into the National Health Service, which is living up to its reputation for absorbing cash without trace.’
In 2001, for example, while health spending rose by 11%, health-service output increased by a modest 3% - and note that this sector alone accounts for a third of all outlays of our money on public services.
Despite much Government spin to the contrary, the Audit Commission sees little evidence of any subsequent improvement, pointing instead to an array of ‘quick-fix measures’ — like the use of hospital maintenance funds on patient care—that are likely to jeopardize longer-term improvements in the NHS.
Refreshingly, the Audit Office has noticed the impediment of the profusion of Stalinist ‘Five Year Plan’ numerical targets imposed by First Citizen RobespiBlaire and Chancellor Culpability Brown.
It says that better management of resources, rather than more resources per se, is the key to cutting waiting times in hospitals.
What a shame that the economic allocation of scarce resources to their most urgent needs is unfortunately something that is intrinsically impossible to achieve in a command economy system, as Ludwig von Mises, of course, proved long ago, to the lasting dismay of Marxists and other Collectivist Utopians everywhere, ever since..
