Debate Magazine

Claiming Credit Where It Isn't Due (cognitive Dissonance Part II)

Posted on the 02 February 2018 by Markwadsworth @Mark_Wadsworth

From the comments to a recent post:
@ Lola "For quicker wealth creation we want more laissez-faire."
Doesn't really match up with rapid post war expansion of wealth creation in the US and Western Europe which happened to coincide with more activist government and powerful trade unionism. That's the trouble with 'cognitive dissonance'. It's always easier to spot in others... ;)
@ Paul156. Nope. You have to correct for inflation, and you have to factor in the false growth created by having to rebuild stuff destroyed in WW2. I found a graph the other day that I can't now find that corrected GDP for inflation...stand by.

Paulc156, being a hard leftie credits the government with the rapid post-war growth, and Lola, being laissez faire, appears to admit that the government did have a larger role, but claims that the growth was either purely inflationary or down to post-war rebuilding (although the USA didn't suffer any damage, it just had to turn production lines from tanks back to cars).
IMHO, there was significant economic growth and development post WW2, but there's no point crediting exclusively 'big government' or 'laissez faire', it was both and neither. For the umpteenth time, "the government builds the roads, private businesses manufacture the cars and private individuals uses the cars" -  in a metaphorical and literal sense.
If the government decides that 'we' need more cars, all it needs to do is expand the road network, have more car parks where needed, ensure traffic runs smoothly. Then people will use their cars more, and will want to buy cars more, and private businesses will build and sell more cars.
If, conversely, the government decides to take over a moribund car manufacturer and just subsidise the production of more cars, then... British Leyland! Even worse, the government sub-contracts decisions on new roads and toll charging to the likes of Carillion or Capita...
The same goes for just about everything. The right way round is the taxpayer funds basic education for all children* (a kind of infrastructure or raw material for the private sector) and thus improves overall average skill levels and the private sector then employs school leavers. Try that the other way round - no state school system, only private education for the middle and upper income levels, and everybody leaves school and goes to work for the government or a nationalised industry?
So the 1950s-1970s were the brief Golden Age of Capitalism because public and private sectors were sticking to their own side of the line (British Leyland excepted) and doing its best. Government stuff (like owning MoD housing and collecting from the MoD, FFS) was not sub-contracted to private companies, that's the worst of both worlds.
The other point is, we had Georgism Lite in those days in most of the developed world, so wealth was distributed more equally and financial crises didn't interrupt everything and put us back ten years every eighteen years forward.
* In turn, this could be done just as well with education vouchers given to parents. This is bottom-up privatisation (like with pre-school nurseries) which provably works, as opposed to top-down privatisation like 'academies', where the council hands over an entire school and million pound budgets to their mates in the nominally private sector (which is doomed to failure, see Carillion and Capita etc).

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