6.7.1 Government Spending and Socio-Economic Rights

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A government spends money on the services and benefits that it delivers to the population, and also on the cost of its administration (3.2.3). One of its most important decisions is its budget for revenue and expenditure (3.5.2), for which it has to negotiate the answers to five key political questions:

1. Which services should be publically funded for some or all of the population? (6.7.1.1)

2. Who should provide the chosen public services? (6.7.1.2)

3. What should be the level of transfer payments, such as pensions and welfare, to help the needy? (6.7.1.3)

4. Are there investment projects that the government should provide funding for? (6.7.1.4)

5. How should the necessary funding be obtained, to cover all its expenditure? (6.7.1.5)

Individualists and collectivists have fundamentally different approaches to answering these questions:

· Individualists want the State to play a minimum role, and they believe that the market should be allowed to determine what is needed – so that people are as free as possible to buy the services they want, or to buy insurance, or to support each other.

· Collectivists believe that the State should protect those who are disadvantaged by guaranteeing some socio-economic rights, using taxation to obtain the necessary funding – and thereby also reducing inequality, as discussed later (6.7.2.1).

Making a choice between these conflicting ideologies is a matter of steering a political course: letting people have ‘a hand on the joystick’ (6.2.6).