220.127.116.11 Collectivist Arguments for State Funding
The collectivist arguments for state funding are not solely ideological: there can be economic benefits from well directed spending
Collectivists prefer to give some economic power to the State and/or local government – a ‘Welfare State’ – to ensure that everyone has the basic economic necessities to live a dignified life and fulfil their potential, whilst spreading the associated costs so that wealthier people pay more, as described previously (3.5.1). They might also argue that the economy as a whole derives some benefits from such a policy:
● Benefit payments, such as those described earlier (18.104.22.168), put money in the pockets of the poor; they are more likely than wealthier taxpayers to spend that money immediately in their own countries – so national consumer demand is increased and there are more customers for local businesses.
● Public funding for infrastructure, and for research, can take a long-term view of future benefit; governments can invest where no single company would be able to (22.214.171.124).
● Government investment in infrastructure, technology and training can result in increased employment, higher productivity and ultimately in increased economic growth that more than pays for the initial investment – as described by Joseph Stiglitz: When it comes to the economy, Britain has a choice: May’s 80s rerun or Corbyn’s bold rethink.
● Public provision should be able to leverage the benefits of scale and eliminate duplication, though there are concerns about its efficiency in practice, as discussed in the next section (126.96.36.199).
● An economy depends upon a supply of suitable labour (3.2.5), so there is an economic justification in providing State funding for education
● One of the powerful collectivist arguments for state funding is that the provision of an adequate social safety net enables individuals to take risks, to find better employment or start businesses. There is thus more likelihood of business innovation and high performing individuals.
● If people do not have a safety net they need to save money in case of future problems, so they do not spend as much money in the economy – reducing the consumer demand (3.2.2). This pattern of behaviour has reduced consumer spending in China, for example, as argued in a World Economic Forum article, What’s holding back China’s consumers?
● Health is another aspect of investing in people – ensuring that the sick can return to work quickly, and that the talents possessed by people with disabilities can be suitably deployed.
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/3522.htm.