3.2.3 The Economic Role of Government Spend

The economic role of government spend is to meet people’s needs and support economic growth; it is tax-funded, so it is contentious.

A government’s primary objective in spending money should be to serve the people.  The cost of maintaining law and order is directly related to its legal powers, as described in chapter 5; defence spending is also discussed later (7.4.6); and a government can also choose to make other benefits, services and facilities available.  All these categories of spend compete for a share of national wealth, which the government funds through taxation – as described below (3.2.4).

When the government funds public services and benefits, it is redistributing wealth from the taxpayer towards people who are less able to pay for them.  This increases economic growth because poor people spend their money more quickly than those who are wealthy – which is an argument that is explored in more depth later (3.5.6).

A government is responsible for maintaining the quality of services and infrastructure that it provides.  Maintenance should be managed responsibly, to maximise value for money through the life cycle of these investments.  The British Conservative government neglected these responsibilities from 2010 onwards, with a mistaken emphasis on ‘austerity’, resulting for example in an Economist headline in August 2022: Almost nothing seems to be working in Britain.  This was undeniable: “As Michael Gove, until recently a cabinet minister, admitted last month, parts of the state are barely functioning.”

Levels of spending are decided by politicians, as described later (6.7.1), but the following sub-sections examine the economic role of government spend:

●  Apart from defence and law and order, a government can choose to fund other public services ( These can include socio-economic rights such as health and education, and other amenities such as libraries and support for the arts, for everyone’s benefit.  The cost of providing these discretionary public services falls on the taxpayer.

●  It can make investments in infrastructure and in research, to help all sectors of the economy to function better ( Such expenditure can fuel future economic growth, and it benefits a country to stay ahead of the competition in new technologies if possible.

●  It can make benefit payments to people in the form of welfare or pensions, which are also socio-economic rights, to protect them from economic hardship (

●  Some government spend can be seen as displacing private enterprise and reducing its competitiveness (

●  The scope of government spend is contentious, as compared to letting people making their own choices about how to spend their money ( There is continual tension between the economic interests of taxpayers and people in need of support.



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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/edition04/323b.htm