Table Of ContentCan Government Go Bankrupt?
Also by Richard Rose
The British General Election of 1959(with D. E. Butler)
Governing without Consensus
InAueneing Voters
International Almanae of Eleetoral History (with T. T. Mackie)
Managing Presidential Objectives
Must Labour Lose? (with Mark Abrams)
Northern Ireland: a Time of Choiee
People in Polities
Politics in England Today
The Problem of Party Government
What is Governing? Purpose and Poliey in Washington
Edited by Richard Rose
Comparing Public Policies (with Jerzy Wiatr)
The Dynamics of Public Poliey
Elections without Choiee (with Guy Hermet and Alain Rouquie)
Electoral Behavior: a Comparative Handbook
European Politics (with Mattei Dogan)
Lessons from America
The Management of Urban Change in Britain and Germany
New Trends in British Politics (with Dennis Kavanagh)
Poliey-making in Britain
Studies in British Polities
Also by Guy Peters
The Politics of Bureaucracy
Can Government
Go Bankrupt?
RICHARD ROSE
UNIVERSITY OF STRATHCLYDE
&
GUY PETERS
TULANE UNIVERSITY
MI
© Basic Books, Inc. 1978
Softcover reprint of the hardcover 1s t edition 1978 978-0-333-26280-1
All rights reserved. No part of this publication may be
reproduced or transmitted, in any form or by any means,
without permission
First published in the United States of America 1978
First published in the United Kingdom 1979
Published by
THE MACMILLAN PRESS LT O
London and Basingstoke
Associated companies in Delhi
Dublin Hong Kong Johannesburg Lagos
Melbourne New York Singapore Tokyo
British Library Cataloguing in Publication Data
Rose, Richard, b.1933
Can government go bankrupt?
1. Economic policy
I. Title
330.9'181'2 H082
ISBN 978-1-349-81420-6 ISBN 978-1-349-81418-3 (eBook)
DOI 10.1007/978-1-349-81418-3
This book is sold subject
to the standard conditions
of the Net Book Agreement
TO
Mrs. McGlone & Mrs. West
who can cope with any loads
There is no such thing as a free lunch
CONTENTS
Preface
XI
Acknowledgments xv
INTRODUCTION
The End of an Illusion
3
What Is the Problem? Bankruptey Is Not Inevitable.
A Chal1enge to Everyone.
CHAPTER 1
Undermining Political Authority
From Market Choice to Politieal Choice. On Trying to
Consume More Than We Produee. The Prospect of
Politieal Bankruptey. What Can Be Done?
CHAPTER 2
Treble Affluence: The Three Faces of Growth
Slow but Steady: The Growth of the National Pie.
Neither Steady nor Slow: The Growth of Publie Poliey.
Real Growth and Relative Dec1ine: The Trajeetory of
Take-Horne Pay. Squeezing Affiuenee.
CHAPTER 3
Everybody Benefits
What the Money Buys. Spreading the Benefits. Giving
Away Money Isn't as Easy as It Sounds.
CHAPTER 4
Everybody Pays 86
How the Money Is Raised. Spreading the Burden. The
Dues of Citizenship.
[ ix ]
Contents
CHAPTER 5
The Pressures for More 106
The Bias in the Electoral Cyde. Inertia Cornrnitrnents:
The Great Moving Force. Consurners, Producers, and
Suppliers Uni ted for More.
CHAPTER 6
Economics W ithout Constraint
One-Eyed Keynesianisrn. The Center Fails to Hold. Mak
ing Money Unreal. Happy Forecasts.
CHAPTER 7
Running Out of Pie: The Limits of Political Economy 154
Depressing Growth: The Record of the 1970S. How
Close to Politieal Bankruptey? Big Trouble Now. Trouble
Ahead.
CHAPTER 8
The Costs of Buying Time 174
Mr. Micawber's Poliey. Money Illusion and Disillusion.
Getting Organized. International Ineredibility.
CHAPTER 9
F orced Choice 200
Baeking into Bankruptcy. Making Public Policy Sacro
sanet. Protecting Take-Horne Pay. How to Put the
Brakes on.
CHAPTER 10
First Things First, or Money Isn't Everything 233
Rights, Benefits, and Wants. The Priorities of Ordinary
Citizens.
Appendix 251
Notes 263
Index
281
[ X
PREFACE
EVERYONE-whether a voter, a taxpayer, a Chancellor of the
Exchequer or all three-must face the fact that something is dras
tically wrong with Britain's political economy today. The question is:
what? This book sets out to explain, clearly and simply, how the
success of government threatens future crisis.
Because the economy has been a chronic subject of complaint,
prognoses of doom and gloom are as familiar as complaints about the
weather. But the economy, unlike the weather, need not follow a
spate of rain with sunshine. Since the 1973 oil crisis, the world
economy has experienced a prolonged, rather than a merely tem
porary, se ries of difficulties.
Comparing England with other major Western nations immedi
ately makes evident that whatever this country's difficulties are, they
are not the result of rapidly rising public expenditure. The costs of
public policy have been rising more slowly in Britain than in
America, France, Germany, ltalyor Sweden. From 1970 to 1977,
the cost of governing Britain rose by 4.1 per cent annually in real
terms, compared with an 8.1 per cent annual increase elsewhere.
The bad news is that the British economy has been growing much
more slowly. The national product has grown on average only 2.8
per cent each year since 1951, compared to an average annual
growth rate of 4.5 per cent in the other five major Western nations.
From 1970 to 1977, the national product grew on average only 1.6
per cent, and in two years it actually contracted.
Any growth is good news, for it means that in absolute terms the
[ xi 1
