Thursday, 3 July 2008

The core functions of the State

Before we argue about stuff like taxation, MPs' expenses, the European Union, Iraq/Afghanistan and the like, the first thing that we ought to agree on is "What things can we only do collectively; by force if necessary and which have to be paid out of taxes?"

To my mind, it's a fairly short list:
1. Police, prisons, law and order, legal system (i.e. enforcing private contracts where one party is taking the piss);
2. Defence (not 'attack' - I am a pacifist-libertarian), border controls, immigration and anti-terrorism;
3. Public health (in the narrow sense);
4. Flood defences, fire service, coastguard;
5. Road maintenance and street lighting;
6. Supervising (not 'regulating' - I mean supervising) banks and utility companies (sure these are private, but too important to be ignored - without these nothing else functions).
7. For some reason, Greenies and NIMBYs think it's important that The State strictly limits planning permission and land use to suit their narrow interests, so I'll chuck that in the pot for now (this is a potential source of tax income rather than a cost, but we'll come to that later).

Apart from that I can't think of much.

Then the next decision is "Which of these things can be dealt with at local level?", remembering that there are economies and diseconomies of scale to all these things.

I would suggest that the basic rules of legal system; defence etc and banking supervision has to be at national level. Everything else should be at local level.

Now, having accepted that these are core functions (i.e. stuff that 'adds value' but which free markets cannot provide, or, even if free markets would provide them, there would be too many 'free riders') the question is who is going to run them? I'm afraid that the only answer can be 'democratically elected representatives' aka politicians.

(Finally, there is stuff that is not a 'core function', like redistribution (whether in cash, or as health or education vouchers) on which everybody has their own view, whether we have this (paid out of taxation, and if so, taxes on what) ought to be subject to some sort of referendum. And there is local stuff that is not a core function either - but which is clearly a public service - like public libraries, free museums or subsidised post offices, which can be decided locally by referendum and paid out of local taxes).
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Nearly eleven years later, an update to this.

6 comments:

cramerj said...

What of education - early and advanced?

John East said...

Putting on my extreme libertarian hat and inserting tongue firmly in cheek, how about:

1. Police to charge a £10 call out, and to collect their costs from the criminals they catch. £1 for a litter bug up to perhaps £50,000 for a murderer. At least this might ensure the buggers come when they are called, make some effort to catch offenders, and get their priorities right.

2. Prisons. Charge all prisoners for their accommodation. If they won’t or can’t pay, then send them to jail.

In Africa.

3. Flood defenses? No, instead we have compulsory property insurance. That will stop the greedy house builders building on flood planes.

4. All roads to be toll roads. If you don’t use it, why pay for it. I should save enough here to buy a helicopter.

5. Planning permission/land use regulations – scrap the lot. Rely on civil court actions to correct the occasional transgression.

There you go, a bit more of our taxes saved.

Mark Wadsworth said...

Education is a "merit good" not a "public good", because it doesn't meet the three tests for "core functions":
1) Doesn't have to be done collectively, and State provision has proven to be absolutely terrible in terms of outcomes or value for money. Private provision and parental choice work just as well.
2) You do not have to force people to attend (and it is impossible to do so anyway, bearing in mind the large Underclass).
3) It does not HAVE to be funded out of taxes.

That said, I have mentioned it in the next list, i.e. taxpayer-funded education vouchers (and by implication private/competing providers). If The Public support this (and I do!), then great, we have a consensus.

Mark Wadsworth said...

JE, re your point 3, local property owners should be given the choice between non-compulsory insurance (as now) and, if the economics support it, a local property tax to pay for flood defences, which I explained here. Otherwise you get a free-rider problem.

Bill Quango MP said...

RE the police if you read any of their blogs they talk about the huge waste of time every day dealing with 'text' message problems, neighbours parking in front of each others houses etc.
It wouldn't hurt for a financial penalty to be applied for 'wasting police time'

Tito said...

The sole function of the state is to protect individual rights from domestic and foreign initiators of force or fraud.

This means, police, courts, prisons, army, patents.

Morally the state can do nothing else.