“You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” – Rahm Emanuel (Former Chief of Staff to Barack Obama)
The above statement explains the British government’s responses to the most difficult situations since the Second World War. It is the political incentive during a crisis to make the people dealing with it look as heroic as possible, creating a convention of overpromising to the people they serve before proceeding to underdeliver.
If you think of government intervention in crises as the equivalent of propping up a shelf with a lit stick of dynamite, you’re on the right track.
The greatest recent example of the damage government can do by vastly overreaching in society is Covid-19. In a matter of months at the beginning of 2020, the government had managed to force small businesses to close, people to stay inside for all but one outside ‘exercise’ outing per day and for everyone to wear masks around their faces. Such drastic action killed the economy and made small and medium-sized businesses beholden to the state in order to survive. In short, because the government had called a national lockdown, they then had to pay the businesses affected so that they didn’t fail, propping up the economy and borrowing billions. After strongmanning itself into the lives of the British people, the state found itself having to pay everyone’s bills just so that the economy didn’t completely collapse, using the tax revenue of future generations to fund gaps in consumer spending and appease those unhappy with lockdowns.
A similar story now presents itself in the form of the unprofitable British Steel, which the state has all but nationalised in order to preserve jobs and avoid looking bad in front of the British public. It is this public choice theory (that people are always going to act in their self-interest) that accounts for why excess government intervention always ends badly. In attempting to make themselves look good by wading into a crisis inappropriate for government, the state will throw money at the problem or impose economically detrimental restrictions, ultimately creating inflation or excess borrowing that future taxpayers must pay for.
Politicians are naturally incentivised to work from a short-termist standpoint, prioritising current government popularity and personal success over what will be good in the long term. This explains why the British state has a national debt of over 100% of its GDP, which, rather than paying down, it extends. During Covid, the government looked to give citizens more liberty when it needed a bounce in the polls, such as around Christmas 2020 and before the local elections in 2021. In this way, crisis response became more of an electoral calculation than a cost-benefit one.
Furthermore, governments look to extend their own remit, with politicians looking to secure more money for their various departments. From this mindset, departments spend their entire budget in an attempt to ask for more, capturing more power in the process. Excess bureaucracy tends to be a predictable part of any crisis response by government, as they look to override the power of the market or the liberty of the individual in mitigating a problem.
The size of the state today also gives its representatives a “too big to fail” attitude. They can make knee-jerk decisions involving billions of taxpayers’ money and not think twice about it, as it is ‘doing a job’, however inefficient that may be. Leaders such as Boris Johnson looked to be decisive in the midst of the crisis while financially stretching the state and increasing its overreach even further on our lives.
Finally, most voters do not have the platform or the wherewithal to track and call out government wastage, which creates an air of complacency in government. If vast overspend by government doesn’t face any criticism by the public for inflationary pressure and problems down the line, governments tend to get caught up in the short-term positive economic and electoral effects.
Governments of the future should look at the long-term effects of harmful spending practices and explore the dangerous precedent of curtailing individual liberties during crisis events. If things do not change, Britain looks to be locked in a cycle of short-term politics, creating modest positives in the short run while choosing to ignore the rapidly mounting negative effects of temporary solutions to difficult problems.
Originally published on Ted Newson’s substack.
