Douglas Carswell's Blog

Tough questions if we want living standards to rise

In 1900, the average American spent $76 out of every $100 buying food, clothing and housing. Today?  They spend a mere $37 out of every $100 on such basics.

Its been a similar story in England and throughout the wider West, too.  

It might not feel like it, given the recent squeeze on living costs, but over the past hundred years or so, this "more-for-less" has been the norm.  We not only get to spend a smaller portion of our incomes on food, clothing and housing than our great great grandparents did.  Thanks to technology and human ingenuity, the quality of the clothing, food and housing, in almost every respects, been vastly better.

"More-for-less" explains why Westerners have enjoyed an extraordinary rise in living standards in recent generations. Because we are able to spend a proportionately smaller share of our income on the basics, we have, generally, had more to spend on other things - items our great great grandparents might have regarded as unimaginable luxuries.

There has, of course, been one great exception to this "more-for-less" rule;  when we buy government.

We have spent an ever larger share of our incomes buying ever more government.  Yet instead of getting more-for-less, we have at best got more-for-more. At worst, with falling public sector productivity, we have had about-the-same-for-more.

Why is government the great exception to the more-for-less rule? Perhaps it is because unlike the folk that supply us with food, clothes and housing, public administration has not faced much in the way of competition. When did the man from government ever have an incentive to offer you better value, or risk losing your custom?  

For a while none of this really seemed to matter.  So bountiful was the more-for-less rule when applied elsewhere, and so vast was the expansion in the West's productive base, we could afford to ignore the relatively poor deal we got when it came to public administration. Living standards still rose.  Until now.

Perhaps Western living standards are stagnating precisely because we now spend such a large slice of our incomes buying goverrnment - yet government almost never seems able to offer us a more-for-less deal?

With stagnating living standards, we need to ask if we might also be able to apply the more-for-less rule when it comes to all that government we buy. In my new book, I suggest how this might be done using digital technology and collective intelligence.

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