Government, Taxes, and Productivity
Better government, lower taxes?



Governments are among the most wasteful, the least productive of any organization yet devised by man. Although this is now becoming apparent to an increasingly disillusioned public, the criticism is not as harsh as it may sound, and is certainly not intended as a reflection on individual elected members or government servants. It is simply an observation of human nature. If we're not under pressure, it's easy to let things slip.

Throughout private sector business and industry, managements are under constant pressure to remain competitive. They cannot afford to let quality slip, to miss an opportunity to improve productivity, or to fill a new market need. No one accepts pressure through choice. The need arises only because competition can overtake a business, even cause its demise.

Monopoliy public services do not suffer such pressures, so it is easy for service standards to stagnate or fall back.

Yet there is still an escape route for dissatisfied customers: you can always opt out. If your electricity supplier really annoys you, close the account and light your home with oil lamps. Inconvenient perhaps, but the option remains, for though a monopoly supplier, your power company cannot require you to use its services.

It is in this respect that Government stands alone. Government is not only a monopoly, it is unique in being an enforced monopoly, there is no option to reject it, and refusal to pay its taxes will land you in prison.

The simple result is that both taxes and government debts slide slowly upwards, services remain stagnant or decline, and government departments proliferate.

Periodically government finances reach a level of indebtedness which requires urgent and drastic action if disaster is to be averted. When this happens, governments give us three choices: higher taxes, lower standards of service, or an increase in the National Debt. The Art of assembling the nation's annual Budget relies heavily on those of the conjuror: obfuscation and prestidigitation.

An option never considered, either in or out of government, is that of expecting government to meet, and to subject itself to, the same standards of productivity and economy existing throughout the “real” world of commerce.

Unknown in government circles is the “P” word – Productivity – the concept of striving continuously to give a better service at less cost, a concept taken for granted throughout the business world. So the burden of government, its size and its cost, steadily increases.


Quality, Productivity, and Service:
three words not normally associated with Government.

If these ideals are to be applied effectively, the function of Government must first be precisely defined; we cannot measure the productivity of a service without first defining its purpose.

The need for, and the purpose of government can be defined by the adverse effects of its absence. Society needs government, law and order to provide protection from robbery, violence and the excesses of individual power, from dishonesty and deception in commerce and industry, to resolve conflicting demands on the natural resources and to prevent pollution and destruction of the shared environment.

The provision of Law is the essential “core function” of Government: the formulation of Law and its Enforcement, or more specifically, those Legislative, Protective and Constitutional Services essential to and directly related to the protection of Liberty.

However governments now undertake additional services, and the current activities of Government fall into three broad categories: Laws, Infrastructure, and Welfare. If Government is to exercise its regulatory function without bias it cannot own or operate any non-legislative services or industries, including Infrastructure and Essential Services which must be operated 'at arm's-length', but with Government's strict supervision.

With the purpose and function of Government clearly defined, it becomes much easier to apply strict financial and administrative disciplines to ensure that Government fulfils its own core functions as efficiently and as cost-effectively as possible with continuously rising productivity, public disclosure and accountability. Clear job descriptions and benchmarks for each department allow for accurate assessment of performance.

Government is a service to its consumers and as such should be subject to the strictest possible commercial disciplines; its performance should be at least as good as and preferably better than the Private Sector. Any Commercial Legislation relating to accounting, standards, productivity or quality of Private Sector business and commerce should immediately and automatically apply to any and all functions of Government.

Such and similar measures would no doubt reduce taxes and increase service quality quite rapidly. But how will they come about? Discipline and regulation are required in large measure, but no institution, least of all Government, can be trusted to discipline itself.

Over the past twenty years just about every part of the world economy has been transformed by technology and new ideas, yet no sector anywhere has changed less than government.

Government accounts, for a start, are totally meaningless to anyone conversant with company accounting procedures. What pass for accounts are vague estimates, fudged by transfers between departments, and budgets set as targets which are never adhered to.

The remedies are fourfold.

One: commission a major firm of internationally recognized accountants to put government's accounts on a standard business footing. Then put every detail online, easily and clearly accessible. Transparency is the first line of defence against waste.

Two: separate-off infrastructure administration and the major welfare services of education, healthcare and pensions so that each can then be reviewed individually.

Three: ruthlessly eliminate the grants, projects, pseudo-government appendages… anything not directly essential to the good governance of the nation. Be ready to question the current usefulness of departments set up long ago and hanging on out of tradition and nostalgia – or simply lack of serious questioning.

Four: subject what remains to an outside professional time-and-motion study. Identify the objectives of each department, institute a measure of its success or failure, then ensure that it meets and exceeds its targets with the maximum efficiency and the minimum of expenditure through continuous monitoring.

The People's assurance of Good Government can best be secured by independent outside agencies, a prime example being total freedom of the press and all forms of communication media with every encouragement for them to research and publicize all acts of government. A further example can be seen in the independent Bond Rating Agencies which rate the credit-worthiness of governments, thus directly influencing the interest rates governments are obliged to pay on new debt issues and indirectly forcing remedial measures.

Requiring that government must account for every penny taken and spent, by ensuring that government and its dependent infrastructural services deliver the best possible product at the lowest possible cost, and by ensuring that government does not pay itself more than its private-sector equivalents, is entirely compatible with the interests of “the people” who must pay the cost and who if specifically consulted would no doubt enthusiastically approve.

But how do we make it happen?


Government governs the People.
Who, or what governs Government?

The answer lies in Constitution, which theoretically exists specifically to exert discipline over government.

Yet while the Magna Carta is revered and respected as being the 'grand-daddy' of constitutions, and while it is studied, analyzed, and to a large degree copied, a fact rarely considered is that the Magna Carta was 'consumer-driven'.

The King did not willingly write a constitution subjecting himself to rigorous self-discipline. It was the barons, nobles and clergy who, as victims of the king's whims and the taxpayers who funded them, drew up the Great Charter and compelled the King by force of arms to agree to it.

The motivation to improve government efficiency and standards of business conduct is unlikely to come from inside government itself, and even if it did, the disciplines thus created would surely prove more cosmetic than real. Governments frequently pay lip-service to improving productivity and financial discipline, but seldom make any real changes.

Self discipline is a noble ideal, but it rarely if ever comes about.



Development Banking can spread growth across the nation, creating jobs and providing the wherewithal for existing companies to increase their competitiveness, as well as for infrastructural improvements.

Pay and Price Evaluation makes it possible to expand the economy to full employment without fear of inflation.


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