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I think the fundamental point of controversy in most of the important current policy debates (which you follow at the risk of severe nausea and internal hemorrhaging) is the issue of whether, and to what extent, public sector involvement in the economy is justified on economic and/or moral grounds. Really novel insight, I know. But we need to get the obvious out of the way first.

I’d like to focus primarily, but not exclusively, on the economic dimension of the debate. Our convictions with respect to ideas of “distributive justice” and “natural rights” inevitably inform our judgments on economy policy. But I’ve always gotten the impression that these moral and philosophical beliefs are nearly “undebatable” – you either hold a certain view or you don’t. It is very difficult to convince someone who places primary importance on the sacrosanct status of property rights that their view is misguided; it is equally difficult to convince someone who believes that socio-economic equality should be our ultimate goal that they are mistaken. Presumably, however, we all have reason to want a healthy, growing, sustainable economy which provides us with a high standard of living.

Not only are the economic consequences of public sector involvement in the economy a shared concern, they also have the advantage that they can be empirically observed and evaluated – at least to some extent. Subject to certain limitations (which will undoubtedly come up in future posts), then, we should be able to have a coherent debate – based on observable facts rather than convictions, and concerning a goal we should all share.

I think it helps to break the analysis of public sector economics into two parts. The first concerns the efficiency consequences of drawing resources out of the private sector and into the public sector (i.e., taxation and public borrowing). The second concerns the economic consequences of the things the government chooses to do with those resources. Of course, both questions have been extensively studied. And though, given the limitations of social science research, one can never be certain about these things, I believe one side of the debate is far more correct than the other. I’m going to try to support that judgment over the course of my blog posts.