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The Economist: Leviathan Stirs Again

January 21, 2010

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The return of big government means that policymakers must grapple again with some basic questions. They are now even harder to answer.

Fifteen years ago it seemed that the great debate about the proper size and role of the state had been resolved. In Britain and America alike, Tony Blair and Bill Clinton pronounced the last rites of "the era of big government". Privatising state-run companies was all the rage. The Washington consensus reigned supreme: persuade governments to put on "the golden straitjacket", in Tom Friedman's phrase, and prosperity would follow.

Today big government is back with a vengeance: not just as a brute fact, but as a vigorous ideology. Britain's public spending is set to exceed 50% of GDP (see chart 1). America's financial capital has shifted from New York to Washington, DC, and the government has been trying to extend its control over the health-care industry. Huge state-run companies such as Gazprom and PetroChina are on the march. Nicolas Sarkozy, having run for office as a French Margaret Thatcher, now argues that the main feature of the credit crisis is "the return of the state, the end of the ideology of public powerlessness".

"The return of the state" is stirring up fiery opposition as well as praise. In America the Republican Party's anti-government base is more agitated than it has been at any time since the days of the Gingrich revolution in 1994. "Tea-party" protesters have been marching across the country with an amusing assortment of banners and buttons: "Born free, taxed to death" and "God only requires 10%". On January 19th Scott Brown, a Republican, captured the Massachusetts Senate seat long held by the late Ted Kennedy, America's most prominent supporter of big-government liberalism.

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