12 February 2010

Saving the economy

Today's FT had an interesting opinion piece from Martin Wolf. The thrust of the piece was how what the UK could do with right now is a hung parliament. That's something I think I could live with so long as it was Labour as the largest minority in coalition with independents and small parties. Mr Wolf seems to favour a Labour/Lib-Dem coalition.

More interesting is his assertion that what is needed to boost the economy is for the private sector to start spending more. Now, how are we going to achieve this, when we have this national deficit to clear (although, as Mr Wolf points out, we're more than servicing our debt by a long chalk so we're not in a bad state by any measure so our credit rating is still very good)? The first and most obvious thing that occurred to me is for the public sector to look at what services it can provide to the private on a fee basis then use the money raised to reduce tax to fund other, socially necessary/desirable, services.

The private sector already receives many services from the pubic sector such as defense of trade, waste disposal, legal protection of contracts, transport network &c. These are not the sort of things that lend them selves to a directly charged, fee based, service for the same reason that those who suggest that individuals should be able to opt out of tax by declining to use publicly provided services, if you're in the country you cannot avoid using the services it provides. The sorts of services that the public sector could provide to the private, directly charging a fee, are exactly the sorts of services that tend to get outsourced. Things like IT datacentre and network provision. If the public sector as a whole got together the economies of scale would be astronomical Additionally the marginal cost of supporting private sector users on top of the existing public sector would be minuscule. Add to this that the public sector already has many people well skilled in dealing with large and complex environments and you have a prime opportunity for a software as a managed service provision.

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