We like to think of Britain, the U.S. and the rest of the Anglosphere as nations that reject the statist European economic model. But from 1997 to 2008, the government’s share of the British economy increased from 38.4 percent to 41.9 percent.
This expenditure was funded by debt that the government, as the Financial Times put it, “concealed . . . with off-balance-sheet finance that would have made Wall Street blush.” These off-balance-sheet liabilities, taken together, raise Britain’s official public debt by almost one-third, to 62.8 percent of GDP.
And that figure doesn’t include the liabilities created by Britain’s unfunded public sector pensions and health care system. A German free-market think tank recently released a cross-national comparison of unfunded government liabilities that reveals just how big the bill will be. Of the eight countries, Britain was the second-worst off, with implied liabilities amounting to 530 percent of GDP.
The worst off: the U.S., with implied liabilities of 567 percent of GDP. And that may be an underestimate: the Medicare Trustees’ Annual Report released in 2008 projects Medicare’s excess costs to be $85.6 trillion. This amount is itself six times the size of the U.S. economy in 2007.
So what’s the solution? In Britain, the answer seems to be to get a government job: this year, the government will control 49 percent of the economy. Public service pensions are worth about three times those in the private sector. And the pay’s not bad either. As Britain’s Institute of Directors reports:
gross annual pay is now higher in the public sector for all but the top 25 per cent of full-time employees, while gross hourly pay is higher for all but the top 10 per cent. Employees in the public sector also benefit from greater job security and in many cases longer holidays.
With pay and benefits like that, it’s a wonder everyone doesn’t work for the state. The only wonder is how much longer the private sector can afford it all.