David Blanchflower: The Big Society? It's simply cover for a Tory attack on the state

Economic Outlook: The poor, the weak, the young, women and the unemployed are on their own in Cameron's version of the Poor Laws

I have had an interesting couple of weeks and flown many a mile. First I was in South Carolina and North Carolina to visit two of my kids to celebrate my 60th birthday (ugh), then on to Scotland to give a speech to the National Association of Pension Funds (NAPF), Florida, and finally back home to New Hampshire. Eight flights in all.

The speaker ahead of me at the NAPF conference in Edinburgh was the impressive First Minister of Scotland, Alex Salmond, who, incidentally is called the "FM" by his staff. In his speech, and confirmed in a private conversation we had afterwards, the FM revealed he had spoken to David Cameron a couple of weeks earlier and the conversation turned to "shovel-ready" projects. The PM told the FM he had no projects that were through the planning process and would be ready before 2014 at the earliest. This is an astonishing admission of incompetence and is consistent with Vince Cable's view, expressed in his leaked letter, that the Government has no coherent or joined-up growth plan.

Never one to let a good political moment go by, the FM sent a letter to the PM containing 20 infrastructure projects worth about £300m that the Scottish government had ready to go immediately if they were funded. This shows how out of touch Cameron is, as presumably every local authority could come up with several projects that are ready to go in a heartbeat. How embarrassing!

I arrived home in New Hampshire to welcome warm temperatures; it was 22C when I landed compared with an average high for the state in March of 5C. New England has been unseasonably warm all winter. We have had little or no snow. Consequently, the snowmobile cross-country trails near my house have remained closed, which has a negative effect on the local economy including gas stations, hotels and restaurants.

On the lake where I live the residents' association has an annual "ice-out" competition to predict the date and time the flag that is set on the ice sinks. Last year ice-out occurred on 19 April at 11.26am and my bet is on 7 April at 3pm, but I am not hopeful of winning.

My return also coincided with the annual town meeting "voting session", held at the fire station, to vote on the $3m (£1.89m) budget which is 11 per cent less than it was in 2008. The major components of the budget are for police, fire, road maintenance and administrative staff. Polls were open all day for the 1994 registered voters, of whom 964 actually balloted this time. The budget was approved, we re-elected the chief of police for another three-year term and voted in a new cemetery trustee.

A number of warrants were approved, including purchasing a "backhoe loader with 4WD, buckets, a thumb and multiple function hydraulics". Of the 14 towns in my area that voted that day and for which we have polling data, half had less than 500 voters while the largest had 1,260. One town voted to raise $2,100 for the police department to purchase a semi-automatic rifle, ammunition for training and a locking mount to secure it to a police cruiser.

This really is the "small society" in action. What is voted on is very limited and confined mostly to the minimal communal services needed by a small rural town in the 19th century – fire, police and roads. Education spending is voted on at county level, which includes several towns.

Other public services are provided at the state and federal level, essentially because there are economies of scale. Why people attend meetings and vote is ultimately, in my view, because they get to decide how the money is actually spent. But meetings only occur once or twice a year and local control is limited.

US states have powers to tax and spend and there are many different models. The next state over, Vermont has both a state sales tax and a state income tax. New Hampshire, the "Live Free or Die" state, has no broad-based taxes. Most revenue is raised from local property taxes, which vary markedly from town to town. As a result, there are big differences between rich and poor towns in New Hampshire in the quality of services provided, especially education, which is the subject of endless litigation.

Apparently, small, New England towns like mine were the model Steve Hilton had for his worthless "Big Society" idea that the public still doesn't understand.

Our small society model is not used in America's urban areas, as it is totally impractical when the electorate is bigger than a couple of thousand, meaning it has zero applicability in the UK.

Tiny New Hampshire towns have considerable control over spending, on the limited set of items they do determine, which presumably Cameron does not want for the UK, where the Treasury dominates all.

It is becoming increasingly obvious that the Big Society is nothing more than a thinly disguised cover for a Thatcherite attack on the state.

The private sector was never likely to replace the jobs culled in the public sector in the depths of a recession when banks were not lending. This was always about ideology rather than serious economics; the haves versus the have nots.

The latest labour market release last week showed that since June 2010, public sector employment is down by 350,000. Education is down 94,000, police by 25,000, health and social work by 27,000 and the NHS, which was supposed to be safe in the Coalition's hands but clearly isn't, is down by 35,000. Private sector employment is up 320,000, which means that total UK employment is down by 30,000 and unemployment is up by 200,000 and there is no sign that the Government cares. The poor, the weak, the young, women and the unemployed are on their own in Cameron's version of the Poor Laws.

The Chancellor of the Exchequer should fund the FM's projects in his Budget next week, but I doubt he will. As ever with this lot, politics dominates the economics. Mr Salmond has shown this week that they aren't very good at either.

David Blanchflower is professor of economics at Dartmouth College, New Hampshire, and a former member of the Bank of England's Monetary Policy Committee.

Comments