NCPA - National Center for Policy Analysis

More Socialism Or Capitalism? Britain Must Decide

March 9, 2001

Britain is heading for a national election, probably in May, and voters will be asked to decide which model for its economy and society to adopt -- U.S.-style capitalism or European-type, government-centered socialism.

Public services such as schools and hospitals are in decay. The incumbent Labor government wants to increase public spending by $103.7 billion over the next three years, which it promises will clean up the mess. While the country is currently enjoying budget surpluses, those will disappear by 2003 and far higher tax rates will be needed -- which Laborites regard as political suicide.

  • Britain's tax take in 1999 was 36.6 percent of gross domestic product -- compared to 46 percent in France.
  • Britain's economy -- the world's fourth largest -- grew 3 percent last year, unemployment stands at 5.3 percent and inflation is at a 30-year low.
  • Britain spends $1,209 per capita on health care, compared with $3,070 in the U.S.

The government wants to spend more to rescue its National Health Service, which nearly everyone agrees is a disgrace. Although the country's ramshackle railroads have been privatized, so many regulators are involved in operations that it is impossible to fix responsibility when wrecks occur or trains are late -- which they frequently are.

Moreover, its schools are so poor that one in five Britons is functionally illiterate -- putting its literacy levels near the bottom among developed nations. The Labor government is considering a plan to encourage private-sector companies to take over troubled schools and run them for profit.

Source: Marc Champion, "Britain Feels Pressure as Public Services Continue to Decay," Wall Street Journal, March 9, 2001.


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