“The question that we ask today”, said Barack Obama in his inaugural address, “is not whether our government is too big or too small, but whether it works.” This is clearly naive: with deficits soaring, nobody can afford to ignore the size of government. Mr Obama’s appeal for pragmatism has some value: conservative attempts to roll back government regulations have led to disaster in the finance industry. But left-wing attempts to defend entitlements and public-sector privileges willy-nilly will condemn the state to collapse under its own weight. Policymakers will not be able to give a serious answer to Mr Obama’s question of whether “government works” without first asking themselves some more fundamental questions about what the state should be doing and what it should be leaving well alone.
But why do we have to pay the public employees so much?
The problem is likely to get worse:
The United Nations points out that the proportion of the world’s population that is over 60 will rise from 11% today to 22% in 2050. The situation is especially dire in the developed world: in 2050 one in three people in the rich world will be pensioners, and one in ten will be over 80.
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