The Invisible Hand of Government?

Don’t worry, this isn’t some paranoid fantasy about the ‘Deep State’ so beloved of conspiracy theorists of the far right and far left. It’s about me and you and our everyday lives and the part Government plays in them.

I can’t recall who it was, but it was an American academic colleague who gave me this idea from something he used to do with his students.

At the start of courses that had anything to do with Government I’d ask my students to put their hand up if they’d had an encounter with Government so far today?

Generally, they’d look a bit blank – especially if it was an early morning course. A few brave souls would put a hand up and I’d ask what it was. Usually it was something obvious like a student loan letter.

Then I would say simply: every single one of you is wrong because you have all had multiple encounters with Government. You just don’t recognise them.

First of all, how many of you have money on you? Nearly every hand would go up. Who do you think produces, endorses and regulates the money in your pocket or purse? Government. The notes or coins in your pocket are by themselves meaningless – just bits of paper (or plastic) or metal.

True, there are some non-Government backed “currencies”, like air-miles, or supermarket points, or increasingly crypto-currencies like Bitcoin. But as I found out to my cost they are very fragile. British Airways took away my 130,000 air-miles cos I didn’t use them in time. Poof. Gone. Nothing I could do about it.

Follow the real money, and generally it leads back to Government.

Second, I would ask my students how many of them were still alive? After a bit of confusion most hands would go up. (I never knew what to think about the ones that didn’t?)

I would explain: not that many years ago some of you would probably have died in a house fire during the night. House fires have thankfully been cut massively because of Government regulations about the flammability of your bed, the safety of your house electrical wiring, having fire blocks built in, etc.

This particular point has been amplified hugely by the Grenfell Tower tragedy which shows what can happen when Government regulation fails.

I would also point out that before we had Government provided fire services it was down to volunteers and/or insurance companies to provide fire and rescue if your place did catch on fire. In the USA houses had insurance plaques on the walls and if the wrong insurance company fire fighters turned up, or you didn’t have a plaque, they’d just go away again. Markets don’t always work in acceptable ways.

Third I would ask if they had encountered the Government on the way to University that day?

This usually just produced general confusion. I would point out that nearly all of them would have used public roads and pavements. These were not only built with Government money (though not necessarily by Government workers) but are regulated by Government to make them safe to use – you know stuff like driving on the correct side of the road, stopping at traffic lights, that sort of thing.

I would also point out that the chances of them being mugged or even murdered on their way to University had declined hugely over the past 100-200 years – the risk of violent death was now tiny compared to the historical levels.

The purpose of this exercise is to give students some insight into just how pervasive modern ‘Government’ is in their lives, even when they don’t notice it. Students are no different from the rest of us – we rarely reflect on all the aspects of our daily lives are impacted upon – for good or sometimes ill – by Government. To the degree we do its usually around irritations, annoyances and failures.

I usually try and broaden this out into a wider discussion about the extent to which ‘Government’ is a good or bad thing, when Governments succeed and fail, and of course why?

One common argument against modern ‘big Government’ (and by historic standards it is big) is that it is too pervasive and its lethargic, bureaucratic and sometimes oppressive. All of which is to some degree true. Many of the right would counter-pose the “free market” as an alternative.

Firstly, I usually point out, there is no such thing as “free markets” – except amongst criminals. Legitimate markets need currency, contracts, property rights, corporate law and much else to function at all, never mind well. There are legitimate arguments about how much Government might be needed or desirable but the idea that it’s not needed at all belongs on the fringes.

Secondly, I point out that both Markets and Government have good and bad aspects. They work best for society as a whole when the good aspects of each mitigate the bad aspects of the other. There is surprisingly little debate about this interactionof Markets and Government with most political debate focussing on a fairly sterile “public versus private” ideological battle.

The idea of “markets without government” is about as unreal as the idea of “government without markets”?


If you are interested in these issues, here’s a few books worth reading:

Colin Crouch (2013) Making Capitalism Fit For Society. Polity

Robert Reich (2017) Saving Capitalism – For The Many, Not The Few. Icon Books

Steven Vogel (2018) Marketcraft – How Governments Make Markets Work. Oxford University Press



2 thoughts on “The Invisible Hand of Government?

  1. Thought-provoking post and a worthwhile and instructive exercise. It would be interesting to substitute EU for Government.

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