Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.
— Benjamin Franklin, in a letter to Jean-Baptiste Leroy, 1789
This section will look at fiscal policy in terms of getting (taxation), spending and the economic impact of fiscal policies (Keynesian demand management).
Spending has risen is the G7 countries fairly steadily over the past century or so, from the late 19thC 10% of GDP to over four times that amount by the end of the 20thC. We will look at how and when this happened in each of our G7 countries and where the big growth areas were (principally spending on health, education and social protection).
Taxation has risen to meet the demand for spending (although not entirely – deficit budgets and national debts are fairly common occurrences throughout the past 100 years.) We will look at the similarities and differences in the both the levels and types of taxation employed to meet this demand.
Finally the 20thC also – especially after the Great Depression in the 1930s – saw governments increasingly using fiscal policy as an instrument of economic management to counter the inevitable cycles of capitalist economies. We will examine how this came into, and went out of, fashion in the latter half of the 20thC and how the 21stC ‘Global Financial Crisis’ was handled across the G7 in terms of fiscal policy and so-called “austerity” policies – with marked differences between countries (e.g. UK vs USA)