In the margins of an FCO Leadership Conference (gathering of Ambassadors and top brass) a couple of years back a presentation on world economic trends was made.

In it a Big Point was made by a passing expert.

That a colossal new process was unfolding with great speed, namely the addition of a billion people (mainly Chinese and Indians) to the global workforce. Nothing like this had happened before on this scale and pace.

The effect, it was said, was to dampen down wage increases for the foreseeable future in the UK and the rest of the developed world. Whatever anyone was doing in return for money, out there were millions of people capable of doing it cheaper.

This in turn meant that living standards broadly would stay where they now were indefinitely. But adding all this to demographic trends (fewer people in the workforce to generate tax, more oldies wanting pensions and healthcare) left future government finances in a dire state.

The strategic answer was, we were solemnly assured … major tax increases to pay for it all!

No thought at all had been given (it appeared) to cutting government functions, so that we had the government we could afford, and no more.

Here is one place to start in the UK. What a bloated, fat target.

In the USA at state level some reality is intruding:

Sadly, the political impulse to protect government largess leads many states to aggravate their dilemma. Already more than half have raised taxes, often on businesses, serving only to chase them and their tax payments away and into the open arms of states like Indiana. Our traffic flow of interested investors is as heavy as it was in 2007. Since January we have welcomed the consolidation of more than 30 firms that closed up shop elsewhere and chose us as the low-cost, enterprise-friendly environment among their current locations.

Indiana was near bankruptcy five years ago but is relatively solvent today because we have spent the intervening years making hard choices. We have reformed state procurement, contracted out some jobs, cut costs, and relentlessly scrutinized expenditures in pushing for annual improvement in departments large and small. We’ve also reduced the number of state employees by some 5,000 from the 2004 level.

Go, Hoosiers.