With the death of Margaret Thatcher, many people have been reflecting upon her legacy.

Since her time as Prime Minister of Great Britain, governments of all colours have rolled back their dominance through spending cuts, tax cuts, withdrawal of services, privatisation and/or deregulation.

As the GFC and its after effects continue, austerity is the new watch word. Countries like Greece, Italy, Spain, Great Britain, USA and France are struggling due to even more tax and spending cuts, privatisation, withdrawal of services, etc.

Even when governments change (See France ), the incoming administration struggles to replace what is lost. The loss of revenue and spending cuts create difficulties in replacing what has been lost. Even Australia despite its world class economy will face this problem if there is a change of government.

This trend to roll back government raises the following question:

What does the ultimately downsized government do?

  • Are they reverting to the nineteenth century role of administering defence, foreign affairs, law and trade?
  • Will downsized governments have no role in the areas of health, education and social security?
  • What then happens to the poor, homeless, sick, unemployed, old, disabled and unfortunate?
  • What about the attendant social dislocation?

What does the ultimately downsized government do?