Two Revelations

This chapter looks at two issues with which Colin Clark was preoccupied in the post-war years: the role and optimal size of cities and the fiscal limits of taxation. Originating in his research on location theory, transport and urban economics, Clark entertained an interest in improving urban design and living. He argued that the principal function of a city was the provision of the full range of services, including commercial, educational and cultural facilities, all predicated upon an effective transport system. Another concern of Clark’s related to the proposed post-war expenditures on welfare and associated fears of over-taxation. Drawing on a brief observation made by Keynes in 1923, Clark found an empirical relationship between excessive taxation and inflationary pressure. He contended, that at full employment, the state could collect, at the most 25% of national income in taxation; if states tried to extract more an inflationary process would be triggered making the exercise self-defeating. While most economists disagreed with the figuring behind his hypothesis it formed an integral part of his attack upon the Leviathan of big government.