Author: philmullan

Why industrial policy isn’t working

philmullan Creative destruction, Economic growth, Economic policy, Politics, State intervention

There can be good reasons for governments to pursue a so-called industrial policy – that is, a policy that sustains or develops certain industries in order to achieve national goals. In less developed countries, an industrial policy can help develop foundational industries, such as energy or food production. In developed countries, a government might pursue an industrial policy during wartime, providing financial assistance to armaments producers.

But in Britain today, there are several compelling reasons for not pursuing an industrial policy. Excessive corporate welfare is sucking the dynamism out of the UK economy. As things stand, government efforts to shape and direct industry are slowing growth, encouraging corporations to depend on state handouts and distracting from the core role of the state in providing decent public services and infrastructure.

Read the full article here.

The economic change we need won’t come from Labour

philmullan Creative destruction, Economic growth, Economic policy, Politics, State intervention

Following the UK Labour Party’s annual conference, which wrapped up last week, we now have a better idea of its economic plans. Though plenty could still change before the next General Election, it’s clear that Labour is not planning to offer an alternative to the existing Conservative economic programme. Essentially, what leader Keir Starmer and shadow chancellor Rachel Reeves are promising is the same old muddling through, but without the Tory ‘instability’ and ‘chaos’.

Indeed, in content, Labour’s policies are very similar to those already in operation. And since these policies have done much to keep Britain stuck in an economic depression, this portends a dismal financial future for most of the population. At the heart of the problem lies the quest for ‘economic stability’.

Read the full article here.

Phil Mullan will be speaking at the Battle of Ideas festival in London in the session, ‘Bouncing back or basket case? The state of the UK economy’, on Saturday 28th October.

The fall of China? Don’t bet on it

philmullan China, Economic growth, Geopolitics

For years Western experts have been talking of China being on the verge of financial and economic ruin. So far it has survived. But China’s uneven post-Covid recovery has brought Western gloom about its economic prospects to new heights this year.

This dismal thinking draws on real economic problems. China slipped into price deflation in July, as growth in retail sales and industrial output slowed. And in August, Country Garden, a major property developer, missed payments on some of its debt. To cap all this off, Beijing announced last month that it will stop publishing youth-unemployment figures, after reporting record highs – a sign that the authorities are keen to bury bad economic news.

So, might the dire expectations from Western economists finally come true this time? Certainly, economic growth has slowed substantially since those heady days during the 1990s and 2000s, of growth rates of more than 10 per cent per annum. But since China has survived all the previous portents of ruination, it would probably be wise not to hold our breath. Gloomy predictions of China’s imminent economic collapse say more about the West than they do about China.

Read the full article here.

The slow decay of the British economy

philmullan Creative destruction, Democracy, Economic growth, Politics, The longest depression

The sense that Britain isn’t working anymore has too many facets to shrug off as undue gloom and doom, as the current government tries to do. The significant thing about all the shocks that have hit Britain’s economy in recent years is its relative lack of resilience. Compared to its developed peers, Britain has been less able to cope with external blows, and been slower to pull through.

Why is the British economy stuck in this rut? The historical economic explanation is not hard to fathom. Britain’s peculiar decrepitude is founded upon a greater dependence on aged capital in both the public and private sectors. But this historic atrophy in production and wealth creation doesn’t explain why so little political effort has gone into attempting to shake up its unusually outdated structures. Specifically, why has Britain’s political class of all stripes been so reluctant to make the hard choices needed for a better future?

Read the full article here.

The dystopian truth about a universal basic income

philmullan Economic policy, Employment, state, technology, Welfarism

Proposals for a universal basic income (UBI) are rarely out of the news. UBI is regularly championed, but rarely criticised. If it’s true that it’s an idea whose time has come, as some suggest, we should be very worried indeed.

The basic idea of a UBI is that the state would make a regular guaranteed payment to every citizen, regardless of their means and employment status. It would be set at a level sufficient to cover the ‘basic’ necessities of life: food, shelter and clothing. Its advocates, from the left and from parts of the free-market right, claim that this would simplify the welfare system, tackle poverty and improve recipients’ mental health.

The enthusiasm with which UBI is now being advocated by certain sections of society tells us a lot about how these left-leaning think-tankers, academics, journalists and even some free-marketeers view work, individual autonomy and the potential of automation.

Read the full article here.