Creative destruction

Trump is hardly the West’s only trade warrior

philmullan Creative destruction, Economic growth, Geopolitics, State intervention, Trade

Enough of the hyperbole about Trump’s tariffs. His tariffs are wrong, but so is the rest of the west’s obsession with Trump-driven trade wars. For a start the hysteria over Trump’s tariffs ignores, and distracts, from just how protectionist most mature economies have become. Protectionism in its many forms impedes the domestic business investments needed for productivity growth. And the parallel fear-mongering about a ‘trade war’ is clouding the bigger geopolitical, as well as the economic issues, at stake today.

Read the full article here.

‘More EU’ won’t save Europe’s economy

philmullan Creative destruction, European Union, Politics, State intervention, Zombie economy

Mario Draghi’s report on the future of European competitiveness, published last month may present itself as a sober economic analysis, complete with proposed policy solutions. But this report – commissioned by the EU and produced by a former head of the European Central Bank – is best understood as a political manifesto for an ever-closer EU, controlled from Brussels.

His report is chiefly concerned with ‘strengthening governance’ – a euphemism for the extension of the European Commission’s power. Stronger governance, he writes, ‘means “more Europe” where it really matters’. And this means less national sovereignty where it really matters, too.

Read the full article here.

Unshackling Europe’s Economy: what holds us back?

philmullan Creative destruction, European Union, Politics, Productivity, State intervention

Here is a video of the talk I gave at the conference ‘Unshackling Europe’s Economy: what holds us back?’, organised by MCC Brussels on 24 September 2024.

My talk critiqued Mario Draghi’s recent report, The future of European competitiveness – A competitiveness strategy for Europe. I explained that this is not a neutral report on economic policy with new ideas to boost productivity within European countries. Rather it is a political manifesto motivating an ever-closer European Union controlled from Brussels. Europe’s real productivity slump is used as another instance of a ‘crisis’ – in Draghi’s words, an ‘existential challenge’ – in order to justify extending the powers of the EU to the detriment of national sovereignty and decision-making.

Labour and the Tories are wedded to a failed status quo

philmullan Creative destruction, Economic policy, Productivity, State intervention, Zombie economy

All of Britain’s mainstream political parties continue to support the stagnant economic status quo. They propose policies that will keep lower-performing businesses on publicly funded life support. And they continue to shy away from the root-and-branch restructuring that’s needed to get the UK economy growing again.

There is barely a cigarette paper between Labour and the Conservatives on the economy. The truth is that neither of their two near-identical approaches can fix Britain’s economic malaise. In the name of ‘security’ and ‘stability’, Labour and the Tories both aspire to preserve things as they are. Their aversion to risk will discourage the transformative change that our economy desperately needs.

Read the full article here.

The tax-cut delusion

philmullan Creative destruction, Economic growth, Economic policy, Politics

A second article suggesting a different approach to the UK’s 6 March spring Budget.

Many in and beyond the Tory Party seem to believe that lowering taxes is a cure to our economic ills. It’s time these tax-cut proponents stopped kidding themselves about the economic effects. A cut in personal or business taxes will not re-energise Britain’s entrepreneurial spirit or resolve its high-debt, low-growth malaise. The barriers holding back investment and innovation won’t be overcome with a reduction in income or corporation or inheritance tax. Britain’s economic slump is deep and protracted.

Yes, we can legitimately argue for lower taxes from the perspective of personal freedom. But lower taxes won’t raise productivity levels. That can only happen through the restructuring of our economy, by shifting resources away from low-productivity businesses into higher-productivity businesses that can provide better-paying jobs. That will require a wave of creative destruction, not fiddling with tax rates.

Read the full article here.