Economic growth

The myth of the population time bomb

philmullan Demographic change, Economic growth, Productivity

In Britain and most other countries today, the birth rate has fallen below replacement levels – usually defined as 2.1 babies per woman. Fertility in Britain first fell below replacement levels in about 1973, and since 2010 has fallen steadily to about 1.55 babies per woman.

These trends are now prompting a lot of doom-laden commentary from demographers, economists and politicians. They claim that an ageing population, with ever-fewer working-age people supporting ever-more retirees, is creating an unsustainable burden for society.

The irony is that such alarmism about ageing and low fertility is aggravating the very anxieties and uncertainties that are contributing to falling birth rates. Thus, it is important to dispel the misconceptions and myths about ageing populations.

We take three here: that falling fertility leads to economic impoverishment; that we are running out of people; and that changing age-dependency ratios are too much to bear.

Read the full article here.

An ageing population is nothing to fear

philmullan Demographic change, Economic growth, Politics, Productivity

People are living longer lives than ever before. This ought to be regarded as something to celebrate. Yet for far too many politicians, commentators and academics, the fact we’re living longer than ever is seen as a serious problem – even as a source of despair. Last week, two reports, one on the malfunctioning National Health Service (NHS) and another on the steadily rising public debt, attributed much of the blame for Britain’s woes to our population’s longevity.

But people living longer is neither an obstacle to growth nor an unbearable strain on the public purse. This fatalism is wrong on every level.

Read the full article here.

The myth of a ‘green’ Karl Marx

philmullan capitalism, Economic growth, Green agenda, Marxism, Productivity

Since the mid-2010s, there has been a surge in articles and books supporting the idea of degrowth – a leftish environmentalist, economic argument against ‘growth-obsessed’ capitalism. Such is the depth of support for degrowth on the left, that some self-described Marxists even claim that Karl Marx himself was actually an environmentalist and early advocate of degrowth.

With the influential Marx in the Anthropocene (2023), Kohei Saito, an associate professor of philosophy at the University of Tokyo, has gone even further. He claims that not only was Marx an ‘ecologically conscious person in the modern sense’, he was also a ‘degrowth communist’.

Contemporary Marxists like Saito are free to propound some vision of ‘eco-socialism’, or to dream of some red-green alliance, should they wish to do so. The problem is that they try to do so by tendentiously ‘reconstructing’ Marx in ways that cut against the very grain of his thought. There is no trace of ‘degrowth communism’ in Marx’s actual work. In fact, Marx staunchly opposed the proto-green, counter-Enlightenment forces of his own time.

Read the full critique of the fantasy that Marx was a degrowthist 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.

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.