Economic growth

The battle for growth

philmullan Economic growth, Economic policy, Politics, Productivity, state

Written and published before Kwasi Kwarteng’s Chancellor’s statement on 23 September, this article explains the background to the mini-budget and the financial convulsions that followed. It argues that a serious and credible plan for growth can’t be reduced to tax-cutting. It goes on to contend that successive governments have failed to appreciate the scale of the economic task at hand. And that is a cultural failing as much as anything.

This failing has three key elements. First, policymakers are plagued by an intellectual shallowness, which underplays the depth of the economic challenges. Second, they adopt a fatalistic approach to economic developments, which underestimates the capacity of the state to change things. And third, the political class has evaded responsibility, with governments repeatedly recoiling from making the decisions needed to bring about an economic renaissance.

Read the full article here.

Fiddling with taxes won’t fix the economy

philmullan capitalism, Economic growth, Economic policy, Investment, Politics

Britain’s grim combination of record indebtedness and anaemic economic growth is desperately calling out for a vigorous government response to shake up and restructure the economy. Unfortunately, the two lightweight contenders for Britain’s next Conservative Party leader and prime minister have not heeded this call.

Instead, all Rishi Sunak or Liz Truss have been able to offer is a choice between tax cuts now versus tax cuts a bit later. The media may claim that this shows an ‘enormous’ gap between the candidates’ economic policies, but that is just empty hype. Both Sunak and Truss share the same illusions about taxation’s ability to revive or depress the economy.

But recent economic history confirms that tax reductions have no determinate effect on business investment and therefore do not contribute to improved productivity performance and economic growth. If the government is serious about tackling our dismal economic situation, it needs to drop its fixation on taxation. And it needs to lead with a genuine plan for economic transformation to drive productivity growth and lift living standards. Anything else is just fiddling while the economic crisis deepens.

Read the full article here.

The fundamental flaw of Levelling Up

philmullan Economic growth, Economic policy, Employment, Productivity

For a long time ‘Levelling Up’ was widely derided as a slogan in search of a policy. With last week’s much-delayed Levelling Up White Paper, we now have lots of policies – 400 pages of them. However, the search to identify the essential causes of lower levels of prosperity and growth in some parts of the UK has missed the mark.

Aspiring to raise living conditions for all, with an emphasis on the most deprived, is a worthy goal. But turning hope into an effective plan needs to start with ‘the why’ to identify successfully ‘the what’ that needs to be addressed. For all its length, the white paper fails to unearth what’s been holding back local, regional and national growth and prosperity. The government continues to evade the fundamental driver for deficient living circumstances countrywide – namely, an economy that has been stuck in depressed conditions for half a century.

Read the full article here.

The fatalism of the inflation debate

philmullan Covid-19, Economic growth, Economic policy, Inflation

When it comes to the misery of falling living standards, we don’t need a fevered and fatalist debate around rising prices and some short-term counter-inflationary devices, but a proper plan for economic growth. The wealth from rising productivity is the only reliable source of durable prosperity. Moreover, it would allow society to deal better with material disruptions of the sort we have had to endure over the past two years of restrictions and lockdowns.

Read the full article here.

Who will save Britain from its never-ending slump?

philmullan Creative destruction, Economic growth, Economic policy, Investment, Productivity

The huge hole at the centre of the Autumn Budget goes beyond any of the fiscal measures announced. The substance of the statement made clear that this government’s bold talk about economic renewal does not translate into a serious pro-growth plan that might address the fundamental challenges of low investment and poor productivity.

Read the full article here.