Economic policy

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.

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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.

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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.

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How to bring about a high-wage economy

philmullan Covid-19, Creative destruction, Economic growth, Economic policy, Employment, Productivity

According to some pundits, the empty petrol stations and gaps on supermarket shelves are a forewarning of another ‘winter of discontent’ – a reference to 1978-9, when widespread strike action brought the UK to a standstill.

In the energy crisis, some see a return to the oil crisis of 1973-4, when OPEC imposed an oil embargo on the likes of the UK and the US because of their support for Israel during the Yom Kippur War.

And, as prices rise across the board, there is a great deal of speculation about a return of 1970s-style ‘stagflation’, when economic stagnation co-existed with sharply rising prices, precipitating a cost-of-living crisis.

As evocative as these trips down economic memory lane are, they do not help us understand what is going on today. The general fashion for reaching for old labels, such as new New Deals or new Cold Wars, to describe the present often obscures what is distinctive about the contemporary moment – and this certainly applies to our current economic situation.

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Inflation: another symptom of the zombie economy

philmullan Covid-19, Economic policy, Inflation, Zombie economy

In both the UK and the US, the monthly inflation figures released this week came in well above the forecasts. These announcements have added to fears from many economists that we could be seeing a return to inflation rates not seen for 40 years.

Led by Jay Powell, chair of the US Federal Reserve, most central bankers believe that the current high levels of inflation are ‘transitory’, and will fade away once the lockdowns have been fully lifted. Meanwhile, critics say any delay in monetary tightening will simply force the central banks to slam on the policy brakes harder at a later point, resulting in even greater economic disorder and perhaps an even harsher recession.

So who is right? The inflation hawks or the apparently dovish central bankers?

Read the full article here.