Economic policy

The end of the American century

philmullan Changing world order, Economic policy, Geopolitics, Rivalries, The longest depression

Many believe that the war in Ukraine will reverse or bring an end to globalisation. However, this is not the first time that globalisation has been declared dead. Obituaries were published after the financial crash of 2008, after the Brexit vote in 2016 and after the election of President Trump in 2016. Yet more obituaries were penned following the pandemic lockdowns and the accompanying disruption of global supply lines.

When a phenomenon is repeatedly declared dead, only to repeatedly survive, it should raise questions about the usefulness of the concept used to describe it. That certainly goes for the concept of globalisation. World economic developments simply do not follow an either / or, more-or-less logic of globalisation or de-globalisation.

In order to understand today’s economic developments, it is better to start not with globalisation, but with the idea that the world economy is always in flux – that the balance between international and national is always changing. We can therefore ask: which features in the world economy are likely to be magnified or sped up by Russia’s invasion and why? The most important impact will be the acceleration of the existing fragmentation within the world economy, both at the regional level and at the national level.

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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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