Productivity

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.

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 inflation trap

philmullan Economic policy, Inflation, Productivity, Zombie economy

Governments and central banks across most advanced economies are battling to put a lid on consumer price inflation. When at the beginning of the year, UK prime minister Rishi Sunak outlined his five key priorities – halving inflation was at the top. With UK inflation still far above the Bank of England’s two per cent target, its Monetary Policy Committee (MPC) once again decided last week to increase short-term interest rates by a further quarter of a per cent.

The focus on tackling inflation makes sense on the surface. After all, high consumer inflation – say, above five per cent per year – is always a problem for people struggling to pay their bills. However, whatever the immediate trigger, higher inflation is invariably a symptom of deeper problems in the economy and in society. A narrow focus on inflation levels can be a distraction from the real cause of people’s hardships – namely, protracted and anaemic growth in the UK and much of the rest of the West.

The key factor behind today’s economic problems is the post-2008 productivity slump. This was the cause of the wage stagnation during the 2010s. It also underlies the economic fragility that has made it much harder for Britain to cope with the supply disruptions of the past three years, caused first by the pandemic lockdowns and then the war in Ukraine. Indeed, the lockdown-related interruptions to imported supplies were what initially set off the jump in consumer prices in Western countries.

Read the full article here.

The problem with Hunt’s ‘back to work’ budget

philmullan Economic growth, Economic policy, Employment, Investment, Productivity

In January, prime minister Rishi Sunak announced his five key priorities for 2023. Conveniently for him, his first priority was something that is very likely to happen regardless of what his government does. Sunak’s top pledge to ‘halve inflation’ came a few days after just about every new-year economic prediction said that inflation would fall by at least half during 2023. Chancellor Jeremy Hunt adopted a similar hollow ploy in his budget statement yesterday, setting himself up to take credit for something that is already happening anyway.

Alongside all the familiar, disingenuous boasts about promoting growth and business investment, Hunt also placed a distinct emphasis on this being a ‘back to work’ budget. He highlighted the importance of ‘tackling labour shortages that stop [businesses] recruiting… by breaking down barriers that stop people working’. Yet ever since the threat of further pandemic shutdowns lifted last year, people have already been returning to work, pretty much as normal. So why the focus on getting people back to work now?

Read the full article here.