“Britain’s biggest problem is a lack of economic growth – so much else is downstream from that. In per person terms, annual real growth averaged more than 2 percent in the run up to the financial crisis. From the crash to COVID-19, growth was just 0.6 percent on average. And of course these growth rates compound. Before the financial crisis, living standards were on course to double every 35 years; afterwards, it was every 120 years. This is a change with profound societal – and even civilizational – consequences.
“From tax and regulation to institutional malaise, demographic decline, and a culture that denigrates success – there are all sorts of explanations for our economic slowdown. But the way I see it is that we are suffering a progressive loss of economic dynamism, as we gradually replace market processes with bureaucratic ones – often to reduce risk or increase ‘fairness’. To many observers, every individual step along the road is reasonable and easy enough to justify. But over time, the effect is suffocating.”
– Tom Clougherty, Institute of Economic Affairs
We are supposed to ignore the 400 Billion Pounds spent on insane Covid policies (which was on-top-of government spending that was already cripplingly high) and chant “Liz Truss crashed the economy” – even though the lady was not allowed to do anything (just as Covid was the rule of “scientific experts”, the betrayal of Liz Truss was rule by the “monetary experts” of the Bank of England and the Credit Bubble “City” institutions which depend on the Corporate Welfare of the Bank of England).
As for the present government – even more government spending (the NHS alone has now breached 200 Billion Pounds per year – and the government has massively increased the pay and perks of various government employees), more taxes (some of the taxes designed to take land, and everything else, away from individuals and families and force its sale to “partner corporations” owned by “Mega Funds” and so on) and even more regulations.
Certainly all these policies are international – the British establishment has invented none of these policies, but they are being carried to an extreme here (as are “Green” taxes and regulations), the British “educated” establishment (of which the government is part) appears to be fanatically determined to destroy the United Kingdom.
It is likely that they will succeed in their task of destroying the United Kingdom.
A fertility rate down to 1.4 babies per woman (replacement level is, of course, 2 or above) and some groups in the United Kingdom have a lot more babies than other groups.
Plus mass immigration of MANY MILLIONS of people, over decades, which (as well as demanding endless benefits and public services – and housing) has overwhelmed the sewers – but it is so much easier to blame “greedy water companies” than to tell the truth about what has overwhelmed the system.
I could tell you what all this, the fertility collapse and the mass immigration, means for the future of the British people (the British nation), but I do not fancy years in prison – so I had better stop here.
By the way – the standard of living is not rising at a slow rate, it is falling and has been for years. People are getting poorer (just as they are in the United States).
It is depressing to see that the IEA does not understand that the inflation figures are severe underestimates (although the distortion of the figures may not be as severe as in the United States – whose government is totally corrupt) – per person, real incomes have been in decline for quite some time.
Paul, a low fertility rate and declining population, and an ageing one, need not be a catastrophe if – and this is a massive “if” – the productivity of those remaining adult workers/entrepreneurs was rising so fast as to offset the impact. But of course….
As for the lax approach to spending, this current joke of an administration in the UK appears happy to pay millions of pounds of taxpayers’ money as a condition of keeping Mauritius (an offshore tax haven) happy as part of a transfer (for no obvious legal grounds) of the Chagos Islands to Mauritius. That network of islands contains Diego Garcia, an airbase. It appears that the upcoming Trump administration has other ideas..
I couldn’t tell if this was an intentional double entendre or if it just exists in my imagination, but I like it.
Anyway, it’s all of a piece with what one notable speaker said decades ago: They would rather the poor be poorer, provided the rich be less rich.
Progressive heaven comes when the entire society starves to death equally, on the same day.
“Progressive heaven comes when the entire society starves to death equally, on the same day.”
Apart from the nomenklatura, they will be well fed, naturally.
Johnathan Pearce – yes, but eventually people age.
For example, I have pains in my back and hip that I did not have years ago – even for non physical work, pain can be distracting.
Also a society where the native people are not having children (a society like Britain or Russia) is a society without long term hope.
By the way only one American State, South Dakota, now has births at replacement level – even Utah does not. Yes society is continuing to decline in Britain and the United States – as it has since the start of the 1960s, but I suspect (just suspect) this is another factor – the Covid “vaccine” injections. Still it may be “just” continued cultural decline – now becoming terminal.
As for giving the Chagos Islands to Mauritius, which is many hundreds of miles away from the islands, and giving Mauritius money on top of this – the government of the United Kingdom is clearly insane.
What else happened in 2008? Oh yes, the Climate Change Act
I’m not a great believer in simple explanations for complex problems, but I would have said high energy prices have been a major contributor to low growth.
Just as well our economy isn’t being run by the photocopy girl at Halifax then.
The productive part of the population is aging (and becoming dependent) and is in decline, not having enough babies to replace them, meanwhile many millions of people are arriving or are produced by natural increase – who require benefits and public services.
The idea that mass immigration is the solution to demographic decline is a nonsense – both in the United Kingdom and the United States.
Russia has gone down this road (although it does not have the high level of government benefits and public services that Western countries do – so the impact of immigration on Russia is rather different) – it imports labour from Central Asia. It is often forgotten that the late opposition leader to Mr Putin, Alexei Navalny, made his name opposing this policy of Mr Putin – according to Mr Navalny, Putin was importing into Russia vast numbers of people who had been enemies of the Christians for over a thousand years.
This was Mr Navalny’s opinion – I am merely reporting it.
The stagnation has been going on for so long in Britain that while I would be wary of claiming to know what solutions will work, we can identify some policies that haven’t worked at reversing stagnation because they have been implemented for much of the post-2008 period without any corresponding reversal of low growth and poor productivity:
1. Mass immigration. Advocates have been claiming it is essential to the economy. Yet while the past twenty years have seen immigration on a scale completely unprecedented in British history, the same period has been of economic stagnation, contrasting previous periods when Britain had a minute non-British population but a booming economy compared to what we’ve had in the past few decades.
2. Loose monetary policy – don’t think I need to elaborate much on this. We had a very long period of very low interest rates but barely any growth.
3. Mass higher education and mass debts by age 21. The push to get half or more young people into university began prior to 2008 but has continued unabated since, and we have also normalised leaving university with £50k+ debts at the age of 21/22. This higher education and student debt boom doesn’t seem to have achieved any wonders for productivity.
Indeed.
I’d add deliberate policy to push up energy prices. And what’s appalling is almost total lack of political resistance to this.
On immigration, it depends what immigrants you mean. Polish electricians and Indian dentists aren’t exactly the problem. It’s when while extended families arrive in a big rush that creates the issue.
Paul: don’t forget to mention a high number of work-age adults aren’t seeking work for various reasons.
I’d add that the work ethic has gone among a lot of people.
I agree with the thrust of what Clougherty says but would suggest that currently the main driver of the move towards bureaucratic processes is net zero. Since the Climate Change Act of 2008 the governments of the UK have become economically illiterate.
Martin, Johnathan Pearce and David Norman.
I agree with all that all three of you have said – and can think of nothing to add.
The uneducated masses (the vast majority – what passes for education in Britain is not worth the label, and I include myself in this mass) are either mollified by lots of free stuff (Universal Credit, for example) and many don’t end up paying anyway. £3 per month leveraged against their benefits doesn’t really bother them.
The educated, by which I mean proper universities like Oxford and Cambridge, are fully on board with the policies. Important we do something about the climate emergency, you see. The tiny number of heretics won’t galvanize the masses into action, and are dismissed as cranks and loons (at best), dangerous climate deniers at worst by the properly educated people.
I completely agree that it isn’t Polish electricians, Indian dentists and pharmacists, or even Czech warehouse workers that are the problem. Unfortunately they have been used to give credibility to a programme of mass immigration hardly matched in history. The UK has gone from 97% white to 80% white in less than 30 years. Colour of skin, of course, means nothing but it does illustrate the scale of the change – particularly when you consider that many of the people who were here 30 years ago are either dead or have emigrated. The country has, quite simply, a completely different populace.
Culture clearly has an enormous effect on economics. English and Scottish factory workers spent their money in their local economies, and had pension plans that had shares in British firms. Today we have Czech and Polish warehouse workers who remit 30-40% of their income back to the old country, and young Pakistani and Indian men who may be remitting as much as 80% of their income to their home countries. In 2017, £3 billion was remitted to India from the UK. Pakistani remittances are harder to track as many use the Hawala system but official statistics estimate $4.067 billon USD in remittances from the UK to Pakistan in 2020/21.
Obviously money earned here has presumably been earned from genuine economic activity, although some of it may be criminal activity, but the point is that money has left the country and cannot be invested in British firms. It isn’t going into insurance policies or pension funds in the UK. It isn’t going into savings and investments in this country.
Furthermore many immigrants are, or were, bringing dependents who are getting treatment on the NHS, getting benefits and housing. Taxes are going up to pay debts incurred by borrowing to pay for this largesse. Immigration, thus, is having several negative effects. If you think having small houses converted into houses of multiple occupation (HMOs) or bedsits is a substantial economic benefit, then there’s plenty of that. On the other hand if you think having our towns and cities become dormitories for thousands of Just Eat, Deliveroo and Uber Eats “drivers” mopeding fast food around the country to the benefit-claiming large-arses is actually more like a biblical plague than sustainable economic growth, then your view of mass immigration may change. I was all for sensible amounts of immigration, right up to 2020 I was inclined to view those banging the drums about immigration as a bit daft and likely a bit racist, but even I have come to view the vast numbers of migrants here now with suspicion.
Though I characterized the purchasers of takeaway fast food as obese scroungers above, I had a moment of weakness the other day. I fancied some fish and chips. My local place doesn’t take card payment and I didn’t want to walk a mile to get some cash, so I ventured onto Just Eat for the first time in a year or so. I ordered a large cod and chips to be delivered. A moped duly turned up with a south Asian delivery driver. I tipped him, and went to eat my fish and chips. There was no cod in the packet, just a pack of chips. There was, however, quite clearly little bits of batter as if the piece of fish had been removed before delivery. I complained and got my money back, but I have a sneaking suspicion the delivery driver quite literally stole my dinner and got a tip for doing it. This is the zero-trust society we’ve built. No doubt the takeaway thinks I ripped them off. Everyone except the culprit lost out.
This isn’t really new, is it? In the 90s we had a lot of ex-miners and such not economically active. However it does seem to be getting worse, not better.
I think that’s true. However a combination of factors are at play here. Many younger people have correctly deduced that whether you work hard or not you’re not going to get a raise, or will only get a mediocre raise. When house prices are so high relative to wages it is hard for them to be motivated. I’ve certainly encountered a lot of junior colleagues who were astonishingly lazy but given the difficulties in getting someone fired it was easier just to try to motivate them or do something, anything, to get a bit more work out of them. It’s also a strange world in recruitment, it’s difficult to find people with the skills you need so when you do find someone halfway decent you’re likely to put up with a bit of laziness than roll the dice on another recruit, not to mention the distraction from actual work that recruitment is.
Motivation is only partly intrinsic. Someone who has a reasonable work ethic and is reasonably talented can still have their motivation damaged by a poor workplace, dull work. A lot of the work in the UK today is in IT which can be incredibly dull, and amazingly is still poorly enough understood by management that they can’t effectively determine why tasks take longer than expected or turn into quagmires of poor productivity. There’s also always more work which is well-known to be a psychological de-motivator. If your job is filing (a job I’ve done myself, years ago) then you have a trolley full of files and once it’s done you can go have a cup of tea. At 17:00 you go home. If your job is fixing bugs and the backlog is 30,000 tickets then you could work flat out all day and no-one will notice the difference. Many bugs might be old and stale and the original reporter has left the company, or doesn’t remember the issue. You could quite conceivably spend an entire day clearing out old tickets that haven’t even been looked at before and no-one would be the wiser that you’ve done anything at all. A lot of IT work is invisible, it’s janitorial. If the filing clerk is off sick, someone notices pretty quickly. If a junior software developer who works from home is off sick, no-one may even notice at all. It’s not a recipe for high extrinsic motivation.
This is a good point.
The ‘where would be without Polish plumbers or Pakistani doctors’ line and it’s variations is used to justify bringing in hundreds of thousands of justeat deliverers and Turkish barber owners and ‘staff’*. I read a headline tye other day that nearly 50pc of immigrants in 2022 into Britain are now on some like of welfare so go figure how really ‘essential’ these people are to the UK economy.
*Have used the quotation marks as whenever I pass the 3 or 4 Turkish barbers that have snapped up in my local area in the past year or two they never have any customers yet the businesses look all nice and prosperous so I’m assuming they are all a front for something else.
I do not believe that the public do support the “Green” high energy prices – or the other Collectivist policies.
But whoever they vote for they get these policies (which are decided by officials and “experts” and backed up by judges), the public are unarmed (so a revolt would be absurd) – and if they protest, say against mass immigration – which they also do not want, they can be sent to prison for years – to be abused by gangs in prison.
The British public live under conditions which mean there is little that we can do. Although perhaps not “nothing”, as there may be some things we can do to change policies to a limited extent.