According to most calculations, the UK economy has still not yet even recovered half of its drastic loss from 2007-8. Since Government accounts assume a degree of growth (and there currently isn’t any), this means we are becoming materially worse off every month. It is a very real problem, the gravity of which the public seem (by and large) to accept, but the solution to which political leaders have still failed to provide.
This is not helped by a debate in the media and general “Commentariat” that seems linear. Essentially, it goes: we had a boom, now we have a bust, so how do we re-create the boom?
Thing is, we never had a boom. Not really. It was the nature of the so-called “boom” which created the bust. The last thing we would want to “re-create” is a boom which inevitably again leads to a bust.
To be clear, what happened broadly in the West, and particularly in the British Isles, was a consumer boom based on cheap mortgages for houses and cheap credit for “stuff”. We led ourselves to believe that City slickers and/or low corporation tax were earning all sorts of money selling things we didn’t understand, enabling us all to get richer. But they weren’t; and we weren’t.
I suspect Northern Ireland is not unique in having an economic debate which seems to focus on “cuts” and “consumers”. Instead it needs to focus on “efficiency” and “exports”.
We need to stop assuming that any reduction in government spending is necessarily bad; if it means an efficiency, or indeed removal of a service which is doing more harm than good (not least if it creates a “dependency culture” on State provision without any real contribution to the funds needed for that provision), then it may be a good thing. We also need to stop this focus on consumers, shops, traders, tourism and town centre retail – not to say these should be written off, but in the general scheme of things they are exceptionally low value-added sectors and there is certainly no case for the government spending taxpayers’ hard-earned money getting in the way of consumers seeking better quality and convenience (whether that means going “out-of-town” or, far likelier, going “online”).
We need to focus instead on ensuring that government (and indeed personal) spending is efficient, and particularly that it helps wealth creation (most obviously through exports). That means an education system which encourages entrepreneurship and innovation; that means a transport system designed to help people move about freely, exchange information, and cooperate efficiently and creatively; that means a focus in enterprise policy in innovative businesses fit for export (i.e. those which create wealth efficiently; rather than merely shuffle it around, often inefficiently).
In other words, instead of asking “How are we going to save such-and-such a store?” (which is invariably on the verge of bankruptcy because it is inefficient and offers a poor customer experience), we need to ask “How are we going to create the wealth to enable us to fund the quality of life we want?” (by encouraging wealth-creating businesses which deliver quality and value) – and that means a radical change to the economic debate.
The growth in GDP in the years leading up to 2008 was the growth in the Financial Sector and was essentially parasitical. Because it was malign we don’t actually want to encourage its return on the same scale. Meanwhile economic power, and inevitably political power, continues to migrate to South and East Asia.
The terms of most things economic and poliyical for the UK, and the rest of the ‘developes west’ are dramatically different this century than for the last. For the moment we still have the defence assets to deploy to suppress subversive elements in undeveloped areas of the world, and the ruling powers of the emerging economic giants are probably happy that we continue to do so, in the short term at least,
But these military adventures disguise the fact that we need to establish ways of making our way in a sustainable way in the new reality, and we are unlikely to achieve that whilst sustaining the general affluence and widespread welfare that we have become accustomed to. A new revolution is upon as if we are to reestablish a more stable and sustainable economy. We need to export more and import less. We need to dramatically wind back our relentless legislation for individual rights and shift the emphasis to community and society health and the wider public interest – Bentham and Mill rather than Smith and Hume. Without such a revolution we shall decline much further. We need to get ‘behind the curve’, and soon, and put ourselves into a situation where modest growth can occur.
We need to focus instead on ensuring that government (and indeed personal) spending is efficient, and particularly that it helps wealth creation (most obviously through exports). That means an education system which encourages entrepreneurship and innovation; that means a transport system designed to help people move about freely, exchange information, and cooperate efficiently and creatively; that means a focus in enterprise policy in innovative businesses fit for export (i.e. those which create wealth efficiently; rather than merely shuffle it around, often inefficiently).