A few months ago I wrote: “The first step to the UK solving their economic problems is to admit it has one“, within which I noted:
..if we look to the longer term (and this has been going on for at least 15 years, many economists would say that core total UK productivity has been in decline since the extraction of economic value (a polite term) from the people and resources of the British empire tailed off then ceased.
Whilst I study economics widely and internationally, I won’t delve deeper here into that. My point today, instead, is to reiterate the human behaviour issue, the reticence we often have to take the first step in solving any problem, which is to admit you have one. Try it. Take a deep breath, talk about what needs to be talked about.
Well, a few days ago, Ian Leslie wrote in his blog, “The Ruffian”, of “The Wil E. Coyote Illusion“. Unlike my prior post, Ian did go into some more detail as to the roots of the issue, as well as the behavioural and structural difficulties in addressing them, and he did so with great eloquence, including this:
Economists sometimes refer to a “Wile E. Coyote moment” to describe an economy that only seems to be doing fine but is about to crash. Britain’s Wile E. Coyote moment has lasted about 150 years.
Look back at the history of Britain’s economic governance, from its squandering of North Sea oil revenues, to its over-hasty shift away from manufacturing, to its neglect of everywhere outside the capital, and it’s a miracle we’re still a rich country at all.
The truth is that we’ve been running down the enormous good fortune we inherited from our nineteenth century forbears. There’s a strong argument that our malaise goes back to 1900 when first the aristocracy and then the government got complacent and failed to invest in innovation. The Victorians built a strong enough economy and infrastructure that even as others have overtaken us we’ve remained wealthy and functional. But we’re like the dissolute heirs to grand estates who assume that the house runs itself and all the servants will stay because that’s how things have always been.
It’s famously hard for poorer countries to catch up with richer ones. The converse of this is that once a country gets rich, it’s very hard for it to screw things up so badly that it gets poor. You have to say, though, Britain is really putting in the effort.
Don’t look down.
Ian also referenced an excellent piece by Adrian Woolridge for Bloomberg, “Britain Should Stop Pretending It’s a Rich Country“, in which he noted:
we are trying to run the infrastructure of a rich country with the income of a poor one
I repeat, “The first step is admitting you have a problem“.
As we enter into “election season” in the UK over the next year, pay close attention to see if either of the two main parties even acknowledge there is a problem, You will see if they do if they start talking about long-term investments and long term solutions rather than quick fixes to buy votes. Here are just a few you can hope to hear about (though I have my doubts that you will):
- Abolition of university tuition fees to stimulate the desire to learn whilst removing the financial shackles of a lifetime 9% Graduate Tax from the next generation
- A clear vision for “NHS 85” (10 years from now) that acknowledges the need for long-term vision, strategy and investment, not just “cut the waiting lists”. Note, as part of that 10-year vision, waiting lists will need to go up before they then go down. Tough to hear, but the system needs breathing space to pause, look up and consider the future, and that can’t happen while things are constantly in crisis mode.
- Affordable Housing. Clear recognition that the damage caused over many decades (as Ian Leslie notes) means that the UK needs to look long and hard at whether solving the need for housing means alternative solutions such as “help to buy” that can only ever be sold to other qualified buyers, or perhaps a massive programme of government-owned rental housing that gives people security of tenure for life at an affordable level (for those old enough, that was available before Margaret Thatcher plundered the assets of the country in the by selling off the housing stock to “financially engineer” the 1980s.
These are but three long-term and radical ideas that would take politicians brave enough to think long-term. I am the eternal optimist, but right now we have the leader of the Labour party about to pressure the London Mayor to delay expanding the ULEZ (ultra low emission zone) to the edge of London this year as it will hurt his election chances next year. This, despite the fact that only diesel cars over 7 years old and petrol cars over at least 16 years old are impacted. London needs cleaner air, a politician who thinks of the next generation thinks of the lungs of children now, not after the next election.
Ah, I am an idealist and optimist, so I’ll keep trying to propagate thinking long-term! Over and out (for now) on this topic!