There’s no mystique about growth? – But step-one is to restore sanity

Economic Perspectives 149

Photo by Ian Taylor on Unsplash

Over the years, my essays have charted the government’s descent from an ignorance of economic principles, all the way to sheer insanity. And there can be no reprieve while the public mind festers in the grip of ideological indoctrination.

Take the fashion for demanding reparations – whether for slavery, colonialism or any other exploitation, and the consequent closure of museums, defacement of paintings, statues and public monuments, vilification of every historic leader anachronistically tainted with a link to a perceived evil that did not exist when they lived – followed by “no-platforming” anyone offering an opposing view.

While this may have no direct connection with economics, it’s so widespread that rational thinking on any subject at all has become impossible. Guyana is currently demanding compensation from Tate & Lyle for sourcing the sugar content of its golden syrup from the country known at that time as British Guiana. Its plantations were worked by indentured labourers from India, who replaced newly-freed slaves.

There is no statute of limitations. Ancient Rome, for instance, staged gruesome gladiatorial contests by slaves whose enforced butchery caused the Tiber to run red. Yet no compensation is sought by descendants today. Why are Juventus players not forced to “take the knee” before every game to demonstrate contrition for participating in a derivative sport, albeit (marginally) less bestial? [And, unsurprisingly, there are no demands for Egypt to compensate Israel for the Pharaonic enslavement of Jews before Moses achieved their release.]

We require sanctions and penalties to be imposed on school teachers for the alleged crime of “misusing a pupil’s pronouns”, coupled with the so-called ‘trans’ obsession. Rational debate has descended into such permissive idiocy that women need to lobby MPs for “single-sex” public toilets to be available.

This idiotic mindset symptomizes the pervasive vacuity that engulfs a post-lockdown society trying to restore meaning to their lives.

Our much-worshipped health service can let us down too

(i) Three years ago research proved that certain hormone-filled drugs for treating “gender dysphoria” in teenagers, could cause permanent physical abnormality. Yet it has taken all this time for the NHS to ban prescription of “puberty-blockers”.

(ii) Strikes by NHS staff have forced 1.5 million GP appointments to be rescheduled and the overall waiting list stands at 7.6 million, despite the secondment of “physician assistants” as GP substitutes.

(iii) NHS has committed to making all new emergency ambulances electric by 2030 at a cost to taxpayers of £500 million. A senior NHS insider said the health service should “let the energy sector worry about tackling net zero. Let’s focus on patients, getting waiting lists down, treating people and then once we’ve done that, who knows what will have been developed.” Yet the NHS, on its knees through shortages of frontline staff, is currently spending over £13 million on hundreds of “diversity and inclusion” jobs.

Political parties rely on the lure of welfare largesse to buy electoral support. Working for a living has become a lifestyle option; the entitlement dogma of  “the-state-will-pay” is no longer questioned; and welfare, once a humanitarian relief option to tide citizens and businesses over in the teeth of adversity, has become the norm. Given the horrid truth that the state has no money of its own – people with even a shred of economic brainpower can see what the future holds.

Let’s conclude this tirade with a lesson in practical economics

Our politicians talk of growth, while demonstrating every day that they know nothing of its origin or how it may be achieved. Yet growth holds the key to addressing all present woes. Government betrays its Keynesian obsession with demand by focussing on spending, when it should be focussing on saving. The wealth that kick-starts innovative production is derived from savings.

Here’s proof that government does not know the difference between saving and spending. Business Secretary Kemi Badenoch has today announced reforms that will save 40,000 businesses from having to spend time and money compiling an annual report on “climate-related” issues, as required under EU rules. That’s saving. Yet the same article reports that the Prime Minister has “pledged £60 million to help small businesses take on 20,000 more apprentices”. That’s “spending”.  [Ask yourself: how will those apprentices be selected? If those “small businesses” need apprentices, why don’t they just hire them? Why do they need government money to pay the cost of hiring? What does “pledged” mean? Whose £60 million is the PM giving away? Is it his to give? Is it yours? Might his pledge amount to nothing other than a shallow vote-winning scam? Does he genuinely believe that people don’t see through the junk-ploys we are continuously fed? Taxpayers are subjected to these insults on a daily basis.]

Yet knowing the difference between spending and saving can be truly transformative, as evidenced by Hong Kong’s miracle decade of 1961 to 1971, when  John James Cowperthwaite served as its Financial Secretary. He gave credit for HK’s success to its citizens’ thrift, industriousness and quickness to react to economic stimuli – the “old-fashioned virtues” that had been given full scope by HK’s economic environment: “a stable currency, low direct taxation, freedom of enterprise, and absence of governmental interference with the free interplay of the forces of the market”. When visiting the colony, Milton Friedman enquired why there was such limited information on national income, Cowperthwaite’s response was that once such data is published it would be used to promote government intervention in the economy. In any case he had no use for national accounts “because our economy has a dynamism which outpaces such accounts.”

For those who complained that his philosophy was opposed to welfarism, he conceded that he was always more concerned with wealth creation than with its distribution. pointing out that only a successful economy is capable of creating the wealth on which welfarism depends; and that he favoured greater spending on benefits for the needy, subject only to (i) benefit levels should be set “so that they do not have any adverse effect on employment and wages”; and (ii) a requirement that the administration must retain an ability to “deal with abuse and malpractice”. He encapsulated his philosophy with economic principle that dwarfs all others: “In this hard world we have to earn before we spend”.

Footnote: This being no. 149 in my Economic Perspectives (EP) series of essays, it is my intention to write just one more, EP 150, and then concentrate on compiling a primer to illuminate the principles that have served as my constant guide for so many years. I promise I’ll then write EP 151.

© Emile Woolf March 2024 (website)