However, the size of the UK’s public sector has grown inexorably, from around 30pc of GDP in the last century to 50pc in the Covid era; Even now it is 45 percent. The numbers show little sign of declining.
The second: comes with a bigger state: higher taxes. Repeated academic studies have shown that the higher the tax as a percentage of GDP, the lower the growth. And yet, again, we keep raising taxes – especially, even under recent Conservative governments.
And when those governments face resistance to raising income tax or corporation tax, they invent all sorts of unconventional taxes – often cloaking the rationale for imposing them in a false moral posture that makes taxpayers feel bad about engaging in the process. Pays heavy taxes on it. But Art Laffer – still reviled, always right – showed that all these tax hikes resulted in less compliance, less economic activity and less tax revenue than predicted.
Big government and high taxes are bad enough, but what really kills growth is the third devil: overregulation.
Little by little, governments fail to resist the temptation to interfere with wealth creators. Sector after sector becomes more and more regulated and can produce less and less innovation. Banks’ capital requirements shift away from lending to small firms. Restrictions on pension funds encourage them to invest in government bonds, not private sector stocks. The car industry is told what cars to build; The boiler industry said they don’t make boilers. Previously privatized industries should be re-nationalized. The madness of EDI, ESG, etc. – mandatory carbon literacy training, anyone? – Forces organizations to affirm and act on the primary objective of achieving social welfare rather than providing goods and services that people want. Good luck with that naked thing; Meanwhile, forget about achieving any economic growth.
So, two simple and very obvious policies, but most Western democracies over the last 50 years have done the opposite, ignoring the clear evidence of how to improve the wealth and quality of life of their people.
There are three general models of how nations operate in this modern age; At the extreme end, we have the brutal marauding dictatorships of Russia, Venezuela, North Korea, Iran, Nicaragua, and Cuba.
These often emerged as the logical outcome of socialism/communism, with leaders hanging on to power by terrorizing their own citizens and engaging in brutal military adventures abroad.
The second model is social democracy. It will take a long time to fail, but stagnation and, as a result, over time, ending with national bankruptcy, is predicted to occur at present, for example, France.
A third model is the free market economy, still followed in countries around the world, all of which show staggering and sustained levels of growth, bringing wealth, health, and longevity. Despite the efforts of Obama and Biden, America is still one; The wealth of its citizens is growing at a surprisingly faster pace than the average EU citizen, causing salaries and wealth to outpace ours more and more. After the war, Europe was successful at first, but little by little its countries moved from free market structures to social democracies, where you were concerned but used to act in a damaging way.
The ever-increasing welfare bill led to the ravages of QE, and we can’t be sure that the bouts of inflation are entirely behind us. Theoretical debaters are now spreading more and more irresponsible social nonsense, such as the claim that our wealth is built entirely on the fruits of fanatical colonialism; promoting diversity hiring; Take for example the outlandish assertion that the socialized NHS, one of the worst health systems globally, is a national treasure and the envy of the world.
Drain the swamp
Leaving the EU has made it possible for us to break away from the European social democratic model. But we didn’t take advantage of this opportunity.
Instead, every government since 2016 has doubled down on social democratic policies, with predictably disastrous results. Liz Truss, the only leader who tried to break free and create a dynamic economy, encouraged everyone to embrace a fairy tale created by poor regulation (rolling collateral calls on LDI funds) before being promptly betrayed by her own side, the Bank of England to support LDI funds as LDI funds lined themselves up. Failing that, „Lis Truss wrecked the economy” (economic growth in that quarter, which was ultimately positive, contradicted the ONS’s earlier claims. shrank).
With his own party actively pushing him to defeat, the political opposition and left-wing commentators had little work to do to ensure that Druss would leave and be replaced by their all-time favorite candidate, Rishi Sunak.
His new government had no guiding principles, beyond a desire to cling to power – and it seemed to have lost interest in it, so inexcusably, it called a snap election in which it was defeated.
The new Starmer government promised to deregulate the construction industry so the economy could improve, but after its good start it introduced growth-destroying measures such as massive pay rises and layoffs for the public sector. All attempts to reduce large numbers of civil servants if they return to pre-Covid levels.
It doesn’t have to be this way. In previous centuries, we led the world with a few basic principles summed up in the phrase „laissez-faire” – allowing entrepreneurs, business and investors to build the economy rather than drowning them with high taxes. In regulatory wetlands. Other countries like Switzerland and Singapore show us that there is no limit to the economic growth a country can achieve if you rule in the state; As a result, they provide all kinds of immense benefits to their people. There’s no reason why we can’t do the same.
Apart from getting rid of these three devils, there are many things we need to do to get growth; Chief among them is improving our state education system, and the wonderful Catherine Birbalsingh has shown us how to do this – but the new Labor government seems determined to do the opposite. We must ban strikes by government employees and break up employee monopolies in the public sector and semi-nationalized industries. Above all, we must find a way to reduce immigration so that per capita economic growth is possible. We must do all this.
We can only expect disintegration, collapse and (ultimately) financial failure, rather than returning this country to growth. One way or another, our economy must be restructured. Better sooner than later. We have to hope our government pays attention – chances are Labor will follow its Conservative predecessors and adopt the same, failed approach.
So in the meantime we must wait, make the case, and keep pressing it: helping everyone understand that growth can only come by returning to the free-market principles that made our country the workshop of the world, and thus ultimately shifting wealth. of the whole world.