….arguments I’ve been making (in less technical terms for years). The big question is to make them mainstream, indeed ‘orthodox’? Only then will the UK, absent the prevailing socialist domination, have any chance of economic recovery. Please keep your contributions flowing & ensure they’re copied to Conservative Central Office!
Little that I have to say is original but I hope that I can express arguments in ways that non-specialists find interesting and even convincing. I wouldn't place much reliance on CCO - they are a well-indoctrinated part of the blob, i.e. entirely focused not on what is true but on what is acceptable to say. Ultimately it is outsiders who have to insist that new ideas must be considered in wider public debates.
Since we (with Andrew J) discussed the misleading & inaccurate accounting behind ‘renewables’, the dial has unquestionably shifted (even at Conservative Central Office). I have similar, guarded optimism that, with further effort, we could begin to convince them on the merits of your work on broader economic issues (per ‘Repeating Old Mistakes’). It would obviously help if we could reference not just one reputable economist (you) but a number of them. Can you suggest other sound recruits? The next task, relatively easy if our approaches were credibly supported, would be to engage as many respected Conservative voices in the media, as possible (I can think of a good half-dozen to start with). Any help you can proffer….
I would add one further thought. It is clear to anyone who looks that the UK state is on track to be eaten alive by the NHS. There is no chance that the current government can do anything about that because it is too much in the pockets of NHS staff. Anyone who aspires to political power in the 2030s should give up unless they have a decent story to tell about how to reform health care in England or the UK. This may be the live wire of British politics but without a better way forward everything else is almost pointless.
I think that this is very difficult. I am, because of personal circumstances, very reluctant to get involved in public debate beyond what I write and occasional private discussions. There are people like David Turver and Kathryn Porter who are both independent and very knowledgeable about energy but they have, I think, no interest in aligning with any political vision.
Beyond energy: In academia the Conservative brand is completely toxic, both because most academics incline left but also because of the general incoherence of the previous government and the extent to which it relied on an incompetent bureaucracy. In the UK it is necessary to start with structure and money to fund people to spend 2, 3 or more years to rethink what government does. As one example, I look at the Institute of Economic Affairs: what I see is a bureaucracy not a policy-oriented US-style think-tank. The harsh reality is that Conservatives, Reform or whoever have to re-establish links with serious thinkers outside the Westminster blob and, very important, play down links with lobby groups.
Great article Gordon. It’s difficult to think of any winner that government picked that came through. But very easy to list the many failures, diesel being greener as just one example. Given this situation why do governments keep making the same mistakes? Do they realise? If they realise - why don’t they care? Or are they simply just not very clever? Are we being run by morons who think they are geniuses?
It is the well-known Einstein aphorism about repeating experiments and insanity. Many policymakers desperately want certain things to be true, so if a policy doesn't work they tell themselves that it was done wrong or conditions were unfavourable or ... Belief/hope/desire are so much stronger than rational analysis. Of course, many are not very clever and some are worse, but even for the most clever the wish that things were as you want easily outweighs the quiet voice that questions everything.
Tax authorities in rich countries are caught in a trap that is very hard to escape with radical changes to how states operate. Over time governments have wanted to be more generous to individuals and households on low incomes or with disabilities, pushing up the target minimum income relative to average earnings. Since it is costly to hand the money out via state payments and then levy income tax on those payments - e.g. paying the state pension and then taxing it - countries have raised the level of income that is exempt from income tax.
However, that change means that to collect the same revenue the income tax rates required to collect the revenue necessary to fund pensions and welfare payments increase which increases the incentives to find ways of avoiding higher tax rates. This is a vicious circle that tax authorities can never win because the benefits of avoidance - or exit - become so large. The trouble is that dealing with the problem means accepting that (a) there is a strict limit on the amount of redistribution that can be achieved via income taxation, and (b) the marginal economic & social costs of increasing redistribution via income taxes may be very high. Politicians don't want to hear that and tax authorities are inclined to say that it is not their job to get involved in such issues.
You don't have to look at the UK for evidence - it is even clearer in California!
Thank you Gordon. You have laid out in more explicit terms than I have seen before, the horror story of the obstacles to entrepreneurship in the UK. A rational, young, dynamic entrepreneur would surely look around for more favourable jurisdictions in which to start a business. In the somewhat unlikely event of a successful, growing and profitable enterprise, the UK would have lost out, once again.
You have also explained why investment in property has been so favourable, relative to productive enterprise, something I've been concerned about for many years.
I have little hope for change since politicians of various parties have for years done little more than tinker at the edges of a system in need of radical reform, nicely illustrated by the latest Spending Review. Anyone with a real desire to bring this reform about would require the courage to tell the electorate home truths most do not wish to hear, dooming their prospects. Perhaps things have to deteriorate to an Argentina-scale disaster before a Xavier Milei-like character emerges, and by the way, that is not Nigel Farage parading with a chainsaw.
I have seen close at hand what happens in countries where the existing economic structures collapse including Argentina, the former Soviet Union, etc. It is awful and I would not wish that on anyone. What is also awful is that the standard bleeding heart story is to blame nasty realists who say that things cannot or could not go on relying on endless charity or borrowing so that change was unavoidable.
The world is full of people for whom the ideas of realism, responsibility and competence are always relegated below having the right intentions. In the past, such people were not indulged because we did not have the resources. Today they are because the costs of absurd beliefs and policies are less obvious or can be borne (for a while) by rich societies.
….arguments I’ve been making (in less technical terms for years). The big question is to make them mainstream, indeed ‘orthodox’? Only then will the UK, absent the prevailing socialist domination, have any chance of economic recovery. Please keep your contributions flowing & ensure they’re copied to Conservative Central Office!
Little that I have to say is original but I hope that I can express arguments in ways that non-specialists find interesting and even convincing. I wouldn't place much reliance on CCO - they are a well-indoctrinated part of the blob, i.e. entirely focused not on what is true but on what is acceptable to say. Ultimately it is outsiders who have to insist that new ideas must be considered in wider public debates.
Dear Professor Hughes,
Since we (with Andrew J) discussed the misleading & inaccurate accounting behind ‘renewables’, the dial has unquestionably shifted (even at Conservative Central Office). I have similar, guarded optimism that, with further effort, we could begin to convince them on the merits of your work on broader economic issues (per ‘Repeating Old Mistakes’). It would obviously help if we could reference not just one reputable economist (you) but a number of them. Can you suggest other sound recruits? The next task, relatively easy if our approaches were credibly supported, would be to engage as many respected Conservative voices in the media, as possible (I can think of a good half-dozen to start with). Any help you can proffer….
Regards,
David Biesterfield
I would add one further thought. It is clear to anyone who looks that the UK state is on track to be eaten alive by the NHS. There is no chance that the current government can do anything about that because it is too much in the pockets of NHS staff. Anyone who aspires to political power in the 2030s should give up unless they have a decent story to tell about how to reform health care in England or the UK. This may be the live wire of British politics but without a better way forward everything else is almost pointless.
I think that this is very difficult. I am, because of personal circumstances, very reluctant to get involved in public debate beyond what I write and occasional private discussions. There are people like David Turver and Kathryn Porter who are both independent and very knowledgeable about energy but they have, I think, no interest in aligning with any political vision.
Beyond energy: In academia the Conservative brand is completely toxic, both because most academics incline left but also because of the general incoherence of the previous government and the extent to which it relied on an incompetent bureaucracy. In the UK it is necessary to start with structure and money to fund people to spend 2, 3 or more years to rethink what government does. As one example, I look at the Institute of Economic Affairs: what I see is a bureaucracy not a policy-oriented US-style think-tank. The harsh reality is that Conservatives, Reform or whoever have to re-establish links with serious thinkers outside the Westminster blob and, very important, play down links with lobby groups.
Great article Gordon. It’s difficult to think of any winner that government picked that came through. But very easy to list the many failures, diesel being greener as just one example. Given this situation why do governments keep making the same mistakes? Do they realise? If they realise - why don’t they care? Or are they simply just not very clever? Are we being run by morons who think they are geniuses?
It is the well-known Einstein aphorism about repeating experiments and insanity. Many policymakers desperately want certain things to be true, so if a policy doesn't work they tell themselves that it was done wrong or conditions were unfavourable or ... Belief/hope/desire are so much stronger than rational analysis. Of course, many are not very clever and some are worse, but even for the most clever the wish that things were as you want easily outweighs the quiet voice that questions everything.
I'm fairly sure that the Treasury's ideal scenario is where all money and income belongs to the State (ie them) and we are paid an allowance.
Does this sound familiar?
Tax authorities in rich countries are caught in a trap that is very hard to escape with radical changes to how states operate. Over time governments have wanted to be more generous to individuals and households on low incomes or with disabilities, pushing up the target minimum income relative to average earnings. Since it is costly to hand the money out via state payments and then levy income tax on those payments - e.g. paying the state pension and then taxing it - countries have raised the level of income that is exempt from income tax.
However, that change means that to collect the same revenue the income tax rates required to collect the revenue necessary to fund pensions and welfare payments increase which increases the incentives to find ways of avoiding higher tax rates. This is a vicious circle that tax authorities can never win because the benefits of avoidance - or exit - become so large. The trouble is that dealing with the problem means accepting that (a) there is a strict limit on the amount of redistribution that can be achieved via income taxation, and (b) the marginal economic & social costs of increasing redistribution via income taxes may be very high. Politicians don't want to hear that and tax authorities are inclined to say that it is not their job to get involved in such issues.
You don't have to look at the UK for evidence - it is even clearer in California!
Thank you Gordon. You have laid out in more explicit terms than I have seen before, the horror story of the obstacles to entrepreneurship in the UK. A rational, young, dynamic entrepreneur would surely look around for more favourable jurisdictions in which to start a business. In the somewhat unlikely event of a successful, growing and profitable enterprise, the UK would have lost out, once again.
You have also explained why investment in property has been so favourable, relative to productive enterprise, something I've been concerned about for many years.
I have little hope for change since politicians of various parties have for years done little more than tinker at the edges of a system in need of radical reform, nicely illustrated by the latest Spending Review. Anyone with a real desire to bring this reform about would require the courage to tell the electorate home truths most do not wish to hear, dooming their prospects. Perhaps things have to deteriorate to an Argentina-scale disaster before a Xavier Milei-like character emerges, and by the way, that is not Nigel Farage parading with a chainsaw.
I have seen close at hand what happens in countries where the existing economic structures collapse including Argentina, the former Soviet Union, etc. It is awful and I would not wish that on anyone. What is also awful is that the standard bleeding heart story is to blame nasty realists who say that things cannot or could not go on relying on endless charity or borrowing so that change was unavoidable.
The world is full of people for whom the ideas of realism, responsibility and competence are always relegated below having the right intentions. In the past, such people were not indulged because we did not have the resources. Today they are because the costs of absurd beliefs and policies are less obvious or can be borne (for a while) by rich societies.
Thank you for your further words of wisdom - much appreciated.