Britain's Great Leap Backwards
We have sold the family silver and are about to tear out the copper piping too. If we continue along our current path, Manchesterism may make this Britain’s century of humiliation.
We often hear the phrase ‘you get the government you deserve.’ I contend we also get the ‘economist we deserve’. Gary Stevenson is a symptom of the time we live in -- nothing more, nothing less. There is little appetite amongst the great British public for a thorough understanding of the structural problems facing the economy. In an age where many people get their ‘education’ from 20-second TikTok clips, we need to present a clear, concise message to counter the widespread simplification of taxes, wealth, and debt.
As Lord Hannan himself pointed out on a recent Economic Affairs podcast: “Two clicks can verify if [something] is true... and yet nobody wants to do those two clicks. They’d rather nurse their grudges.”
There is no ‘honest misunderstanding’ anymore, just people clinging to their prejudices. This is most exemplified in the wilful ignorance of senior political figures: “Bond Markets will have to fall into line.” It’s one thing when language like this is uttered by some bewildered backbencher; it’s another when you have incoming political leadership (Burnham et al.); stewards of this nation; throwing around pseudo-economic platitudes such as ‘good growth’ as serious policy points. How in God’s good name is this meant to encourage or entice investors? At a time when external investment is at an alarming low, companies are fleeing the London Stock Exchange, further prospect of tax hikes are already scaring investors, and now those same investors are worried that their ‘growth’ might not be deemed the right type; how does this inspire confidence?
For a man preaching ‘Manchesterism’ as the beacon to follow through Britain’s current Dark Night of the Soul, Burnham seems to conveniently leave out the importance of neo-liberalism in much of its success. As Maxwell Marlow from the Adam Smith Institute pointed out on his recent appearance on Radio 4, “What we’ve seen in Manchester is quite a lot of Neo-Liberalism. Removing a lot of regulations and obligations on developers, to build up the amazing skyline Manchester has now. He has removed much of the social housing requirements, the affordable-housing requirements; he has worked very closely with the private sector.”
Public ownership costs, or indeed the consequences of ‘greater public control’, are not being fully discussed. No one is thinking about the secondary effects of all of this. These are not long-term solutions, but band-aids on an already gaping wound. Reindustrialisation is being tossed about by figures (from most parties) as some sort of definitive answer to all our woes. The government has now fully nationalised British Steel, which, according to the National Audit Office, is already costing British Taxpayers £1.3m per day. It all feels a bit Groundhog Day?
Luckily, the Overton Window is starting to shift. It is most notable when you are witnessing bedfellows as strange as Tony Blair, claiming ‘the state is too big.’ There is now a huge opportunity for someone with the chutzpah to grab the bull by the horns and really push this message to the masses.
Now more than ever we need a bold vision. Many voted for Brexit with the vision of a deregulated Britain, a thriving economy free from the shackles of European overreach; one which could capitalise on our already comparative advantage of the services industry. Sadly, this never materialised the way many of us foresaw. But one can still hope that the baton can be picked up by those with the political will and daring to do so.
It’s important to note that London’s status is not fixed. Dubai was little more than a desert 50 years ago. Singapore was little more than a backwater. Cultural capital is important, but it’s not enough to ensure long-term prosperity.
Yes, stagnation is not a problem unique to this country. It’s an existential question nearly all Western democracies are currently racing to answer. But if we give up on growth, we give up on Britain. I am no economist and never claim to be; but anyone who can see past their own hubris should be able to realise the economic miracle that is the city of London. We need to build on this. Not try and rewire it. It’s about trust, simple as that. As a colleague from the IEA recently remarked to me - “there’s a reason why no one buys Zimbabwean bonds...”
The state is not merely underperforming; it is structurally imbalanced. If we fail to address this properly, we will prolong the current malaise we are in and deepen the risk that this becomes Britain’s century of humiliation. We have sold the family silver and are about to tear out the copper piping too.
Robert Dalton is an MA student of Modern History at King's College London, a former Conservative Councillor Candidate, and an incoming intern at the Institute of Economic Affairs.
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What I see here is something very evident in such discussions; conventionally educated people keep describing the problem - yet not one word about a usable solution. Again, as Steven Gresham Farrall, below points out, this is common to the entire Western economic model. What we all need to do is turn the clock back and ask the question, what single event occurred to bring about the constant decline of our economic model? So who am I to start down this road? What happened to me to bring me to describing a solution? And, yes, why is my work so invisible to economists? The fact is, today, no one must ever be credited with the ability to think; if their knowledge stems from outside of a university education. As such, economics is, as with many other areas of education; stuck inside of an invisible bubble deliberately created to try and maintain a monopoly of knowledge. Except that bubble has also caused an even greater problem; no one dare suggest an answer, unless the answer has been defined by a VERY senior academic. Again and again we keep hearing about peer review, while at the same moment, no one is allowed to state the obvious if it has not been so reviewed.
Result; everyone states what the problem is; rather than express a possible solution . . . that has not been given a review. Today the world of education is flooded out with so called educated that fear presenting a solution; for the even greater fear of being publicly humiliated by those that hold the purse strings; the peer reviewers. So much for short term employment contracts for academics! But I am NOT an academic!
To enlighten; for what it was worth, I am the inventor of the camera phone combined with navigation capabilities such as GPS. Never heard of me? No surprise there. What happened to me is integral to the reason why the western economic model is not working. First UK patent granted 1989, but being in Europe, I decided to file for Europe, only to discover that Europe required I abandon my UK Patent to allow me to file for Europe. Then I discover that I cannot afford to pay European filing costs and they in turn abandon me. By pure chance I had ticked a tiny square on a sheet of paper that, in those circumstances, allowed me to file for a US patent, but with no funding it took me until January 27th, 1998 to receive my first one: US 5,712,679 Jan 27 98; then later; US 6,181,373 Jan 30 2001; and later still; US 6,469,735 Oct 22 2002, and during this period, Japan granted me Japan Patent 2896930. But patents run out after 20 years from the first grant, 1989, so by the time I was trying my best to gain support in the US, my patents were worthless. The end result was by 2003 I very nearly ended bankrupt, living rough back here in the UK.
In 2004 I presented a 350 page report to the government titled; Evidence of due diligence in trying to raise funding for patents. That in turn got me interviewed by three bankers at the request of Eddie George, then Governor The Bank of England. Government came up with the concept of Venture Capital Trusts, and I could see that they will not provide a solution, so I came up with the concept of being required to create a river of jobs while pouring my drinking water into the sand . . . downstream of a gigantic financial dam without a spillway; so I titled my thinking vehicle; The Capital Spillway Trust, and then sat down and wrote; The Road Ahead from a Grass Roots Perspective, and then placed it up on my home web site https://www.chriscoles.com/page3.html
The underlying problem has been caused by the creation of the Financial Services Industry. The problem has been caused by creating an industry that is based upon an so called Independent Adviser holding the means to enjoy sic! their working income that derives from being able to ask their client to sign a piece of paper that allows the adviser to take control of the citizens savings; ergo, to allow them to pass those savings onto a so called "FUND". Indeed, I was offered the opportunity to join such a group of advisers and made the decision not to do so.
What has occurred is a classic example of unintended consequences; where once, before the creation of the FSI, a granny might have had a biscuit tin under her bed containing her savings, and she might have once bought shares in a small local start up business within her local community. Her investment paid for the early years of such a start up to cover all their daily costs until they reached profit, so the savings were her investment into the local community economy. If the start up failed her investment was not lost; as it has to be seen as her support of the local community prosperity. When sometimes the start up succeeded, it would go on to be accepted for listing on the London Stock market, which demanded certain essential attributes before such a listing; essentially that the management were honest, and managed the business in such a manner that now Grannies shares were sure to receive a constant dividend income.
That investment was always in a very real sense, a gift of surplus value towards the ongoing prosperity of the local community. It was never seen as a potential loss, as it paid for the many needs of the start up, all of which were also contributed by others within that locality, each earning their income as support for the start up.
Now, today, all of that has been lost. The headline no one wants to see is indeed very simple. All the savings of EVERY citizen is now in the hands of so called FUNDS, and we all see regular full page adverts in National newspapers telling today's grannies; how much interest they can earn from placing their savings into the fund. But that fund has no interest whatever in investing as shares in small local start up businesses. Indeed it has been made a possible crime to do so.
The end result is the entire Western economy is now grossly under capitalised. Instead of shares invested, you have to have sufficient asset, a home a good example, from which you borrow from a bank to fund your early years. So that loan has to be refunded, the initial investment always leaves that community, and is drained out by the bank. Again if the start up fails not just the loan, but now the value of the house is also removed. Every aspect of the funding of so called "Growth" is now designed to remove all immediate and future prosperity from the local community economy.
The Financial Services Industry has effectively de-capitalised the Western economy. Now, the entire savings of that economy is in the hands of so called funds, and not to forget that your financial adviser gains income from passing your savings onto a fund; indeed the incentive is to pass the savings onto a larger fund; ergo, those enormous funds now hold the majority of the Western economies savings; in turn investing vast sums into the top six companies listed in international stock exchanges.
Try reading Hussman, https://www.hussmanfunds.com/category/comment/
The entire western economy has now reached beyond the limits set in the 1929 collapse with every expectation that we are on the edge of the potential collapse of even greater proportions.
What needs to happen is that all nations seek the return of their citizens savings back into the hands of the saver themselves; alongside the closure of the financial services industry, and I do not need anyone here telling me that is impossible; UNTIL; after the coming collapse. But by then all those savings will be gone. The future of the Western economies is a certain complete collapse, followed by perhaps decades of horrific difficulties for everyone.
Peer Review anyone?
Why is this situation universal throughout The West? Maybe the common theme is the creeping socialism driven by the Fabian agenda and its consequential technocratic managerialism?