How to fix the UK economy

 

Photo by Alexander Grey on unsplash.com

Will Hutton seems to have a clear idea of what needs to be done with Britain. He has written his own book (Britain after Brexit, This Time No Mistakes), and as if this wasn’t enough, in a review of two titles addressing the same problem (Great Britain? How we get our future back, by Torsten Bell, and Left Behind, A new economics for neglected places, by Paul Collier), he made several specific recommendations for getting the UK economy to grow. I’m no expert in analysing the problems of the UK economy, but it’s interesting to see what others recommend. And, in all modesty, perhaps I can add a personal angle to the conversation.

Should we worry about the UK declining?

The first assumption seemed to be that the UK needed fixing. I was struck on a holiday to rural Portugal how wealthy that country had been to create so many lovely buildings (up to around 1800, as far as I could see) and yet how poor it was when we visited (this must have been around 2010 – things have no doubt changed now). If a colonial empire was really so lucrative, was there any alternative to economic decline once the colonies became independent?

What does nationalism have to do with it?

I was struck by the way all commentators agonized about how to improve the UK economy. Does it matter? There has been much talk in government circles about encouraging pension savers to invest in UK companies, something that seems to have gone completely out of fashion. But why should anyone invest in UK shares if the performance of the UK economy is so dire, compared to the USA? I read somewhere a figure of just 4% of UK pensioni funds invest in UK stocks, and I was surprised – until I read that Canadian pension funds have an even lower proportion of investment in their own country.

But let’s see the specific recommendations first to bring British economy back to life. I’ve based it on Hutton’s review of the two books, which usefully summarizes the main arguments.

Will Hutton seems to have a clear idea of what needs to be done with Britain. He has written his own book (Britain after Brexit, This Time No Mistakes), and as if this wasn’t enough, in a review of two titles addressing the same problem (Great Britain? How we get our future back, by Torsten Bell, and Left Behind, A new economics for neglected places, by Paul Collier), he made several specific recommendations for getting the UK economy to grow. I’m no expert in analysing the problems of the UK economy, but it’s interesting to see what others recommend. And, in all modesty, perhaps I can add a personal angle to the conversation.

Should we worry about the UK declining?

The first assumption seemed to be that the UK needed fixing. I was struck on a holiday to rural Portugal how wealthy that country had been to create so many lovely buildings (up to around 1800, as far as I could see) and yet how poor it was when we visited (this must have been around 2010 – things have no doubt changed now). If a colonial empire was really so lucrative, was there any alternative to economic decline once the colonies became independent?

What does nationalism have to do with it?

I was struck by the way all commentators agonized about how to improve the UK economy. Does it matter? There has been much talk in government circles about encouraging pension savers to invest in UK companies, something that seems to have gone completely out of fashion. But why should anyone invest in UK shares if the performance of the UK economy is so dire, compared to the USA? I read somewhere a figure of just 4% of UK pensioni funds invest in UK stocks, and I was surprised – until I read that Canadian pension funds have an even lower proportion of investment in their own country.

But let’s see the specific recommendations first to bring British economy back to life. I’ve based it on Hutton’s review of the two books, which usefully summarizes the main arguments.

Will Hutton seems to have a clear idea of what needs to be done with Britain. He has written his own book (Britain after Brexit, This Time No Mistakes), and as if this wasn’t enough, in a review of two titles addressing the same problem (Great Britain? How we get our future back, by Torsten Bell, and Left Behind, A new economics for neglected places, by Paul Collier), he made several specific recommendations for getting the UK economy to grow. I’m no expert in analysing the problems of the UK economy, but it’s interesting to see what others recommend. And, in all modesty, perhaps I can add a personal angle to the conversation.

Should we worry about the UK declining?

The first assumption seemed to be that the UK needed fixing. I was struck on a holiday to rural Portugal how wealthy that country had been to create so many lovely buildings (up to around 1800, as far as I could see) and yet how poor it was when we visited (this must have been around 2010 – things have no doubt changed now). If a colonial empire was really so lucrative, was there any alternative to economic decline once the colonies became independent?

What does nationalism have to do with it?

I was struck by the way all commentators agonized about how to improve the UK economy. Does it matter? There has been much talk in government circles about encouraging pension savers to invest in UK companies, something that seems to have gone completely out of fashion. But why should anyone invest in UK shares if the performance of the UK economy is so dire, compared to the USA? I read somewhere a figure of just 4% of UK pensioni funds invest in UK stocks, and I was surprised – until I read that Canadian pension funds have an even lower proportion of investment in their own country.

But let’s see the specific recommendations first to bring British economy back to life. I’ve based it on Hutton’s review of the two books, which usefully summarizes the main arguments.

First, the government must lead as a “public investor … so that it supports private investment”. That is easier said than done. Successive governments have tried public-private partnerships, usually with disastrous results. The present government is showing itself unwilling to take responsibility, for example, with the water industry, leaving it in private hands.

“Economic dynamism is linked … to socially cohesive societies”(these are Hutton’s words, although he is paraphrasing Torsten Bell).

 It doesn’t look like that in the US, with huge variations in income but vast wealth creation for some.

We need a regional policy to redistribute wealth. Easier said than done; I was in Boston, Lincolnshire, and I’m not sure what expenditure could change things.

“Destructive privatization has run riot” – “we need to change the fiscal rules so the government can borrow for investment”. Agreed, but the current government is not placing big enough investment in place.

Raising taxes, including council tax reform, increased capital gains tax, taxing electric vehicles. Unfortunately, the new government has already demonstrated that relatively small changes are greeted with screams of woe from the wealthy.

British companies must invest more, and they must invest in longer-term projects, not just for results in the short term. Great idea, but impossible to regulate by government.

Share ownership in UK companies should include a critical mass of influential owners, who can sustain the long-term strategy of companies. My reading of any investment is that sensible investors are in the minority. The majority are looking for a quick win, without any relationship to actually building the economy.  

Pension funds should be consolidated, so they can make some more risky investments safely. I’m not sure I am convinced by this argument. Pensions are not risky investments, for the most part, even without being consolidated.

More generally, he write about “contributive justice”, the idea that citizens contribute to a common purpose. Now, at the level of a residents’ association, there is plenty of scope to provide this kind of beneficial activity. But how can I contribute to the success of the town where I live? It looks to me as though this has already been established by central government bypassing local authorities, by setting up bodes that are not directly accountable to the electorate, but which benefit from central allocation of funds – the local example is the Greater Cambridge Partnership.

Does it fall within contributive justice to invest in UK stocks? Should I express my patriotism by restricting myself to a lower pension? This hardly seems a sensible option, either for an individual, or for a pension provider.

All in all, the views of the analysts and critics don’t appear to be stress-tested against the real world, where if you make the slightest increase in fuel duty, you are confronted by mass demonstrations that bring the country to a halt. There is no justice in this, but there is mob rule that you cannot ignore. So my fear is that nothing much will happen with all the above, and in the meantime, the rich continue to find out way of staying rich and getting richer – without any redistribution of wealth.

My 2024 books of the year

 

And the books keep piling up ... some of the books I haven't even started yet

2024 has been a good year for books. I’ve written separately about my two favourites, The Voices of Morebath, by Eamon Duffy, and Witold Rybczynski’s Home: a Short History of an Idea. Both these books continue to resonate several months after I finished them, the first helping to answer the question “What is religious belief and how was it manifested in the common people in pre-reformation England?”, and the second the equally fundamental question, “What does home mean now, and when did it start having the present-day associations we have with the term?”

More light-heartedly, the discovery of the year was E F Benson’s Mapp and Lucia (1931), a truly comic novel that had me in stitches. Perhaps it’s easier to write social satire about a distant generation to our own, but it certainly seems difficult for comic novelists to achieve with the present day (at least, if Nina Stibbe’s Reasons to be Cheerful and Hanif Kureishi’s The Buddha of Suburbia are typical). Benson is mercifully free of any self-importance, and his premise of elderly society women attempting to gain or maintain top social status in a provincial town is a perfect one: this is a novel of triviality, but written with such verve, and with such awareness of conversational put-downs, that you begin to anticipate the next social catastrophe. Elizabeth Mapp fails to respond to Lucia’s application for the annual art show, and whole chapters are devoted to the build-up, and consequence, of such a faux pas. It sounds insignificant, but in the hands of a skilled writer like Benson, who reminds me of Evelyn Waugh at his most satirical, it  has a glorious verve to it. 

I read that Miranda July’s All Fours, a novel that appeared on several critics’ books of the year, has comic elements, but for me any comedy was outweighed by the narrator’s monstrous egotism. Except, perhaps, for the joke that by the end of the novel, she hadn’t even reached the menopause she so dreaded. 

In complete contrast, Fin de Siècle Vienna, a series of essays by Carl Schorske, was heavy going (no reading aloud!) but rewarding. I bought it to accompany a trip to Vienna during the summer, and it added a whole dimension. I am no expert in the complicated emergence and fortunes of Austria-Hungary during the 19th- and early 20th centuries, and I needed to create my own notes of terms, people and events, to make sense of it, but it was worth the effort. Schorske has the knack of taking two historical figures, such as the writers Schnitzler and Hofmannsthal, and finding remarkable similarities and differences between them, such that these contrast build up an impression of the society and politics of the period. The crucial comparison is the essay on the Ringstrasse, the famous circular road around the historic centre of Vienna, and two of the urban designers involved in its construction, Camillo Sitte and Otto Wagner, the former a traditionalist, the latter a modernist. Similarly, Schorske’s chapter on the early years of the state of Austria finds unlikely parallels between three contemporaries, Georg von Schönerer, Karl Lueger, and the founder of Zionism, Theodor Herzl, as he charts the tragic decline of democratic institutions and thinking during the early 20th century. One of the most impressive tools Schorske uses is the apposite quotation. Quotes appear in one location, then are recalled in a different context where they become hauntingly significant. Thus, Hofmannsthal: “Politics is magic. He who knows how to summon the forces from the deep, him they will follow.”; or Freud’s “If I cannot bend the higher powers, I shall stir up hell” (the epigraph to his The Interpretation of Dreams, a quotation from Virgil; Virgil was referring to the River Acheron). A haunting book, Fin de Siècle Vienna depicts the steady descent of a nation to some of the most shocking events of the 20th century.

Of course, all my efforts at reading were dwarfed by Jane’s completion of A la recherche, by Proust, all seven volumes and 1.5 million words of it (not all in 2024, I hasten to add). I’ll leave to her the task of formulating a critique, and I look forward to it.  

The Future of Dinosaurs (David Hone), an interesting overview of the prehistoric animals, by an academic palaeontologist, was enjoyable, but read like a research proposal (“If only we had more specimens, more evidence”) rather than an attempt to tell us what we do know. Nonetheless, it contained some interesting details, when the author managed to get over his excessive qualification of results. Some dinosaurs had lips, but no ability to move them. We have more specimens of Anchiornis (a feathered troodontid) than any other dinosaur, but that doesn’t stop the world writing about Tyrannosaurus, with (according to the author) only 12 good complete specimens found, which means that a lot of what is written is guesswork.  

In summary, I’ve learned during 2024: something about dinosaurs, a lot about Austria-Hungary, the English Reformation, even something about the back-stabbing that takes place in a small English coastal town. But I can’t say I’ve learned much more about the menopause. 

Lucy Prebble, The Effect (Corpus Playroom, Cambridge)

 

Photo by Anna Shvets (CC0)

The Effect was great fun: entertaining (for the most part) to watch, with some good ideas. The plot is quite straightforward. Connie and Tristan, two twenty-somethings, have joined a medical trial which involves them being given increasing doses of an antidepressant drug. They interact, and the question is, is their interaction caused by the dopamine released by the drug, or is it a natural attraction?

That would be quite sufficient for a theme, but it’s not sufficient for a full West End play, which requires two hours. So the plot is, in my opinion, rather artificially thickened, to no great effect. The subplot is that the two doctors, one in charge of the trial (Dr Toby Sealey) and the doctor actually carrying out the trial (Dr Lorna James) had an affair some years ago. I found this subplot less convincing, perhaps because I was watching a student performance, in which the younger roles are always easier to cast than parts for 40- or 50-year-olds.

Prebble has a fine ear for dialogue, and writes some sparkling exchanges between the two young participants. It’s the classic contrast of higher-educated versus lower-educated, with all the corresponding differences in attitude and expectations, and performed brilliantly by the young actors, who are on stage most of the time. It reminded me of Shaw: the ability to construct a lively dialogue out of the simplest of scenarios.

There are some interesting puzzles to clarify, possibly just the clever decisions by the playwright to challenge your expectations. Of course the young man tries to get off with the young woman. Of course, the young woman is suspicious. But everything about the boy is not what it seems. He’s called Tristan, unlikely for someone from Wood Green in Essex, although it no doubt ticked a significance box for the author. More surprising, he turns out to be a believer in God, unlike her. And when rejected, he makes it clear that this is not a quick affair, but the love of his life. This is, for me, where the play begins to break down. I don’t see any justification for the two to stay together for life; I just can’t see it working. Where did eternal love come in? She has studied psychology and sociology, while he appears to be from the University of Life, although he is clearly an excellent learner.

The need to extend the play led to the introduction of some less essential material. Once the couple had got involved, their subsequent discussions were, for me, somewhat convoluted – what did they need to talk about? Even more cumbersome was the situation of the junior doctor, Lorna James. Whatever her background, her character didn’t quite gel for me, and it didn’t seem to matter too much to me if she did or didn’t resolve things with the older doctor.

The play throws in references to the ethics of medical trials (“you’re only interested in a side-effect if you can sell it!”), depression, and as I mentioned, attempts a subplot between the two doctors. But the main story is what gripped me. Its theme is summed up in a marvellous exchange between the two principals. She claims he is only attracted to her because of the drug. She says that if he were drunk and made a pass at her, she wouldn’t take it seriously. He replies that males only make a pass when they are drunk because they are too shy to open up normally. Of course, there is some truth in both arguments. Prebble’s achievement is to combine the two so that both are believable – until they fall in love for ever.