January 10, 2022 - 11:42am
Lord Frost — the ex-Brexit minister who staged his own exit before Christmas — is now telling the Tories what to do in an interview with the Mail on Sunday.
The way forward that he advocates is in fact back to the 1980s and the Thatcherite golden age: “We need to get the country going economically again and that means free markets, free debate and low taxes.”
He’s certainly right that we need to get the economy going again, but as part of the “free debate” about that, I wonder if he has any explanation for this:
The UK's productivity performance between 2010 & 2019 in international context: in the OECD, only Greece & Italy did worse. pic.twitter.com/dvGNcBraPr
— Richard Jones (@RichardALJones) January 7, 2022
It’s a chart tweeted out by Professor Richard Jones — a scientist and expert on innovation policy, whose work has influenced Dominic Cummings among others. What it shows is that the UK has suffered a productivity crisis. From 2010 to 2019 only two OECD nations have done less than Britain to boost labour productivity — Italy and the special case of Greece (which had an economic meltdown during the Eurozone crisis).
It’s an abysmal record, and if we’re serious about turbo-charging our economy then this is where we need to start. Furthermore, if free market Right-wingers want to us to follow their prescriptions, then they need to explain why less economically-liberal economies like France and Germany have managed to out-perform us.
Frost also criticises the UK government’s net zero policies — an attack amplified in an op-ed from Andrew Neil, also in the Mail on Sunday. But investment in clean technology doesn’t seem to have done super-green Denmark — close to the top of the productivity league table — much harm.
In fact, the Danes are only beaten by two countries: Ireland and South Korea. The Irish model can be dismissed because the Republic’s GDP figures have been distorted by tax avoidance schemes. The Koreans, meanwhile, have benefited from an ambitious, hi-tech industrial policy.
As Ben Houchen — the Conservative mayor of Teesside — argues in a piece for The Times today, the new Tory voters of the North and Midlands want to see that sort of ambition from the British government. Therefore, Boris Johnson and Rishi Sunak have a big decision to make: whether to prioritise tax cuts or the strategic investments of the levelling-up agenda.
Of course, what Lord Frost and his allies would argue is that lower taxes and reduced regulation is how we create the conditions for wage-boosting investment. But if that’s true, then why hasn’t the UK’s liberal economic model solved our productivity crisis?
Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.
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SubscribeThere are huge debates about how/whether these GDP figures relate to genuine productivity.
Linking Lord Frost to this issue seems absurd – a classic example of lazy click-bait.
How about citing some theories instead.
I cited a theory below – the one which says money loaned into existence must be productive money if the economy is to prosper as speculative money loaned into existence will just prove Gresham’s Law, (“bad money drives out good.”) in a rather cool modern way of Fiat paper, rather than precious metals, but same thing, debasing currency…
But no one either understood, or disagreed, or knows as much of finance as a rabbit…. zero up or down votes…. Also it is 100% true about the banks in Germany and UK, and how this leads to Bad Money loans in UK, and Good Money loans in Germany.
Now if this article had been about Middle Aged women and Third World Sex Holidays it would have 140 posts and hundreds of up/down arrows…..
https://www.investopedia.com/terms/g/greshams-law.asp.
We have low productivity because we have deliberately chosen a low wage low impact economy based on bringing in cheap overseas labour.
It is our free market that has created that.
Lord Frost for PM.
I can never understand the productivity issue in the UK. Anecdotally I see we’re doing ok relative to everyone else overall, but the productivity data always shows us to be massively underperforming. Is this data reliable?
I have spent many years trying to measure the productivity of the teams I manage (software development). I have come to the conclusion that, beyond easy-to-count manufacturing or agricultural activities, it is impossible to do.
So I have zero faith in productivity stats.
Definitely not reliable at all.
Productivity is basically GDP divided by population. The idea is to calculate how much “domestic product” is produced by each person. If it’s going up it means each person is producing more, probably through better technology.
Thus to have confidence in this stat we must believe two things:
We know for a fact that (2) is false. If you’ve follow the Daily Sceptic then you’ll know that there’s been a long running argument about the validity of the UK’s vaccination statistics. At some point Will Jones over there started reporting the UK HSA’s unadjusted vaccine effectiveness figures, and calculating those requires knowing how many people are in the country.
At this point Full Fact jumped up and embarrassed themselves by “fact checking” Jones by claiming he was wrong to use NIMS numbers as a measure of population and should be using the UK ONS stats instead. Problem 1: it was the HSA’s choice to use NIMS population data, so Full Fact should have been “fact checking” the government. Problem 2: the HSA had a good reason for ignoring ONS stats. In some age groups more people had been vaccinated than the ONS claimed existed in the country at all.
In other words, the official UK population statistics are wildly wrong to an extraordinary degree.
To believe UK productivity stats have any meaning you must believe that despite being completely unable to count how many people are in the country, the government is nonetheless able to accurately do the much more difficult job of finding all the people and adding up how much they’re producing. But that’s implausible. Population is a much simpler and tighter defined number than GDP is.
Thanks Norman, I didn’t know this debate was going on (I am a supporter of Toby Young’s Free Speech Union and shall check out the Daily Sceptic more often).
It sounds right to me though – it was only six months ago when we discovered that despite the upper limit of EU citizens in the UK being officially 3m, 6m applied for and got indefinite leave to remain. If you assume that not every EU citizen living in the UK applied, that would make the number what? 9m? 12m?
And that is just EU citizens. I remember during the referendum seeing figures that the number of new NI numbers being issued every year was treble the number of immigrants captured in the official stats.
In 2011 someone in the business told me that even though the official population was 64m, the supermarkets budgeted for 70m people living here in their planning. I wonder what it is now that the official pop is 68.5m. 75m?
NIMS versus ONS
The latest available ONS figures are based on the 2011 census, adjusted for births, deaths and estimated migration. NIMS figures, which are used in planning the vaccination programme, are based on GP records…..The ONS figure is for mid-2020 and so doesn’t capture the large number of excess deaths we have seen during the pandemic. Meanwhile, NIMS data can count the same person several times if they have changed GP practices but still appear on the books of their old surgery. And both sources are unlikely to fully capture the effect that both Brexit and the pandemic have had on migration.
How these imperfect data sets have been used to mis-interpret infections in vaxxed and unvaxxed explained here :
https://theconversation.com/covid-19-why-infection-rates-among-double-vaccinated-older-adults-look-worse-than-they-are-167836
and similarly by the Actuaries, for hospitalisatione here :
https://www.covid-arg.com/post/vaccine-effectiveness-and-population-estimates
Denominators count. Roll on 2021 census data due this spring !
Maybe the best way to approach this issue is indirectly via training, ambitious infrastructure goals, business friendly tax and regulation policies. Also, the UK has a comparative advantage in energy resources: the governmùent should be out and about opromoting the development of these resources.
“Furthermore, if free market Right-wingers want to us to follow their prescriptions, then they need to explain why less economically-liberal economies like France and Germany have managed to out-perform us. “
Banking. Money is created when banks loan. UK with its Mega Banks cannot be bothered with small business loans. This is the key in increased GDP.
Big banks want big loans, and real Estate loans – not some builder wanting a couple hundred thousand for a new earth mover – or a machine shop wanting to get a new line of machines for a couple hundred thousand. Germany specializes in small, local, banks who do exactly this, by knowing the local conditions and people.
The only way a economy prospers is when loans go to buying things which increase productivity – like plant and equipment, not just huge banks making loans to corporations so they can buy back stock and such finance Cr*p – or ever increased real estate loans at lower interest so the property market can form huge bubbles in price…That debt produces no productivity, just a drain.
Banks need to make loans for productivity for productivity to take place. This is not happening as the British Banking is just classic Finance Game Playing Banksters, instead of vehicles of productivity.
So crass not worth commenting on
Another day, another Tory boomer who wonders why we can’t just play the greatest hits of a woman who left politics 30 years ago and died almost a decade ago, one more time. I thought Corbyn was the throwback?