Mani Basharzad has a useful CAPX piece on how misunderstanding the nature of investment is a major reason why the UK Left fails to invest effectively. An old problem but the whole piece is worth reading as a reminder that voting for Andrew Burnham always had little chance of being a successful vote.
Burnham could turn out to be better than disastrously useless, but the political culture of his party does not offer much room for optimism. It never did.
What the Left doesn’t get about investment
- Left-wing economists conclude that government, through public spending, can simply increase investment and therefore create growth
- Investment isn't a magic variable that automatically creates growth simply by increasing it
- Politicians simply do not have the incentives to allocate capital in the most efficient way
Investment isn’t a magic variable that automatically creates growth simply by increasing it. As Andrew Lilico wrote, “Investment doesn’t create growth. It’s opportunities for growth that create investment.” Investment is not merely another variable in an economic formula that can be turned up at will. It is itself dependent on wider market conditions. What the UK faces is not a lack of investment but a lack of opportunities for investment, with the rhetoric of wealth taxes and exit taxes making investors increasingly uncertain about committing capital to the country.
This is one of the mistakes the Labour government has made under Keir Starmer: investment for the sake of investment. As Rachel Reeves declared, “The only way to drive economic growth is to invest, invest, invest. There are no shortcuts.” But when investment is not driven by market forces, it creates two phenomena: malinvestment and overconsumption. You may spend billions of pounds on Net Zero and create new green jobs, but that is merely the seen rather than the unseen. The unseen consists of the jobs that could have been created in more productive sectors but were crowded out by this policy.
9 comments:
The reason that Britain developed an industrial society is that men with a bit of spare cash saw the prospect of enriching themselves and their families in helping build new things like canals and then railways. They saw the future and thought " I will have five bobs worth of that ",buying shares in the new projects. No one gave thought to this will help the local economy and give jobs to the poor, it was simply a chance to make money' the jobs were a side benefit..
John - and over time, the poor became less poor until we arrived where we are now and ruling elites decided to forget the past.
So the poor combined, leaderlessly ... cue nasty pieces of work like Marx and Lenin, to compound the woes of the poor.
From an article about Labour "values" in the Spectator: "With the Labour party of today, their entire purpose is for them, high-status people, to spite and goad you and me, low-status people. " This includes 'toffs' and 'gammons' - and perhaps the Labour malice includes the trades and investments of such people.
And so Labour do not understand 'investment' beyond another club to beat those they hate.
James - and now they have invented woes to compound, and they do, they compound them like crazy.
DJ - "their entire purpose is for them, high-status people, to spite and goad you and me, low-status people"
Yes, it's a depressing thing to say, but it has to be said. The spite and goading have always been there, but not so endemic within government and not so systematic.
There are over 400 Labour MPs. The PM was on the brink of resignation and the 400 realised that not one of them was up to the job so they brought in Mr Blackshirt from Manchester.
I reflected on this and decided that it's a reasonable conjecture that I am not only better educated than every Labour MP but also, perhaps by a fair margin, more intelligent.
Might there be someone both highly educated and clever on the opposition benches? Not in the Greens or the Lib Dems or the SNP. Maybe in the Conservatives or Reform but if so they do a good job avoiding the limelight.
I'm not suggesting that education and intelligence are all that matters - far from it - but that a lack of any people with those characteristics must obstruct formation of a competent government.
dearieme - yes, reflecting on it highlights how weird it all is, as if the educated ability isn't there and they know it isn't there because it isn't that kind of career.
It isn't easy to believe that Starmer's failure taught them something they didn't know, yet the alternative seems to be a bombastic stupidity which is virtually universal within certain political parties.
All political lives end in failure - it's just a matter of how long and how self-inflicted.
DJ - yes, the opportunities must in many cases be worth the failure, or at least worth the risk.
Post a Comment