Winning kick: British political economy


MOST COUNTRY proud of their thriving industries. Olaf Scholz, the new German chancellor, organized a rally for Volkswagen workers, ignoring a decade of corporate wrongdoing by the automaker. After his Minister of Health suggested that he soften the wine, Emmanuel Macron bragged about having drunk it for lunch and dinner and shuddered at the idea of ​​a dry January.

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In Britain, politicians take a different approach, ignoring, despising or even actively despising the more prosperous sectors of the economy. Everything from banks to universities is disparaged. Two centuries ago, David Ricardo proposed the notion of comparative advantage, according to which countries should focus on producing goods and services in areas where they are relatively efficient. British politicians have turned the tide: comparative disadvantage is all the rage.

Part of the problem is political geography. Take London. Over the past three decades, it has grown from a shrinking envelope to a global power. His productivity means he pays 36 billion pounds ($ 49 billion; 2% of GDP) more in taxes than it recovers in public expenditure. Boris Johnson, the Prime Minister, and Sir Keir Starmer, his Labor counterpart, both have seats in London. But they keep quiet about it, except when they swap beards. “You can take Islington’s lawyer out, but you can’t take Islington out of the lawyer,” Mr Johnson once said. In fact, Sir Keir does not live in Islington, but Mr Johnson did for many years.

Both sides are desperate to avoid being portrayed as metropolitan. Lisa Nandy, Labor’s shadow minister for ‘leveling up’, frequently laments high investment in cities, saying regeneration in Manchester has failed to boost her constituency Wigan. But wealth was flowing from London to Woking in a perfectly efficient manner. The problem isn’t that places like Manchester look too much like London; it is that they are not yet enough like London, with too little wealth to spread. But now that the frontline of British politics is in the cities, such arguments fail. Politicians do not follow growth, but vote.

If the cities have fallen out of favor politically, the City has fallen the most of all. Financial companies have few political friends. As mayor of London between 2008 and 2016, Mr Johnson was a bank booster; as prime minister his government is an enthusiastic critic. The financial sector has been sacrificed during the Brexit negotiations. Virtually none of his requests have been met. Again, negativity crosses party lines. Labor is nervous about Tony Blair’s business model of being intensely relaxed about people getting very rich as long as they pay their taxes. Gone are the days of fostering prosperity and sharing the gains.

One of the reasons Britain’s strongest professions struggle to make their voice heard is because they fall on the wrong side of the ‘Richard Scarry rule’. Named after the beloved author and illustrator, this warns politicians against brawls with workers depicted in children’s books. Thus, fishermen will always find political allies; traders, lawyers and management consultants will struggle. The best-known reference to lawyers in English canon comes from “Henry VI”, where one character suggests that the fastest way to improve the country would be to kill them all.

Another is that when it comes to economic matters, British politicians can be puritans. They seem to think that the country’s thriving creative industries are not serious enough to deserve praise. They talk about Premier League football as if it is just a den of inequity, rather than Britain’s most powerful cultural export. Video games are seen as a hobby rather than recognized as a national strength. When Nadine Dorries became secretary of culture in 2021, her main qualification was a desire to put the boot on the luvvies. Similarly, politicians seem to view culture as easy and industry as difficult. It sets things back. Any major European country could host a Nissan plant. But few could conceive ITVthe tea time quiz, “The Chase”, which was a worldwide success.

Higher education is one of the few areas where Britain can truly claim to be, in Westminster’s peculiar vernacular, ‘beating the world’. But the sharp increase in the number of students going to college is a sign that commentators (with degrees) are wringing their hands as if three more years of study in 80 years of life will lead to decay. If the effort to reduce student numbers is successful, it will be the University of Bolton that cuts its enrollment, not the University of Manchester. For a government determined to level up, to decouple opportunity from geography, this is a bad idea. In a place like Teesside, the new Freeport can grab headlines and be graced with visits from politicians in high-visibility jackets. The expanding university, which has helped stem the region’s decline, is sometimes overlooked.

Many of these factors are longstanding – and indeed Britain’s star industries may have flourished in part because of political neglect, rather than in spite of it. But Brexit tore up its economic scheme. Universities, financial and legal firms, and creative industries have been boosted by EU members, and no party has identified a replacement. Many voters don’t seem to care. About two-thirds of retirees backed the Tories, who promised a hard Brexit, in the 2019 election. As did nearly 60% of people who own their homes. To someone without a rent or a mortgage and with an inflation-indexed pension, it might seem little concern that Britain’s strongest industries are fading.

Safety helmets against mortars

Indeed, the comparative disadvantage has its fans. Politicians kick winners because they think it will be popular. After all, bankers deserved the shame after the financial crisis. And man cannot live on quizzes alone. If a voter’s town is in trouble, it’s easy to blame a prosperous London. Many felt that the old system was not working for them, so politicians stood on a platform to break it. The British economy was unbalanced. But it is easier to correct weaknesses if you also play with your strengths. ■

Read more from Bagehot, our columnist on British politics:

Liz Truss declares the end of the era of introspection (December 18)
Britain’s New Suburbs Are Special Places (December 11)

Jordan Peterson and the Lobster (December 4)

This article appeared in the Great Britain section of the print edition under the title “Kicking winners”


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