Sunak is far from what the UK needs

As Finance Minister and potential Prime Minister, Rishi Sunak He is a major figure in British public life. That is why his conference in MES (held every year at the Business School of Bayes) deserves attention. It represents your belief. It’s also pure and smart, but it’s a far cry from what’s required. Crucially, it does not encounter legacy failures Margaret Thatcher.

It’s been nearly 43 years since then Thatcher She became prime minister. The Conservatives were in power for 30 of those years and Labor for 13 of those years. But the New Labor Party has largely embraced the legacy Thatcher In matters of economic policy and state size. so what happened?

sonak He rightly points to stagnant productivity and asks, “How can we accelerate growth and renew productivity?” The answer is “new company culture”. But didn’t we have an entrepreneurial culture four decades ago? So what failed and why? How will it be different this time? It is disappointing that you did not address these obvious questions.

The sad truth is that the long-term track record remains lackluster. Let us compare the results of the United Kingdom with the results of our European neighbours, GermanyAnd the AustriaAnd the BelgiumAnd the DenmarkAnd the SpainAnd the FinlandAnd the FranceAnd the GreeceAnd the IrelandAnd the ItaliaAnd the NorwayAnd the HollandAnd the PortugalAnd the Sweden And the Switzerland. In 1980, output per hour in United kingdom She was fifth from the bottom in this group. In 2019, it dropped to 4th place (before GreeceAnd the Portugal And the Spain). Again, in 1980, Britain’s per capita GDP was fifth from the bottom. In 2019, it climbed to sixth place, ahead of GreeceAnd the PortugalAnd the SpainAnd the Italia And the France (Barely from the last state).

Given this poor record, the common places of Rishi Sunak On the wisdom of the economist Adam Smith They are empty. All of these high-income countries understand that open economies, the rule of law, and private institutions drive growth. United kingdomwhich has significantly raised barriers to trade with its major partners (with enthusiastic support from sonak), perhaps he is the least understanding of it. The Heritage Foundationwhich is a conservative think tank European Unionuntil determined United kingdom behind IrelandAnd the Holland, Finland, Denmark, Sweden, Norway, Germany And the Austria on the Index of Economic Freedom. Obviously getting close Adam Smith Britain’s exit from the European Union was not necessary.

Thatcherite politicians need to dig deeper to understand why the results are so lackluster. Many of them stress the need for a “lower tax economy,” including Rishi Sunak, but the evidence suggests that this is not so important, as wealthy self-interested people insist otherwise. According to the International Monetary Fund (International Monetary Fund), among these 15 countries, the tax burden United kingdom It’s third from the bottom. If high taxes paralyze prosperity, United kingdom He must be among the rich, but he is not. Finland, Belgium, Austria, Sweden, Germany, Netherlands, Denmark And the Norway They have much higher tax burdens and much higher GDP per capita. So, when sonak It states that he believes in “lower taxes”, he only utters an ideology.

This ideology has its costs. Distribution of household disposable income in United kingdom It is by far the most uneven of these 15 countries, according to the Organization for Economic Co-operation and Development (OECD).Organization for Economic Cooperation and Development). Moreover, this was also the result of changes in the 1980s, which were never reversed. When assessing the record, one also cannot ignore the financial crisis and subsequent austerity, both of which are ideological consequences. Margaret Thatcher.

These changes also had significant effects on the absolute and relative standards of living of the most disadvantaged groups. Not surprisingly, the years after 2010 saw first a stagnation and then a decline in life expectancy. This is consistent with the experience of the United States. Nor is it surprising that politics has shifted toward questions of identity, particularly Brexit, and away from prosperity.

sonak You are correct in saying that tax cuts do not pay for them. Also by emphasizing that current expenses must be paid out of current income. In this regard, he reiterates the view of his predecessors in the 1980s that public finances should not be sacrificed on the altar of supply-side tax cuts: United kingdom not European Union; However, initial common sense is insufficient. Yes sonak Wanting to be persuasive as a thinker of the present, he must deal more honestly with the past. Should show any parts of the ideology Thatcher It worked and which ones should be discarded. You don’t need to tell us the importance of the private sector; We already know that. It should tell us how it can improve, and how the public and private sectors can work together more productively in the future.

It would be unfair to say that sonak, like the Bourbons, have neither learned nor forgotten anything, but it wouldn’t be entirely unfair. You should think more.