The EREP network – Economists for Rational Economic Policies – has published its Review of the UK Economy in 2015, with a series of short articles focusing on different aspects. The Review argues (adopting an Osbornian “building” metaphor)
“As the year has progressed, the economy has slowed and regressed. The public finances are built on hopes and assumptions that appear to be fragile indeed, and economic activity in many key areas has decelerated whilst the property boom helps the asset-rich. The weaknesses in the UK economy are more and more apparent, like a building with a flashy design but poor construction. The cracks begin to show. Let’s hope there’s no earthquake coming…”
The report’s authors include:
John Weeks on fiscal policy
Ann Pettifor on monetary policy
Richard Murphy on taxation
Özlem Onaran on inequality and wage stagnation
Jeremy Smith on labour productivity
Andrew Simms on climate change and energy
Jo Michell on private debt
The full report can be downloaded here.
The EREP comments are largely justified but ignore the real causes of our economic problems.
Briefly, these derive from our history and heritage. In 19th Century Britain, a disdain developed for industry and trade. Post Marx, this was reinforced by moral disapproval of the selfishness of capitalism. Our cleverest graduates sought careers in the media, politics, civil service, the law, anything but manufacturing. Merchant or investment banking and stock exchange were the only business activities deemed acceptable.
It is not surprising that we have such a large current account deficit and low productivity given that so much activity is now distribution of imported goods. There simply are not enough firms around to substitute for imports, and generate exports and higher paid jobs.
I would appreciate it if EREP could devote some time to these basic problems. There are some encouraging recent developments. The UK seems to have become relatively strong in distribution and online sales. But this alone will be inadequate.