How government makes us poorer

It is definitional that economic growth is the speed at which people do new things, old things in new ways or simply more things. That’s just what we’re totting up when we calculate the economy, how much is being done. Therefore economic growth runs at the speed at which people do new, old in new or more.

Government makes us poorer:

Jonathan Reynolds, who has returned to the role of business secretary under Andy Burnham, has indicated that the government is likely to water the mandate down.

“They’re waiting for the mandate, certainly,” Hawes said when asked about manufacturers’ plans. “There’s investment decisions on next model, next generation, which need a resolution, need an easing of the mandate.”

Everyone’s awaiting the political decision:

Carmakers are delaying final decisions to invest in UK factories until electric car sales rules are relaxed, according to the head of the British car industry’s lobby group.

Leave aside what is the correct decision here*. That the decision is delayed is what is delaying the investments. Thus economic growth is slower by the speed at which decisions are not being made.

Which is how a political and bureaucratic economy makes us poorer. The decisions about new, old/new and more run at the speed of political and bureaucratic decision making. Thus the speed of economic growth is slower, the future is poorer by that lack of speed.

We are reminded of a story - possibly apocryphal but we have been assured not - about Your Party, where they had a 6 hour meeting in which everyone had their say and not one single decision was actually taken. An economy enjoying that sort of direction is going to be much poorer than one in which people are able to do things.

It’s the very process of government considering who may do what which makes us poorer.

Tim Worstall

*Our own decision would be anyone can make what they like, as can consumers then buy or not what is made. Any thumb on the scale should be on the emissions, therefore the carbon tax which, as we’ve noted before, is already at the correct rate in the UK for road transport. But that’s our decision, not what is relevant to the point being made above.