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The not so big economy

27 September 2011 By Edward Hadas

Big society, economic rebalance, something for something. British politicians love slogans which suggest that grand change is coming. But for the economy, the announcement of 3,000 layoffs at BAE Systems, the UK’s largest manufacturer, suggests more of the same. The job cuts are justified by a decline in demand, and they suggest the nation’s broader industrial decline continues.

While the coalition government promised a new approach, it has offered more rhetoric than genuine policy novelty. Even without a recession and a financial crisis, it would be difficult to overhaul taxes and improve education and infrastructure. Opposition leader Ed Miliband, who set out his revival plans in a speech to his party faithful on Tuesday, would run into the same obstacles.

Decades of solid government policy can help build industrial economies, as countries from France to China have demonstrated. It is harder to reverse economic decline, but a decade of industrial decay in Germany was followed with a recovery, over two decades. Britain could do the same – although it has more than a century of relative industrial decline to overcome. It would take a decade for the required profound changes in education, the role of finance and investment behaviour to bear fruit.

Miliband, like Prime Minister David Cameron, wants to renew society as well as the economy, a project given new impetus by the summer’s looting. Both leaders and their successors could be inspired by a multi-generation Swedish anti-alcohol campaign in the second half of the 19th century. Consumption per person fell by 80 percent. But a similar effort in the UK, let alone a renewal of schools, families and civil society, is well beyond anyone’s political timescale.

Civilisations and economies cannot be built, undermined or restored over the five-year term of UK parliaments. If British leaders want to get anywhere, they must resist the desire to do something visible right now – whether saving jobs at BAE or automatically imprisoning young miscreants. Miliband and Cameron want the best for Britain, but they seem to want the best for themselves and their political parties even more. That is not the way to change the country’s direction.


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