The mantra of the current government is growth, growth, growth, and it appears that there is no discrimination as to how it is achieved or where it comes from. I would contend that the last time the nation as a whole prospered from genuine growth of true value to the nation was during the Wilson government of the late 60s, fuelled by "the white heat of technological revolution". This was achieved along with a coherent strategy on domestic social reforms in education, health, housing, gender equality, price controls, pensions, provisions for disabled people and child poverty.
The Thatcher years saw significant growth and prosperity, but how and where was this achieved? Traditional manufacturing was decimated, and the ability of labour to demand better employment rights, pay and conditions was amputated by severely limiting the power of the unions. Entire communities outside of London and the South East were allowed to stagnate and rot. How, in reality, was that growth and wealth generated? Primarily by abusing a national asset in the form of north sea oil and gas, revenues used to pay for day to day expenditure rather than investing in the future for current and future generations. Additionally, selling the family silver in terms of nationalised industries and stock of social housing. The economic boom in the south was driven primarily by financial services fuelled by the irresponsible deregulation of financial markets allowing the investment arms of banks to gamble on their own behalf on the back of the retail deposits of the general population.
Then came the golden years of New Labour with the Blair and Brown governments. Whilst their achievements were many and to be applauded, their laissez faire approach to financial regulation and supreme arrogance on managing the economy, demonstrated by a belief that a Labour government could overcome the global economic cycle of "boom and bust", ended in Gordon Brown presiding over one of the worst global financial disasters of modern times. Exacerbated for the UK by a reluctance of Brown in particular to reign in the excessive greed and risk taking (with our money) by the proprietary trading arms of the once traditional solid boring retail banks.
Since the financial crash of 2008, successive Tory governments have not been able to generate growth in any significant manner. This is due primarily due to incompetence, the general malaise of the global economy, Brexit and the pandemic, probably in that order.
So what can the current government learn from history, and common sense? Primarily, that achieving genuine growth that is spread evenly across the nation is not as easy as ministers seem to imply. There is certainly no silver bullet. What is certain is that merely stating that growth is the governments most important priority will not get you to your goal.
Placing a heavy reliance on financial services and the boys in the city will be your downfall. Profits from financial services generate cash for a fortunate few, they do not add value to the nation, nothing of intrinsic value is produced or manufactured. Deregulation will lead you down the path of disaster, you cannot rely on the market to behave responsibly. Because the market is made up of a majority of actors who given the chance will behave irresponsibly, especially if they are gambling with other peoples money.
Our remaining national assets should be preserved and not sold off to the highest bidder, others repossessed. The revenues generated from these assets should not be used to service day to day government expenditure, but invested in infrastructure, education, technology and industry to preserve and generate wealth for current and future generations. The government pension fund of Norway stands at US$ 2.04 trillion; the purpose of the fund is to safeguard and build financial wealth for current and future generations based on revenue from Norway's oil and gas resources. Where is the wealth from the UK's North Sea oil revenues?
A common error by our government ministers when articulating their economic agenda on the airwaves is to label growth as an economic strategy. It is not; growth is an objective. An objective needs a coherent all encompassing strategy with integrated policies and work streams with measurable milestones to keep us on the right path to achieving that objective. Policies must deliberately target less wealthy areas of the country to level up the nation and provide opportunities for those who have been abandoned in the past. Investment in infrastructure education technology and a coherent industrial strategy are all precursors to generating growth that is sustainable, equitable and evenly distributed across the nation.
We are rapidly becoming a nation of consumers and not producers. We outsource our means of production to countries that have considerably lower costs for wages, energy and raw materials. So what is our industrial strategy? How will we compete on the world stage, what is our competitive advantage and how do we channel the nations resources to meet the challenges of a global economy. These are the questions that should keep our government ministers up at night and providing the answers is why we put them there.
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Johann Mendis is currently retired and living in Cheltenham. He is married with a son of 26 years. He has a degree in Accounting and a Masters in IT. Johann worked for over 35 years in the Banking industry in London and across the middle east and south asia region. He worked for Standard Chartered Bank, Arab Banking Corp. Barclays, and Ahli United Bank. Johann was specialised in change management, systems implementation and building high performance teams in specialised disciplines such as IT, Finance and Risk Management. Towards the end of his career he was heavily involved in special projects being program director for the implementation of multi million dollar Risk Management, Treasury and Financial systems.
When not watching sport on TV, politics and current affairs and reading consume most of Johann's time at the moment.
All blog posts represent the views of the author alone and not necessarily those of Mainstream.
