There must be more to life than just balancing the books. Yet there seems to be a vacuum in government thinking about future growth and prosperity. Nowhere was this more apparent than on page 3 of the Financial Times of Monday 22nd November “Growth Master Plan Dropped for Lack of Content” was the headline. “Long Awaited White Paper Abandoned” was the comment. As the article explained the White Paper has been down graded to little more than a discussion document because the government did not have enough serious content to warrant it. How depressing!
Yet immediately below was a report on McKinsey’s report “From Austerity to Prosperity”. A report published that day. It listed seven priorities and how to tackle them. It concluded that if done properly tackling these priorities would enable the UK “To achieve robust long term growth leading to an economy in 2030 that is productive, broad based and resilient”.
What a contrast!
These priorities are not rocket science. They are in fact common sense actions dealing with raising productivity sector by sector, releasing more money to invest in the infrastructure, concentrating innovation in large clusters, the huge potential economic growth in education and health, giving cities much greater co-ordination and financial roles, facing up and dealing with the demographic challenge and generally making Britain a better place for business.
Being a consultants report its slays some sacred cows on the path to prosperity, but that is no bad thing. On the other hand it ignores several social aspects, but the politicians can fill that gap. You can read the paper via McKinsey’s website.
Another recently published paper which looks to future prosperity and chimes well with the McKinsey paper is Professor Helm’s paper published by the Social Market Foundation. His point is simple. Instead of saying all debt is bad and a burden on our children and grandchildren, we must differentiate between productive debt and unproductive debt. Unproductive debt is certainly a burden, but productive debt can be a blessing. Debt which is incurred for investment in our physical, intellectual and social infrastructure is not bad because we are bequeathing something better to the future.
Seems sense to me. So come on government. Stop being down hearted and let’s have some positive thinking about a future strategy for our prosperity. Even if the ideas are pinched from other people.
“Stop being down hearted and let’s have some positive thinking about a future strategy for our prosperity.”
Yes, but first lets look at each MP/peer’s career before they came to Parliament determine whether they represented revenue or cost to their enterprise? Let’s start with you: revenue? Lord Norton: cost? Baroness Murphy: cost? Business Secretary: cost. The Prime minister: revenue? And so on.
Perhaps some academic would care to make a list on this basis. I would wager that Parliament is filled with more cost than revenue especially in the Commons. The HoL is the same except that there are many like yourself that have some long experience in industry and business.
The academic might then ask an off the cuff question: what is the mark up price on 10 GBP to achieve a gross margin of 30%? Most would say I haven’t a clue I leave that sort of thing to the people in the back office to work out.
Other questions might be: I need to import iron ore from Africa what TARIC code should be used on the export documentation? How do I determine the import duty and VAT on the imported goods and what is a TARIC code?
In fact a Parliamentary workshop could be set up to manufacture a virtual mouse trap and then go through the varying stages raw material to resale. What legislative impediments has the EU put in the way of achieving this?
Has any of this got anything to do with Parliament?
Ref: Ferengi Rules of Acquisition
http://www.sjtrek.com/trek/rules/
I am afraid that all of us in Parliament are a cost.
“On the other hand it ignores several social aspects, but the politicians can fill that gap. “
There’s a wealth of information in that sentence; if only we could get to it.
“His point is simple. Instead of saying all debt is bad and a burden on our children and grandchildren, we must differentiate between productive debt and unproductive debt. “
Goodness me. If only someone had thought of this sort of thing decades ago. You could knock me down with a feather.
Somebody did think of this decades ago. Unfortunately it was forgotten and only now are we being reminded of it again.
“There must be more to life than just balancing the books.” A little off-message? No, wait a minute, Alan Johnson has just quipped about the down-grading of the White Paper (in his response to the Autumn Statement).
The McKinsey report might be summarised as a rejection of businesses that are British, rural, small, and a wake-up call to English students, the sick, the old, but a big yay to PFI. But that’s their job – why did the last government make it theirs?
PFI seemed a good idea at the time.
To who?
You do know that we can see your comments?
“We must differentiate between productive debt and unproductive debt.”
Any debt is a gamble, no one knows the future even the Banks who are normally good with predictions.
“Debt which is incurred for investment in our physical, intellectual and social infrastructure is not bad because we are bequeathing something better to the future.”
Not if something is missed or the structure is altered. You can become so indebted in one or two aspects that a third may well bring the house down, the straw and camel effect. Balance is needed and is something all Governments struggle with and will continue to do so.
You are absolutely right. Balance is everything especially now. But it needs to be tipped more towards investment.
The noble Lord is surely talking about national prosperity and not that of peers or MPs, whatever we may think, about their milking the system.
Unproductive debt is certainly a burden, but productive debt can be a blessing.
Productive debt is surely debt no longer, depending on how you do the arithmetic.
Prosperity of these islands today resides in the vast numbers of young people who have migrated from other countries,or regions, such as Poland and the Arab world to create a truly cosmopolitan nation state.
Few countries of the developed world are any different today.
They come because they recognise that the developed world exploits the underdeveloped
one, and they want to be in on the act.
Full marks for that.
The number of Mega metropolises in the world today including Quang dong in China and Sao Paulo in Brazil, and others in Africa Lagos…. surely only goes to show that prosperity is an absolute measure and not a comparative one.
Their mega metropolis is not as fine as our megametropolis by all civilized standards!
Certainly our future is with the young people here and elsewhere. They prefer to live in cities and I don’t blame them for that.
No ! Our future is what Labour spent and what the young have to pay for.
At least it’s all *somebody’s* fault! I was getting worried.
Quite. They have got in vast amounts of debt.
Even the civil service have lent the government their entire pensions to fund state spending.
That include the Peer’s “Attendance allowances”
Such a strange choice of words, you have to ask why they used it.
The answer is that they can’t be done for fraud when the check in, check out and do no work. After all, they attended.
There must be more to life than just balancing the books.
Complete codswallop.
The reason is simple. Currently people are paying money for services and not getting them. The government has huge debts to service.
As for economic growth being the solution, that’s a basic and straightforward lie.
The government cannot get it’s self out of its hole by growth.
It can only get its finances in order if it takes more in taxes. It’s growth in taxation that it needs, because its not prepared to stop spending.
Why pay 4, 5 or even 6 times the actual cost, because the government has run up huge debts?
The only reason is that politicians like yourself use threats just like the mafia to extract cash from people for these services.
Exactly what school of economics does that analysis come from?
Unproductive debt is certainly a burden
So what’s unproductive debt?
It’s pensions payments. That’s not producing anything. Out of the 6.8 trillion of debts, only 1 trillion is bonds. The rest is pensions.
Of the 1 trillion in borrowing, only a fraction is ‘productive debt’. Even that in lots of cases isn’t productive.
Here’s an example of what you probably think is productive debt. Crossrail. 16 billion, and interest bill of 3 million a day. For 150,000 passengers. Add on running costs, and the tickets are 20 quid per day. Will people pay it? Will they heck. So far from being productive, its destructive.
Ask the students. They are just protesting about a fraction of the debts the government has run up for them.