The Economy: The Problems

Great Britain, as it was then mostly known, was the leader of the industrial revolution. We assembled the largest empire in the history of the world, out of our ability to build ships and railways and every single component of both manufacturing and consumption. Self sufficiency and independence were a given.

Now, manufacturing accounts for less than 10% of our GDP. We have an economy dominated by domestic consumption, yet we import 90% of everything we consume. This blog is not going to plunge you into a blizzard of figures. First because there are now so many sources on line to provide every statistic which interests you and second because the problem is not the figures. They are the symptom. The problem is the structure.

Having shifted the economic activity from making things to services, we have forgotten to think about where the money comes from to pay for these services, whether  they are provided by the state or the private sector. As we ceased to generate enough new wealth (literally so when it comes to energy) we bridged the gap by borrowing. And instead of investing the borrowed money into new wealth creation, we used it to inflate fixed assets, primarily land and property.

Having set out on that dangerous course we convinced ourselves that we were becoming ever richer, with a new selfish ideology running into every stream of our lives, which gave the individual priority over the common good. This stoked a smouldering fire which burned through national assets,  shrinking the state, even though the population was growing. So now nothing works. Transport, the NHS, education, social care, the justice system, prisons, sewage, power, flood prevention, the list goes on, are all under invested and at breaking point

All of that can be improved with a fairer more enlightened approach to both analysis and solutions. But the structure will remain. And it is the structure which has enabled everything that has gone wrong. It is founded on the principles that the markets know best, central banks should set interest rates, borrowing by governments and individuals is the only way to expand, money can be printed almost on demand and the fact that both the pound and the dollar have lost over 95% of their value over the last sixty years is okay. In fact the rot set in when both currencies floated free of the gold standard in the early nineteen seventies.

We now have a stunted economy too small to fund the services and infrastructure of a modern state, cash starved in spite of almost the highest levels of personal paid direct and indirect tax in history. So to renew our economic model to one that fits the needs of the hour and equips us for the challenges of the future, which are many, is the number one priority.

What is truly shocking is that, so far, such a major refit it is not even on the agenda.