I love the Coalition

It’s fashionable just now to hammer the Coalition government from all angles. The Telegraph tendency is almost as vitriolic as the Balls brigade. But I love the coalition, and in particular its economic policies.

Forget the debt crisis. In the end we’ll pay off enough of it, through a combination of default and cuts, so that growth will resume (if it hasn’t already – see previous blog). But Britain’s main economic problem is not debt or recession, but it’s money-sapping, inefficient, strike ridden, low quality, monopolistic public sector.

Effectively about 35% of our economy is run on communist lines. That’s why the Thatcher reforms, concentrated as they were on the small segment of the economy that was both commercial and state-owned, had such a small impact on our growth rate. They left the whole health / education / welfare edifice untouched.

It’s also why continental countries, which traditionally have higher tax rates than Britain, often perform better economically. They never communized half their economies like we did after the war. Tax rates are only half the story. A high tax country that recycles the cash to people to spend as they want is going to perform better than a low tax one that pours it down the drain.

The Coalition is the first government since 1945 to tackle this problem. It’s de-communising the state sector in England, and this will have a dramatic effect on future prosperity.

For more detail on my love-in with the Coalition, see today’s article on the Think Scotland website!

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2 Responses to I love the Coalition

  1. Jean de Bolle says:

    Your uncompromising take on the UK economy is both insightful and to the point. I wonder however if some of the simplifications and generalisations make it open to a valid counter-attack and therefore weakens somewhat the underlying argument in favour of smaller government, to which I also subscribe. Take the NHS for example. Although I have not checked the latest numbers, in Britain we spend something like 9% of GDP with helthcare while in the US, they spend something like 16% of GDP. if you take account of the fact that GDP per capita is higher over there, it means that they spend at least more per person in the US than we do in Britain. And I know where I want to be when if and when I need serious medical treatment! So to say that helth provision in the UK amounts only to openning and closing holes is somewhat far fetched to put it mildly.

    • tdpcm says:

      True, but the analogy was not with the US, but with continental Europe, where you have market-based health systems that are funded, but not run, by the state. Productivity in that part of the economy is far higher than here as a result.

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