Before Christmas, John Fingleton tweeted a link to a talk by John Kingman, outgoing second secretary of the Treasury.
In the speech [here] Kingman reviews what the Treasury had achieved to improve the performance of the British economy over the decades since Nigel Lawson’s 1984 Mais lecture, which argued for a switch to have microeconomic policy seek to promote growth (supply side) and macroeconomic policy control inflation (demand side), a reversal of the post-war policy. He estimates less than 10% of Treasury staffing was subsequently devoted to supply-side policy and the talk discuss the institutional challenges of internalising the new supply-side role.
He reckons the successes of supply-side policy were in
– fighting bad ideas (“God’s work”): not to prop up failing industries
– labour markets: improved ratio of job losses to output loss
– competition policy: the 2002 Competition Policy and the decisions to introduce criminal penalties for cartels, and to take Ministers mostly out of merger decisions (Ministers are mostly captured by sectors whose names appear in their departmental title)
– science, innovation and universities; he points out that the UK has far more top-ranked universities than all of the rest of Europe and the whole of Asia.
Where does he see remaining supply-side problems? In
– planning and housing, where the public has not been persuaded to modify land policy
– education and skills (other than elite universities) where spending is high but outcomes “mediocre”
– the “absurd cost” of infrastructure: he doesn’t use this example but the cost of an additional runway at Heathrow exceeds that at Dublin by a factor of one hundred! (€0.25bn versus €25bn.)
– (obviously) migration.
In discussing the failures, Kingman distinguishes areas where the solution is known but the public has not been convinced (planning, migration), and ones where the ways to ‘crack’ the problems are just not known (effective non-elite education, distinguishing between investments that will prove to be grand projets rather than plonkers).
A comparable review of policy successes and failures Ireland would make for valuable reading but, at a high level, some of the UK’s successes are patently not ours (elite universities, vigorous competition enforcement – tackling ossified oligopolies), while some of their failures may have been avoided here (migration) to date. How to fit the enclave MNC sector into an evaluation is not clear. Lots of supply, albeit exaggerated, but possibly disguising problems in the non-MNC economy.
PS Some similar themes (from a regulatory perspective) were discussed by John Fingleton in a talk last December to the IIEA here.
