Going South: Why Britain Will Have A Third World Economy by 2014, by Larry Elliott and Dan Atkinson, is a rattling good read.
The authors, veteran journalists on the economics and finance beat, are the Statler and Waldorf of the field. This book is a follow-up to 2007′s Fantasy Island – the new book has the same gloom about Britain’s economic prospects seasoned with a sense of satisfaction that events seem to have proven these pessimists right.
The thesis is straightforward: the UK is de-developing. Just as Argentina, which would have been in the G7 in 1945, has dropped down the world economic league table, so is the UK. The roots of the decline date back to at least 1914, although at some points the book seems to trace them to 1815 or even – I thought at one point – 1530. Young workers have inadequate skills, thanks to the failings of the school and training system, there is too little manufacturing industry, the infrastructure is decaying, finance has unbalanced the economy, living standards are declining and will do so for years more.
Interestingly, the authors focus on the malign role of the state in shaping this grim economic future. They describe the proliferation of rules and intrusive petty officialdom (a 600,000 increase in state sector employment between 1997 and 2010) as “enormously wasteful and inefficient” (p97) and speak of the “hostility by practitioners to public choice and involvement” (p112). The result is that “the state’s own enforcers are increasingly treated with the greatest suspicion.” (p117) and most people aim to avoid the attention of officialdom in all its manifestations. This, they argue, is undermining the rule of law in favour of the rule of personal connections. Hmmm, echoes of Good Italy, Bad Italy. Their prescription? Shed our illusions, stop daydreaming of a golden age (Downton Abbey, Call the Midwife), and recognise that the economic policy needed is a development policy.
Now, of course this is overstated – especially the decline of manufacturing - and the recent books Made in Britain by Evan Davis and The New Industrial Revolution by Peter Marsh offer useful balance. (Although it should be acknowledged that Elliott and Atkinson are in the distinguished tradition of Britain’s Economic Problem: Too Few Producers by Bacon and Eltis, which was big in my student days.)
Still, this is mischievous of me, but reading the book so soon after listening to Niall Ferguson give this year’s BBC Reith Lectures, the areas of agreement seemed striking. Although both contributions to the debate, Ferguson on The Rule of Law and Its Enemies, Elliott and Atkinson in Going South, overstate their case, both make some important points. The economic and political system as a whole is not working. This book exaggerates wildly – and very entertaining it is too – but they’re on to something.