In a recent piece Stephanie Flanders, the BBC’s economics editor, pondered how the UK economy could be adding jobs while, according to the figures, shrinking by 0.7% during the second quarter of this year. As she put it, this is a conundrum that “Britain’s finest economic brains simply cannot explain”. Well, I can’t explain it either.
But, perhaps because I’m not any kind of economic brain, I wonder if all this measuring and collecting of information now does as much harm as good. In one sense, of course, it seems obviously good that government collect data so it knows what’s going on. But that comes at a price: it encourages governments to tinker and interfere even more than they might already be predisposed to tinker and interfere.
That’s the subject of my latest Think Scotland column in which I raise a cheery glass to the memory of Sir John Cowperthwaite – the modest Merchistonian at least partly responsible for fostering the conditions for Hong Kong’s spectacular success – and wonder if we might learn something useful from him today.
Despite pressure from civil servants in Britain (and some within the colony’s administration too) the Financial Secretary [Cowperthwaite] declined to collect, far less publish, detailed economic statistics that would document Hong Kong’s economic progress. Doing so, he suggested, was nothing less than an invitation to mandarins and ministers to interfere with the workings of the Hong Kong economy. However well-intentioned those efforts might be, they could only complicate and confuse matters. At best, improvements in one arena might well come at the price of losses in another.
[…] Cowperthwaite was always endearingly modest about his record. “I did very little” he said. “All I did was to try to prevent some of the things that might undo it.” If only such modesty were more common! Instead it is depressingly rare.
It is not that Cowperthwaite’s 50-year old recipe for the Hong Kong would necessarily be applicable in every particular to the United kingdom today, rather that it would be pleasing if more politicians and civil servants had greater sympathy with the broader thrust of his views. There is wisdom in modesty.
Moreover, it sometimes seems to me that the economy is some kind of confidence game. It needs confidence to expand. Yet how can such confidence be built when ministers keep talking about the need to boost business and consumer confidence? That they feel the need to issue such exhortations is a signal that businesses and consumers should not feel confident. Otherwise there’s be no need for such boosterism. Similarly, urging the banks to “lend more” is an unwitting signal to the banks that they are right to adopt a cautious – perhaps overly-cautious – approach to lending. If the conditions for growth were present there’d be no need for ministerial chivvying.
Whole thing here.
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