From the November 11, 2009 Daily Telegraph
November 11, 2009
by Irwin Stelzer
The good news is that a series of mistaken policies has brought Britain to a sorry pass. The nation's finances are a mess, with public expenditure out of control and taxes headed up from levels that already threaten to drive entrepreneurs to more tax-benign jurisdictions; the education system is producing graduates unlikely to be able to compete in a globalised economy; the financial sector is in disarray, and banker-hostility seems to dominate the policies of all political parties; immigration policy, designed by Blair & Co to remake Britain into a multicultural society, has succeeded in unleashing xenophobia; and invitations and thank-you notes had best be sent via email because the postal workers' union has decided that it is more powerful than Arthur Scargill ever was.
The reason that it is good news is that policies which produced this mess can be changed. We are not dealing with some historical inevitability, or uncontrollable tsunami that has devastated the economy, or a plague that has wiped out or debilitated a portion of the population. The policies man has wrought can be changed.
We have been here before, when the Civil Service believed its policy should be to manage decline in a way that prevented social upheaval. Then came Margaret Thatcher, policy reversals, and a period of growth that New Labour inherited, only to squander its benefits. In short, it is important to look not at what is, but at what can be for Britain, given sensible policies.
Remember, the British economy is the fifth largest in the world (rankings fluctuate a bit with exchange rate changes). It is home to either the first or second most important financial sector in the world (as a native New Yorker, I like to think that Wall Street tops the City in importance), a consequence of the fact that it lies in a time zone that makes it easy to do business anywhere in the world, and that its City folk speak the language of international business.
With a few aberrations here and there, its citizens and businesses benefit from the rule of law, something upcoming rivals such as China cannot claim. It ranks second in the world in the number of top universities, and its academics and politicians have won half as many Nobel prizes as the United States, despite having a population only one fifth the size, a number that holds even if we exclude the laughable Nobel Peace Prize from the count, and confine ourselves to literature, medicine, physics and chemistry.
Even in athletics, Britain matters, despite its reputation as a gallant loser concerned not with who wins but how you played the game: the UK won more medals in the 2008 Olympics than any country except the much larger China, US and Russia.
That Britain goes through long periods in which it fails to capitalise on these and other advantages there is no doubt – one need only look at the history of the past decade. But times they are a-changin', or so it seems, whether that change comes from a dethroning of Labour or a Mandelson-led realisation by Labour that change is necessary.
The dire fiscal condition can be changed, and the public sector brought down to a size that can be afforded, managed, and still produce the services to which citizens are entitled, given the tax burden they bear. With the possible exception of the Prime Minister, there is a non-partisan consensus that once the crisis is under control, if not before, the growth in public-sector pay and ongoing inflation of the workforce must end. Not easy to do, as successive governments in your country and mine have discovered, but a lot easier to bear than a visit from the IMF or a downgrading of the sovereign debt.
The post can be delivered, if the Government adopts policies that put the public interest above that of the trade unions. When the air traffic controllers in America went on strike in defiance of President Reagan, he fired the lot – and they never again worked in the public sector. Surely, finding competent replacements for mail sorters and deliverers is somewhat easier than finding replacements for air traffic controllers.
Yes, the education system is a mess. But we know how to fix it, drawing on schemes in America and Sweden that empower parents over the Ed Ballses of the world, and that allow teachers to enforce discipline and adopt learning methods appropriate to their students' varying needs and abilities. Yes, immigration has caused tensions, but that's because policymakers refused to realise that immigration without assimilation will give rise to dissatisfaction among native Britons, and that the skewing of the welfare system in favour of new arrivals will lead to anti-immigration sentiment. That sort of policy is not easy to reverse, but America's success at assimilating arrivals from all over the world suggests that policies that welcome those looking for a hand up rather than a handout are within the ability of man to devise.
There's more: keeping criminals in jail rather than on the streets, taxing pollution rather than work and risk-taking, among other things. All aimed at allowing British entrepreneurs and workers to use the advantages here for the taking. Decline is a policy choice, not a condition. So is prosperity.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.
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