OPINION - Do voters actually want economic growth?

 (Ben Turner)
(Ben Turner)

There are so many books I want to have read: Middlemarch, Ulysses, Eat, Pray, Love – but cannot bring myself to read. Voters have a similar relationship with economic development.

People want to be richer, sure, but do they want growth? The author and blogger Chris Dillow doesn’t think so. In a post earlier this week, he reflected that there was “little evidence the voters want economic growth: they voted against it in 2010, 2015, 2016, 2017 and 2019.” Now, Dillow self-identifies as “one of Rutland’s most prominent Marxist economists”, so he is not necessarily a natural Tory voter. But his case is worthy of examination.

Dillow points out that growth creates losers as well as winners. That’s because its benefits are uneven, or only become apparent over time. So planning reform boosts productivity but hurts nearby homeowners. New companies threaten incumbents. Nascent industries may lead to higher unemployment in established sectors. Land taxes may be more efficient than business taxes but hurt commercial land owners. Rejoining the EU’s single market would boost trade but annoy leave voters.

In isolation, these may hold a certain logic, but the cumulative effect is damaging. It means we don’t do lots of things that we agree would probably grow the economy because they go against the interest of specific groups who hold political power. Especially those who live in marginal constituencies or are older and therefore more likely to vote.

There’s an element of loss aversion about this too. The term, coined by Daniel Kahneman and Amos Tversky in 1979, refers to people’s tendency to value avoiding losses far higher than making equivalent gains. So someone who loses £1,000 will experience more discomfort than the joy they would feel from gaining £1,000. Substantially more. The effect of this is that when people make decisions or evaluate risk, they typically must expect the upside gain to be significantly greater in order to even countenance any loss.

That is why successful opposition parties don’t simply offer change, but change without risk. But it also explains why we don’t pull a lot of the levers that might grow the economy or boost productivity – the things that actually make us richer. It’s a good thing that minority rights are respected, governments run consultations and periodically hold elections. But one can err on the side of sclerosis.

This afternoon, the BBC reported the government was expected to announce that sections of HS2 will be delayed to save money. Because delays to infrastructure projects famously cut costs. For additional background, about a month ago I dedicated a newsletter to the issues surrounding the UK’s inability to do big things including HS2.

Today’s decision seems to be less about the overall cost and more to do with fiddling the figures so the Treasury can meet its self-imposed targets by spreading the cost over a longer period. It’s easy to criticise this decision (fun, too!) But if voters don’t prioritise economic growth, why should governments?

In the comment pages, Andy Burnham, says more powers are going to cities: that’s good for London and the country. Prudence Ivey warns it’s not only women who deserve to pay what they can afford for housing — everyone does. While Suzannah Ramsdale is keeping a watchful eye on Keira Knightly and Care Mulligan on how to age.

And finally, did anyone else find season three of Succession to be a disappointment? Well, season four (coming 27 March) is set to be the last and to tide you over, we bring you the best lines and insults from the show.

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