If only The Observer would take The Observer's advice

Peter Preston has some useful advice for the economics editors of the nation:

And what are economics correspondents there for on the big budget outing? Not merely to take the latest Office of Budget Responsibility growth figures and turn them into a uniform tale of woe. As Alex Brummer of the Mail (and before that the Guardian) very reasonably pointed out, the OBR has “a flawed track record” on forecasting– and is glooming a damned sight harder than the Bank of England and IMF.

That may be right or it may be wrong. But the point of employing economics editors is to give the audience their own special take on Philip Hammond’s figuring, not to simply transfer pages of OBR (or indeed, extra-gloomy Institute of Fiscal Studies prognostication) into holy writ. Two questions matter most. Are we really in a hole this big? And even if we are, what can we do about it?

Quite so, at which point perhaps Preston would have a little word with Phillip Inman, the economics editor of his own newspaper:

Of course, this presumes that British businesses remain strong enough to benefit from their newfound freedom to trade with whoever they want.

If Fox had listened to the Bank of England’s chief economist Andy Haldane, he would know about the UK’s reliance on a small proportion of highly productive companies and the long tail of largely unproductive “zombie” ones that tick along without making much money or paying their workers much in salary, pension or other benefits.

All economies do that, it's only ever the top 10% most productive companies (or producers) which even try to export. Entirely understandable as mediocrity is generally available across geography. We also know what the solution is - lowering trade barriers. No, not to our exports, but lowering them to imports into the country. As the Treasury has explained:

In the long term, greater openness to trade and investment boosts the productive potential of the economy. Openness increases competition among firms, allows access to finance from abroad, improves the quality of production inputs, and creates incentives to innovate and adopt new technologies.

Indeed so, the cure for low British productivity is greater openness to trade, exactly what Liam Fox is suggesting. This is not a controversial point, this is simply the way that trade works. Might be useful for an economics editor, as Peter Preston suggests, to tell us all this, no? Mr. Inman?

Previous
Previous

Things not to do: Introduce socialism

Next
Next

A really interesting complaint about Universal Credit