Just a little note for the Resolution Foundation's national conversation

The Resolution Foundation has taken upon itself the task of guiding a national conversation about how the British economy should develop in the coming years. We are, as you all know, somewhat sceptical of the value of such national conversations about the economy. We regard the economy we’re going to get as being the outcome of individual actions, not something produced for us by a few meetings and mutterings among the Great and the Good.

However, as a matter of politesse and even good cheer a little note of advice for them. In their opening report they insist that:

The UK’s changing place in the world will require a major reallocation of labour and capital, away from the sectors that are no longer competitive in EU trade, and towards the domestic market and non-EU trade. It is critical for UK prosperity that the new jobs and firms that emerge are productive, thereby enabling the UK to remain internationally competitive and supporting the living standards of UK residents.

We agree, obviously we do, jobs should be productive. The test of this being whether the output from the job being done has greater value than the cost of the inputs into the job being done. That is, if there’s a profit - and there’s no insistence here that said profit has to flow to a capitalist, this is just the observation that profit is the excess of value produced over the cost of production - then the job is productive. If there isn’t, if subsidy is required or losses are made then it’s an unproductive activity and thus job.

As to how we get such productive jobs the only known method is a free market economy where entrepreneurs are allowed and left the room to try things out. Top down planning does not produce them - as looking east from the Brandenburg Gate in 1989 showed us all. Further, the competition in a market economy, and from outside it in the form of potential imports, is exactly what raises that productivity over time.

That is, we entirely share the ambition of productive jobs. We just insist that the gaining of it requires very much less guidance by the Great and the Good sitting in committees and rather more economic liberty. But then we would say that, wouldn’t we, and the Resolution Foundation wouldn’t.