Britannia Unhinged

Paul McNamara is an investment director at GAM Investments

There’s a fellow called Telfer who makes more pork pies than anybody else in the bloody world, old boy. So the Americans went and asked him how he did it — incentive schemes, graduated bonuses, productivity scales, vacation benefits, you know the kind of thing. “No,” he kept saying, “no, I never do anything like that, no, I just let ‘em turn the bloody things out as best they can. Oh, now I come to think of it, there is just one thing — every so often I goes down to the yard and I bawls, ‘Faster, you fuckers!’”

Terry-Thomas, as quoted in Kingsley Amis, Memoirs (1991)

As far as the authors of Britannia Unchained are concerned, it appears that this is not so much an amusing anecdote as a prescription for what ails Britain.

Crediting the UK’s new prime minister and chancellor as authors alongside former ministers Priti Patel, Dominic Raab and Chris Skidmore, the book bills itself as a diagnosis of where the UK has gone wrong as well as a prescription of how to fix it.

First, the authors outline what they see as “the chains”. These do not include the country’s financial elite, nor the small group that controls the bulk of our media. Instead, “bureaucracy”, laziness, an excessively comfortable welfare state, lack of ambition and lack of appetite for hard work interact to produce a country that is stuck in decline.

The book was written in 2012, and while it is hard for policy prescriptions to stay current for a decade, the models our leaders looked to have not aged well. Brazil (optimism, apparently) finds itself up with Canada and Australia. The shining model for business is . . . Addison Lee, the London-based cab company. Less than a year after publication Carlyle had bought Addison Lee and was loading it with debt as Uber ate its lunch.

When it comes to economic principles, attention to detail is lacking. The ten years that have elapsed have apparently not been enough for the publishers to correct the prominent reference to Reinhardt and Rogoff’s infamous finding, based on a spreadsheet error, that high debt takes 0.1 per cent a year off GDP growth. Perhaps reflecting a discomfort with numbers, Britannia Unchained upgrades the growth penalty to 1 per cent.

An exhaustively (and exhaustingly) repeated point that low government debt promotes growth is based largely on Canada, with a brief shout-out to Australia, but neither country’s high immigration rate is noted. Nor is the importance of their relations with the US and China respectively. There’s an almost sweet reluctance to acknowledge the value of being able to sell certain goods and services into a large market on your doorstep.

Anyone with any empirical knowledge of Canada and Australia knows that their fiscal strength is associated with very fast credit growth. Credit booms are always associated with fiscal strength — until they end. Yet the authorial Fab Five can admire Canada’s fastest-in-G20 property price growth without noticing the housing bubble.

More problematic yet are the repeated references to productivity without any visible understanding of what the term means. As an example, French labour productivity is much higher than in the UK. But high French labour costs make investing in capital (ie, machinery) more sensible. Economists have coined the term “total factor productivity” to discuss such issues. But maybe a person can leave an Oxbridge university with a PhD in an economics-related subject without coming across the fundamental concept.

It’s the central chapters, on effort and entrepreneurship, which give the strongest impression that our current leaders don’t like us very much.

Strong family ties and obsession with work in China (or Asia; the two are used interchangeably) are cultural, apparently, not the result of a weak to absent welfare system. The prose sometimes lurches into a rant, such as around how British kids want to be pop stars while their Asian counterparts want to start tech “unicorns”. The fact that Korea’s notoriously mental-health-destroying education system has families spending 20 per cent of income on private tuition is noted approvingly.

The book alternates between Daily-Mail-comment-box level economics, relying on cherry-picked facts without context, and what can only be described as haranguing of the feckless and lazy.

We should be more entrepreneurial, it says, to be like Israel. Whether that means increasing our population by 15 per cent largely by importing highly-educated Russians is not addressed. Nor is the fact that the UK’s apparently pop star and footballer-oriented education system has never underperformed Israel’s in any area in any PISA test in any year, nor even come close to doing so.

Where facts are quoted, they are often wrong. (Note to printers: UK household-plus-government debt was 171 per cent of GDP in 2012, not 476 per cent). The wider points are often hyperbolic. (While Lakshmi Mittal’s ascent to global success is indeed admirable, claiming that it’s “common in many Asian families” is a bit of a stretch.)

The Israel-centric chapter on innovation includes high praise for chutzpah. The book succeeds at least as an example of this.

At its core the book reads like a parody of the taxi-driver stereotype, deploying every available cliché short of “there’s too many of them over here”. It’s unusual for a policy book published this recently to include just a single reference to “climate change” — and that, literally, from a black-cab driver complaining about higher energy prices. But this is an unusual book.

As a diagnosis-prescription for the UK’s travails, Britannia Unchained is hard to recommend. As an insight into the level of attention that has gone into the authors’ plans, it fares rather better. As they write, “failure should not be stigmatised”. It’s an appropriate motto for people who keep on failing upwards.