More broadly;
> We think we're a rich country
> We see prices rising, assume that means growth we're not participating in
> We see taxes rise and public services/realm worsen
> We see very rich (often American) and very poor people on TV and social media
It's extremely for any populist to draw their own shapes with those dots. Pick a villain, blame them, get everyone angry about it, promise a political revolution and a reckoning for the bad guys.
But productivity has been frozen for years. We're not producing more £££ per hour worked. We've expanded the population without building new capacity for them. We've allowed infrastructure to rot, and underfunded capital investment. We've thrown hundreds of small, but cumulatively huge regulations over everything. We have an ageing population.
And fundamentally, we have the delusion that policy decisions which make the nation poorer should not be allowed to make *us* poorer. We want carve outs, protections, subsidy to protect us from the consequences of the policies we've collectively chosen; minimum wage hikes, triple locked pensions, rising welfare, subsidised energy bills or tickets to attractions.
Costs have risen - the pound is not what it was 20 years ago, so imports are more expensive. We are exporting less and earning less money to pay for the things we want to buy. Other countries are getting wealthier, and we want to keep up with them, but without doing anything to achieve that. As Tom says, we pile expenses and restrictions on instead.
So if costs rise, and our productivity doesn't, we're going to get poorer. If you protect pensioners, and you keep raising the minimum wage with no more wealth, you just squeeze the middle and higher earners.
Our costs of living seem to keep rising, because we have placed pressure on housing, energy, and public services without corresponding increases in wealth to pay for it.
I think a huge part of the reason why no government has been able to enact difficult pro-growth reforms is that the average voter still believes we remain a rich country.
You hear this in politicians’ rhetoric “the sixth richest country in the world”.
We’re the sixth largest economy but now far from the richest. Per capita we’re tanking down the rankings.
One of the reasons why Poland or China have been able to have growth miracles in recent years is they think like a developing country.
They know they were poor and they have to build to get rich.
We think we are rich and that we don’t have to build anything anymore, or that when we do, it has to be the most expensive possible version of what we build.
Bat tunnels. Fish Discos. Kittiwake hotels.
We think we’re rich so we can afford to chase some wealth creators away, afford to mandate public biodiversity net gain on every development in the country, and afford to ratchet up state pension spending five times faster than the rate of growth in the economy.
We’re suffering from acute ‘rich country delusion’.
It’s only once we realise we’re far poorer than we should be that we can start to fix this nonsense.