I I criticized the Conservative Party a lot in this election. Now it’s time to direct some of my focus to the (other) main Social Democratic Party. We should not be fooled by Labour’s National Wealth Fund and the party’s growth proposals. While Labor has made some welcome noise about its desire to avoid a return to socialist taxation and spending, its actual proposals for economic growth amount to little more than “a real industrial strategy that has never been tried”, with some nasty surprises hidden within.
The party has gone out of its way to make clear that it will not increase taxes on working people and will stick to the spending recommendations issued by the Office for Budget Responsibility. Despite some increases in capital gains tax or pension taxes, Labor has managed to maintain a ‘steady as we go’ approach to fiscal policy, for now, with the Conservatives making only minor inroads with their proposals to cut ‘ Sterling pound”. 2000 tax bomb” under Labour.
This is part of Labour’s strategy to win over voters in central England who represent Labour’s path to power, but who may not trust the party on the economy and public finances. They repeatedly talked about growth, and claimed that the way to achieve that growth would be through planning for reform. Perhaps they have taken a leaf out of Liz Truss’s book, or decided that Robert Jenrick’s planning reforms from 2020, which they call the “Developer Charter”, are actually a path to prosperity after all.
Here they speak with some logic. They have expressed a great deal of need to speed up the process of granting planning permission for things like data centres, transport infrastructure and new energy sources. They suggested that central government should have greater power to determine planning permissions for these types of projects, over local councils. Making it easier to build these projects is a good thing, but Labour’s approach makes a mistake typical of almost all industrial strategies. Instead of getting the basics right – the basics of planning, energy and tax policy – they propose special operations for special categories of infrastructure.
While the special planning system for preferred types of projects is annoying, it is by no means disastrous. Much worse is Labour’s proposed National Wealth Fund, which they expect to fund with up to £7bn, which will be spent on projects across the country. This will be funded in part by an unexpected tax rise on the oil and gas industry, and by money Labor hopes to raise from the private sector, such as institutional investors and pension funds. These funds will be transferred to industrial projects related to net zero, decarbonization of supply chains, and green hydrogen manufacturing. This should create 650,000 “green jobs” and fully realize Labour’s clean energy vision by 2023. The Scottish National Party has tried this idea, with disastrous results.
It is not only industrial strategy skeptics who do not like wasting public money on projects that generate poor returns, and who should fear this policy. Rachel Reeves, the shadow chancellor, wants to take over the country’s pension funds – tasked with making sure we can all enjoy a healthy retirement – and force them to spend our money on politically preferable projects. Whether it is green industry, nationalized automakers, or declining coalfields receiving public subsidies, the effect is the same: unproductive companies pile up subsidies, innovators crowd out, and ultimately everyone pays dearly for the next collapse.
The additional danger today is that this type of industrial strategy is fueled by two new philosophies: diversity, equity and inclusion rules, and environmental, social and governance principles. This is what woke capitalism looks like in practice A new paper from the Legatum Institute In this topic, he reveals how dangerous this is to prosperity.
… The message is clear: private enterprise exists only to advance political goals
The Labor Manifesto was implemented with this kind of thinking. From the National Wealth Fund, to the Race Equality Act, and Labor’s plans to mandate UK-regulated financial institutions to implement net-zero transition plans, the message is clear: private enterprise exists only to advance political goals.
Let’s look at what this actually means. The National Wealth Fund will transfer private and public capital to projects that may be financeable through market forces, given the appropriate regulatory environment, or projects that provide no economic benefit at all. The Racial Equity Act, which is expected to impose diversity-related hiring, reporting, and pay requirements, would end meritocracy in the workplace and create a divisive legal workplace environment. Plans to transition to net zero will have huge costs to the economy. Not only would it impose administrative costs on businesses, it would have real-world consequences: businesses would lose access to financing, farmers would be organized out of existence, and aspiring homeowners would be unable to obtain a mortgage to buy a home. With leaky windows. This is a recipe for poverty, not prosperity, and the issue of work must be scrutinized.
The great tragedy is that there is so much evidence of the failure of these ideas all over the world. Labor is imitating the “entrepreneurial economy” with its green industrial strategy. But Biden’s economics is failing in America: inflation is rising, and companies are constrained by environmental, social and governance issues to meet impossible compliance requirements for government support. In Europe, the public is revolting against the EU’s net zero regulations. The hype and excitement around ESG investing has died down a few years ago, and an increasing amount of new evidence has been produced showing its fundamental flaws.
Instead of removing the real barriers to growth and prosperity in the UK – complex and unpredictable planning rules, expensive energy, high taxes, and mass immigration – Labour’s economic growth agenda amounts to special rules for favored sectors and the imposition of grievance. and identity politics in the United Kingdom. All workplaces, all companies politicized. It won’t save the planet, it won’t save the economy, and it certainly won’t be pretty.