The Intelligence Squared Economic Outlook, with Tim Harford, Part One
Intelligence Squared
Deep Dive
Why is the UK economy growing so slowly?
The UK economy has been growing slowly for over 15 years, with a combination of bad luck, self-inflicted injuries, and mysterious forces. Bad luck includes high global energy prices, while Brexit has caused uncertainty and hindered business investment. Productivity growth has also been disappointing across major economies, with no clear single cause for the UK's underperformance.
What role does government play in the economy's performance?
Governments can make things better or worse through well-designed or messy tax systems, infrastructure investment, and regulatory frameworks. However, economic growth is not a simple switch that can be flipped. Even under good governance, the economy is unlikely to grow at 4% annually, as it is influenced by complex factors beyond government control.
What advice does Tim Harford give for thinking clearly about data?
Harford suggests three rules: be calm, get context, and be curious. Emotions can cloud judgment, so it's important to notice and manage them. Context involves understanding the definitions and origins of numbers, and curiosity means using data to explore the world rather than as a weapon in arguments.
What are the principles of a good tax system according to Tim Harford?
A good tax system should avoid treating similar activities differently based on labels, such as income versus capital gains. It should be progressive and avoid unnecessary complexity, which can lead to inefficiencies and favor certain groups. Simplifying the system can help raise more revenue while minimizing costs for taxpayers.
Why did the US economy's strong performance not prevent the incumbent party from losing the election?
While the US economy grew by about 10% since COVID, outperforming other G7 countries, voters' perceptions were influenced by factors beyond aggregate numbers. Real wages, employment rates, and inflation impacts on lower-income households showed uneven performance. Additionally, political partisanship plays a significant role in how people perceive economic conditions, regardless of actual data.
- UK economy's slow growth for 15-20 years, resulting in 25-30% lower performance than expected.
- High tax burden, underperforming public services despite high taxes.
- Contributing factors: bad luck (global energy prices), self-inflicted injuries (Brexit), and mysterious factors (low productivity).
- Governments can influence the economy but their impact is limited.
Shownotes Transcript