Watch, listen to or read the media and the great and good of the economic world – the heads of the UK Treasury, BoE, IFS, IMF, OECD, OBR or ONS to name but a few – and, with rare exception, all paint the same dismal picture viz:
- It’s doom and gloom for the UK economy from now on
- Productivity has peaked
- Productivity growth has been negligible for the last ten years
- The UK is in an even worse state than France, for heavens sake
- The UK has had terrible productivity growth since WW2, deteriorating GDP and rising inflation which means no end to austerity in the budget
- We must get used to low productivity and low pay levels from now on
- The good times are over
- The ability of the UK Chancellor of the Exchequer, Philip Hammond to borrow or spend from tax receipts will be severely limited
What miserable pessimists they all are
None question the data on which they base these views – they’re deemed to be facts
No doubt most belong to the same close-knit groups – select chattering classes who meet and argue with each other, read each other’s papers and soon find their views coalesce
Groupthink is the result – a view that gathers momentum by seeking out confirmatory data whilst brooking no dissent – the facts may change, their views do not
It reminds one of the enormous resistance Galileo experienced when arguing against the received wisdom of the day that the Sun revolved around the Earth
Or current attitudes towards Nigel Lawson, ex Chancellor of the Exchequer, when he offers inconvenient facts which raise doubts about man-made influences on apparent global warming, especially when we know Planet Earth has suffered ice ages not that long ago, and tigers roaming the UK not long before that
Best, whenever the mass of opinion claims, but cannot prove, a theory to be scientific and first try to disprove it and why it might be wrong – and only when this fails claim it must be right
Hence, the current consensus that productivity growth is poor and will continue to be so, with dire consequences for the nation’s standard of living, needs to be tested
Already, there are some leading experts who consider the base data on which such forecasts are made to be not only seriously flawed but also dangerously misleading, not least because:
- National budgets and major taxes are decided based on them
- Public spending is cut in some areas – austerity is prolonged when it might not be the answer
- National demand/ consumption falls as people take note and batten down the hatches
- Businesses and banks become risk averse, so vital capital investment for productivity improvement dives
So, at present, the popular view is ‘gloomy times ahead’ – and actions taken reinforce this view
But what if the doomsayers are wrong?
All we need is data to prove them so – and therein lies the rub