Ritchie, please, just try and grasp the occasional economic concept

There are three fundamental flaws in Osborne’s budget.

The first is the assumption that the UK will increase its growth when the Office for Budget Responsibility say that will not happen in the Eurozone and many other markets. I don’t believe that, especially when UK investment rates are so low and productivity is only 80% of that of France as a result.

That actually means that there’s rather a lot of easy economic growth that the UK can do. Just by, umm, copying France to get that higher productivity.

I don’t say that I recommend that as a course of action. It is, rather, just to show the lunacy of the assumption that the LHTD is making. If our productivity is lower than that of some other economy then it is easier for us to have growth, not more difficult.

20 thoughts on “Ritchie, please, just try and grasp the occasional economic concept”

  1. ” Just by, umm, copying France to get that higher productivity.”

    (A) I’m a bit surprised that you now think we should model ourselves on France, but hey, rejoice if one sinner is converted (or whatever the saying is).

    (B) is it really that easy just to copy France? Haven’t they been more productive for years? And why not just copy the US or Switzerland? Easy.

  2. Bloke in North Dorset

    Isn’t the quickest way to move our productivity towards France’s to sack a load of people? I’m not sure he’d approve of that.

  3. Luke said, “I’m a bit surprised that you now think we should model ourselves on France” despite Tim just having said, “I don’t say that I recommend that [copying France] as a course of action.”
    Huh?

  4. isn’t French productivity so high because the employment laws are so insane that businesses minimise hiring and maximise investment in automation instead? Thus high productivity but low employment?

  5. Via ran

    Yes, and that must be what Luke means by ‘converting sinners’: burn them in the cleansing fire of unemployment.

  6. Wonderful.

    So Apple won’t sell many phones, because just look what happened to Nokia…

    And if France is 25% more productive than us it probably shows that his measuring stick is a bit wonky.

  7. Yep, bring in labour laws which exclude the low-skilled (the young, immigrants, these poorly educated or not bright) and before you know it we’ll be enjoying French levels of productivity.

    I mean, forget horrifying levels of youth unemployment and immigrant ghettoes surrounding your capital city – let’s nail the abstract concept instead.

  8. The demand among the French for working in England is an interesting demonstration that there are things people value more than high productivity. I wonder if any of the lefties who’ve recently taken to worshipping France’s productivity have an explanation for that.

  9. bloke (not) in spain

    Let’s not forget how we calculate GDP, eh? How the productivity of the public sector is calculated.

  10. The Other Bloke in Italy

    My Brother in Christ (Not) in Spain:

    I feel I should read up on this concept of public sector “productivity”. Can you point me at something useful?

  11. isn’t French productivity so high because the employment laws are so insane that businesses minimise hiring and maximise investment in automation instead? Thus high productivity but low employment?

    Plus a colossal state whose employees’ pay gets counted as GDP even if they’re sitting around in a prefecture drinking coffee all day.

  12. Bloke in Costa Rica

    Squander Two: isn’t it possible that they do value productivity? Even if the average Frenchman is more productive than the average Briton, maybe the average Frenchman working in the UK is more productive than the average Frenchman working in France. In fact I’d lay odds that’s the case, simply based on my knowledge of the kind of people who tend to become ex-pats.

  13. > isn’t it possible that they do value productivity?

    (a) I didn’t say they don’t. (b) We’re talking about the total productivity of the state, not individuals’ productivity.

  14. Tim Newman,

    Government employees have their productivity measured on a 1:1 basis, i.e. €1 of payroll cost equals €1 of product generated. Private sector workers must logically have a greater than 1:1 productivity, i.e. €1 of payroll creates more than €1 of goods & services, since there is a profit margin.

    Since France has more public-sector workers, for the overall country to have such high productivity the remaining private-sector workers must be incredibly productive.

  15. Bloke in Costa Rica

    How does €1 spent on keeping someone on the dole factor into GDP calculations? Not being facetious: is it +, – or 0?

  16. Since France has more public-sector workers, for the overall country to have such high productivity the remaining private-sector workers must be incredibly productive.

    Not quite: huge swathes of the French public sector have nowhere near a 1:1 productivity, more like for every €1 spent they squeeze 10c worth of “services” out of them (go into any prefecture to see this in practice). If you count blithering idiots sitting around doing fuck all as productive due to their working in the public sector, and your public sector is big, your country will appear to be productive.

  17. @Tim Newman & Andrew M: surely the point is how much State employees are paid not how many there are? If their ‘product’ is equal to their wages, which for productivity calculation purposes it is, both in the UK and France, then if French State employees are better paid on average that their UK counterparts, they will be considered ‘more productive’ per head. Even if in actual terms neither produce very much at all.

    If we employed every single unemployed person in the UK @£50K each to sit in an council office all day and do nothing, UK productivity figures would go through the roof, as long as it was termed a ‘job’.

  18. @ Squander Two, the slightly embarrassing fact is that I have met plenty of young-ish French people* over the last 20 years who came to England/London because it was easier to find a job here. And they were happy to have a normal sort of job, nothing special.

    * Including a couple each of whose parents were in turn Spanish who had moved to France in the 1970s or 1980s and told me that in France, even second generation Spanish people get looked down on and discriminated against, they felt much more at home in London where basically everybody is a foreigner.

  19. Luke
    March 19, 2015 at 10:45 am

    ” Just by, umm, copying France to get that higher productivity.”

    (A) I’m a bit surprised that you now think we should model ourselves on France, but hey, rejoice if one sinner is converted (or whatever the saying is).

    (B) is it really that easy just to copy France? Haven’t they been more productive for years? And why not just copy the US or Switzerland? Easy.

    Oh its easy to get the productivity of your workforce up to France’s rates.

    Simply make it so the least productive people are locked out of the workforce.

    Sure, you get structural long-term unemployment rates of 20% or so (even higher among the young and immigrants) but those who have jobs? They are amazingly productive.

Leave a Reply

Your email address will not be published. Required fields are marked *