Willy’s new theory

Despite Truss and Kwarteng’s overconfident claims, there is not a scintilla of evidence that tax cuts “trickle down” to impart economic dynamism, extra effort or enterprise. Growth instead comes from the application of inventiveness, via the efforts of thousands of firms and millions of people using the gifts the gods gave them, to make the world better – and from which profits flow. Economic growth, as I argue in one of a collection of 18 essays, The Change We Need, on Monday, is the product of complex economic and social organisations marshalling these impulses around a shared purpose. It is purposeful firms that bind their stakeholders into a common cause and drive growth.

Britain has too few. “Supply-side reforms” that focus on further deregulating an already very deregulated economy are beside the point – the focus should be on reforming how firms are owned, managed and governed. Only thus can other crucial ingredients of growth – increased public investment, boosted R&D and full access to our biggest market, the EU, via rejoining the customs union and single market – catch fire.

Willy’s wrong, of course. He’s arguing against the first and most important insistence of economics – incentives matter.

11 thoughts on “Willy’s new theory”

  1. “reforming *how* firms are owned”
    That sounds a bit scary, not who owns it, but how they own it is to be reformed. Ah, got it, Willy wants the owners or their representatives to decide what the company does in a different way. Or else.

  2. @Bongo – I think you’ll find ‘reforming how firms are owned, managed and governed’ will be practically the same as ‘reforming’ who owns them…

  3. ‘… the focus should be on reforming how firms are owned, managed and governed. Only thus can other crucial ingredients of growth – increased public investment, boosted R&D and full access to our biggest market, the EU, via rejoining the customs union and single market – catch fire.‘

    Ah yes, business remains in private hands but operates as directed by the State to meet objectives decided by the State.

    The French call this Dirigisme (their economic policy since 1945); Mussolini called it Fascism.

  4. allthegoodnamesaretaken

    As the US intellectual Thomas Sowell notes:

    ‘It is not just in politics that the non-existent ‘trickle-down’ theory is found. It has been attacked in the New York Times, in the Washington Post and by professors at prestigious American Universities – and even as far away as India. Yet none of those who denounce a “trickle-down” theory can quote anybody who actually advocated it.’

  5. Despite Truss and Kwarteng’s overconfident claims, there is not a scintilla of evidence that tax cuts “trickle down” – Willy Hutton

    They haven’t cut tax for the purpose of ‘trickle down’ anything, you boring twat. This is just the latest proggy epistemological spellcasting, like when they tried to convince other morons and themselves there’s such a thing as “hard” Brexit.

  6. They haven’t cut tax at all. The tax take will increase. Just you watch. Now, who campaigns against an increased tax take? How could it be seen as a cut?

    Oh, as far as Will is concerned, no matter the problem the solution is always the same. Perhaps he’d like to give us an example of it working, anywhere.

  7. Only thus can other crucial ingredients of growth – increased public investment, boosted R&D and full access to our biggest market, the EU, via rejoining the customs union and single market – catch fire.

    Apparently, being shackled to the EU is a pre-requisite of economic growth. Along with massive amounts of tax and public sector spending. Obviously what we had before wasn’t the right sort of massive amounts of tax and spend and EU shackles.

    I’m curious to know (but not curious enough to read any more of his drivel!) what reasons he gives for the lack of growth in EU economies that tax heavily and spend lots.

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