Price signals suggest the Oxford-Cambridge corridor desperately needs more housing and infrastructure, for example, with demand for lab space outstripping supply. Just this week, reports suggest Michael Gove, the Secretary of State for Levelling Up, will shelve investment plans for the area in favour of directing yet more resources to depressed northern regions.
The Conservatives have abandoned a mooted overhaul of the land-use planning system that would deliver more homes in areas of the country where people actually prefer to live. Instead, the party now seems obsessed with encouraging people to reside where they grew up and wittering on about reviving high streets.
Plans for “industrial policy” and “levelling up” suppose that the market just can’t be trusted to deliver the “right” mix of activity or inclusive progress without the Government’s guiding hand. But even today’s Tory stasists have too much respect for capitalism’s enriching power to explicitly endorse planning. Instead, they justify intrusive government interventions with weasel words, such as ensuring “sustainable development” or a desire to “protect the community”.
On tech, the Government will establish a Digital Markets Unit that will require permission for major firms to introduce new products into their digital ecosystems. “No innovation without government evaluation” is the principle. Change is again seen as a threat until assessed otherwise.
Even when Covid disrupted work patterns, Boris Johnson’s instinct to emphasise the possibility of positive long-term change was tempered by his ministers’ pushing for “returning to the office”. The Government did not trust the market to work out the best employee location arrangements.
Why are the stasists winning out? Economist Mançur Olson theorised that wealthy, stable economies would eventually develop “distributional coalitions” that gum up decision making and so curb dynamism. Interest groups of reactionaries, technocrats, and NGOs would form to produce institutionalised sclerosis. Only highly disruptive events that break these coalitions would revive dynamism.
One reason many of us backed Brexit was precisely to shake up British interest groups. Without the EU as a scapegoat, we thought, British policymakers would be forced to take responsibility for their decisions. A shock that delivered more policy freedom would afford new chances to reform the civil service, or weaken some of the protectionist or rent-seeking interests that make us poorer. Faced with a contraction of EU trade, we would be pressured to liberalise.
Sadly, it’s the stasists that have been emboldened by the disruption offered by Brexit, then Covid, and now Ukraine. Public sector reform is non-existent, while economic policy is increasingly interventionist or reactionary. Though certain Cabinet ministers have more dynamic inclinations and backbench groups such as Steve Baker’s Conservative Way Forward support conserving market principles over conserving old industries, these people aren’t driving policy.
In shelving his dynamist instincts in favour of the environmentalist and nostalgic impulses within and around him, Boris Johnson has squandered a large Parliamentary majority. The Prime Minister likes to extol the promise of technological developments, from quantum computing to artificial intelligence. But his Government’s policies seem predicated on fearing the future that a free economy would deliver.
Ryan Bourne is an economist at the Cato Institute
