Industrial policy is a dead end
The British Right is embracing bad economics
It's too darn hot. And you know who to blame for that.
The Met Office says that thunderstorms are brewing, and tempers certainly flared at Reform UK today, as Zia Yusuf posted on X to correct Robert Jenrick’s remarks over the weekend on the party’s deportation policy. Below, you can also find Dan Neidle’s analysis of their new plan for tax-free overtime – and why the sums don’t add up.
In other news, Joanna Cherry, a former SNP MP, called for an independent investigation into how Peter Murrell was able to embezzle more than £400,000 from the party and spend some of the proceeds on luxury pens, high-end coffee machines and a £124,500 campervan.
And the Next CEO Simon Wolfson warned that there has been a ‘dramatic fall’ in the number of entry-level job opportunities. He said the Government needs to reverse its tax rises on employers, and ditch upcoming workplace regulations before they make things worse. Some, however, are starting to wonder if this is all part of a cunning plan to juice the productivity stats. But then again, this is Westminster, so bet on cock-up over conspiracy.
Below you’ll find all the latest pieces from CapX, plus what we’re reading from around the web.
Marc Sidwell
Editor, CapX
Today’s Takes
Fresh thinking from CapX
Industrial policy is a dead end
Samuel Gregg
‘Conservatives should be more wary of industrial policy, including the current Chinese variety.’
Influential voices on the British Right are giving up on free markets in favour of industrial policy. Inspired by China, they believe that the state can in some cases produce more desirable outcomes than the free market. This is entirely wrong. Rather than produce untold growth, industrial policy embeds cronyism and malinvestment into an economy. Read More
How 'distributionalism' killed long-term thinking
Mani Basharzad
‘Distributionalism has pushed governments, Conservative and Labour alike, toward short-term policymaking.’
Many complain about short-termism in Westminster, but few have correctly diagnosed what’s causing it. We need to talk about ‘distributionalism’: the belief that every policy should primarily be judged by how it affects different income and wealth groups. This attitude is deeply embedded in British policymaking, and it completely misunderstands how growth is generated. Read More
The Nimbys have conquered Peckham
James Ball
‘How many decades are we going to build nothing while we wait for the perfect plan to arrive?’
For this week’s ‘Nimby Watch’, we’re off to Peckham in South East London, where Nimbys – including comedians Nish Kumar and James Acaster – are celebrating blocking a new development. Rather than build 867 new homes, activists have chosen to save a dilapidated shopping centre. We seem to be addicted to complaining that there’s nowhere to live, while making sure we never fix the problem. Read More
Stat of the Day
The CapX Reading List
The best of the web today
Reform's overtime policy is comically bad
Dan Neidle, The Spectator
‘Reform have caught a disease normally found on the Left – they’re ignoring incentives.’
Reform UK’s proposal to exempt overtime from income tax is a terrible idea. While a bold PR move, the policy will create a cliff edge of extraordinary proportions, and invite every company in the country to redraft its employee contracts on the morning after the Budget. A serious tax-cutting party should broaden the tax base and remove distortions. This isn’t it. Read More
Is AI hallucinating evidence?
Nicholas Blomfield, City AM
‘Courts should be prepared to draw adverse inferences where AI use is concealed or inadequately explained.’
AI material is becoming pervasive across legal workflows, in witness statements, in disclosure reviews, contracts, policies and even in expert witness reports. There are multiple issues that will come with this, but one intrinsic issue is whether a court should assess, and rely on, evidence that may be partly or wholly generated by a system capable of producing authoritative but, in some cases, false outputs. Read More
This is how the Iran War ends
Michael Doran, The Free Press 🔒
The Capitalist
In this week’s episode of the CapX podcast, we share a speech by Shadow Chancellor Mel Stride on the economy, including:
Why Britain’s gilt yields are the highest in the G7
How the ‘Burnham premium’ could cost every working household £300
Labour’s plans to borrow a quarter of a trillion pounds more across a single Parliament
Watch on YouTube; listen on Apple Podcasts or Spotify.
And if you want more...
– How to survive a heatwave without air-con (The Conversation)
– One infusion that replaces a lifetime of cholesterol pills (NHS)
– Edmund Phelps: economist of values (Civets Outlook)
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