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OSBORNE red and blue

In an interview for the Daily Telegraph the Chancellor of the Exchequer, George Osborne, stressed how enthused he had been by his visit to China. He said:

“You cannot fail to be staggered by the scale of the economic progress and the building that’s happening all around you. It’s astonishing.

“I feel both energised by a trip like this because there’s so much more Britain can be doing; I also feel a bit like, my God, we’ve really got to up our game as a country, and the whole of the West has to understand what is happening here in Asia.”

China is certainly an astonishing place. It remains Communist in its politics, but by embracing free enterprise in its economics, has lifted hundreds of millions of its citizens out of poverty. This was not achieved through egalitarian ideology. China now has 168 billionaires. Thankfully, the UK has not reduced the top rate income tax to the Chinese Communist level of 45 per cent. But Mr Osborne’s visit has also prompted him to reflect on his own country:

“Somewhere along the line in Britain there were bits that were great about British industry that we allowed to wither. There has been at times in Britain a sense of defeatism. You saw that in the late 1970s when everyone was resigned to the decline of empire and Britain being the sick man of Europe. Margaret Thatcher turned that around.

“You saw that [defeatism] three years ago when everyone thought we couldn’t tackle our debt problems and the financial crisis had relegated us to a second-rate power. I hope that what we have shown in the past few years is an ambition to say ‘no’, absolutely not, Britain can be the best.”

I don’t care for the phrase “global race” as it rather implies a zero sum game. It has the implication that if India or China become richer then we will be poorer – that there is a fixed amount of wealth to go round and that we will have a smaller share. However, the tone from Mr Osborne that we need to be doing much better is right. There is great public antipathy towards the Tories in general, and Mr Osborne in particular, sounding smug and complacent. Interviews such as the one he gave this morning made that charge a bit harder to stick.

While Mr Osborne was away, we had some figures on Wednesday which showed a fall in unemployment, combined with average earnings still rising slower than inflation. This offered contrasting messages as to the strength of the recovery. In fact the combination of those figures offers an explanation rather than a paradox. If a large number of unemployed find jobs they will tend to lower average earnings as they willl usually start with low paid jobs. So it does not necessarily mean that most of us have seen a fall in the value of earnings. However, many of us have. Those who are still struggling will prefer to hear the Chancellor stressing that a lot still needs to be done, rather than emphasise how well everything is going.

 

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