Nick Clegg has emerged as the Coalition champion of the economy since Vince Cable’s well- publicised setbacks. Nick uses a great many words all spoken at a great rate of knots with an intonation that defies interruption. To be fair to him, I understand from my children that this is the way children speak in the playing fields these days. The words he uses are very fine and well-meaning and will convince some people – but not me – that he and his Tory colleagues have fine plans for the future of the British economy. It seems churlish of me to express the opinion that his words are either misleading or disingenuous. My main objection to them is that they do not rest on any firm and defensible theory of what works and doesn’t work in the British economy. Take the jargon on re-balancing the British economy. You know the sort of thing: shift the British economy away from services, in particular financial services, to manufacturing, and shift economic activity away from London and the South East with a resulting shift in population and jobs. This is pie in the sky. It is not a new narrative for it has been a constant theme of the last fifty years. I have no no wish to be boring but to be prief capitalism does not work like this in a capitalist economy. Industry location, population and investment follows the laws of comparative costs. It will be located in London and the South East so long as these comparisons favour these locations. There are advantages in mass. London has become the leading financial services centre in Europe accounting fot 9 percent of British GDP compared with 12 percent for manufacturing. Why is it so obvious that you should constrain financial services growth in London when it is a world leader?
Successive Governments have recognised the problems of the North by shifting public services to there with incentives for industry to follow. Their pump priming has been partially successful Now the Coalition is busy destroying these jobs. No wonder they need to mollify electors with meaningless promises of other jobs being created.
It used to be the case that these arguments were encapsulated in the simple division betwees monetarists and advocates of supply side reforms and Keynesians with their concentration on the demand side of the debate. At present those on the supply side of the argument are having a hard time of it. Money aggregates are weak with all that flows from it. The demand side is precarious and faltering. Those of us who observe these matters from the sidelines might well despair. It is a long way to Rotherham from Central London, Cleggie boy. Is your journey strictly necessary for a display of groping in the dark?