Tuesday, September 24, 2024, 05:53
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Monday, September 23, 2024, 6:01 p.m.
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Recent investments in British data centres show that it is not all doom and gloom for the economy
The outlook for the UK economy doesn't have to be so bleak. We just need to focus on what matters, writes Sam Bidwell
It was Lee Kuan Yew, the visionary founding father of Singapore, who once famously said: “Those who do not know history think in the short term, while those who know history always take a medium or long term perspective.”
If Lee is right, then I have to conclude that there are no historians in the British political class. For decades, this country's politicians have avoided tackling the structural flaws in the British economy, focusing instead on short-term stopgap measures. As the Labour Party conference begins, the open secret that no one in government wants to admit is that our economy is low-growth, low-technology and low-innovation, largely due to political decisions.
And as the public now realises after Labour's overwhelming election victory in July, these structural challenges are not the prerogative of any one political party. Both major parties have been complicit in maintaining a broken planning system that discourages growth and investment. Both major parties tend to lean towards knee-jerk regulation as a solution to all negative externalities. Both major parties have driven away the world's best and brightest minds through punitive taxation and the abolition of the non-dom regime, while simultaneously supporting policies of mass immigration.
This all sounds pretty grim, but there is a silver lining. Despite all of the UK's weaknesses, from our absurd energy policies to our declining government capacity, people still want to invest, build and grow here. Whenever you hear a story about a new data centre or a new lab being refused planning permission, you can take comfort in the fact that these stories imply that companies actually still want to build data centres and labs in this country. People want to invest in the UK, but we are making it impossible for them.
To seize these new opportunities, all we need to do is get the foundations right. We need only allow the country's natural brilliance to flourish, and then we would be well on our way to addressing our persistent lack of economic growth and our lagging productivity.
And slowly but surely, this simple idea of ”getting the basics right” is becoming the consensus on how to fix our broken economy. The excellent essay “Foundations” published just last week – written by Sam Bowman, Ben Southwood and Samuel Hughes – rightly noted that without planning reforms and cheap energy, there is no path to economic growth.
In this sense, we need to redesign our immigration system to prioritize high-skilled human capital, as the Adam Smith Institute notes in its recent paper Selecting The Best. Far too often, talented immigrants from countries like the United States are made to suffer, while at the same time we encourage industries like hospitality and agriculture to rely on low-skilled migrant workers.
Instead, our economic system should encourage innovation, automation and education while poaching the best and brightest. This means that we must enable companies to invest in new machines and new technologies and use robotics and AI as a means of increasing productivity and reducing our economy's structural labor needs. These investments must in turn be supported by a planning system that allows us to build the necessary infrastructure, such as data centers.
None of this is particularly spectacular – in fact, it's the economic equivalent of plumbing. But harnessing the natural strengths of our economy is the first step towards the high-tech, high-investment, high-quality economy we all deserve. In the immortal words of Adam Smith, to move a nation from the lowest barbarity to the highest wealth, little is needed except peace, low taxes, and a tolerable administration of justice.
Sam Bidwell is Director of the Next Generation Centre at the Adam Smith Institute
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British economy: After a busy week, the fundamentals look solid
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