This article is taken from the October 2024 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

Growth, growth, growth. Everyone’s talking about growth. All the Conservative party leadership candidates have said we must achieve it. All the major parties in the last election said it was their number one objective. Our new prime minister has stated that he will focus “laser-like” on growth. And not one of them seemed until recently to have a clue what they meant by the word; prescriptions as to how to achieve it there were none.

Well, okay: I think we all understood that what they were talking about was economic growth. But how to define that metric? The politicians, media and commentators use the simple measure of Gross Domestic Product. That leads them into grievous error, coming from their not really understanding what the simple purpose of achieving economic growth is: to make the lives of our citizens better.

Which means that GDP is the wrong measure: we should be targeting growth in GDP per capita; that latter metric is what makes it possible for each citizen — each capita — to pay for their needs, to take care of their families, to achieve their dreams and ambitions of a better life.

Every time you see a forecast of GDP, or of the impact on GDP that a particular policy is expected to have, you should reframe it for yourself in terms of GDP per capita, because that’s the number that counts; and then you should factor in the fact that the population of the UK is forecast by the ONS to grow from 67.6 million in 2022 to 70 million in 2026 — a growth in capita of 3.5 per cent (0.86 per cent a year).

So a growth rate in GDP of 1 per cent per annum, something we would think a good achievement at the moment, would mean about zero per cent growth in GDP per capita. And zero growth is a big problem for struggling families. Failing to focus, “laser-like”, on the right measure (GDP per capita) has led in the past decade or more to societal agitation and dissent, in particular amongst that large proportion of the population who have been at the sharp end of the resultant zero-to-negative growth in GDP per capita.

The effect of immigration on GDP and GDP per capita is at the heart of this. The OBR used to have a model that implied, incorrectly, that any kind of immigration was good for GDP — assumptions that underpin relaxed migration controls. But this September the Office for Budget Accountability announced that only “high wage” immigrants improve GDP; “low wage” ones, they have now decided, reduce it.

Not talked about is the impact of dependents, or family, who together add up to a large portion of immigrants, and who presumably reduce GDP per capita. Also not talked about is the fact that it is as much gross (1.2 million a year), not just net (670,000), immigration that has an impact; particularly now when the brain drain is running fast so that high contributors to GDP are leaving, whilst low or negative contributors are arriving.

Above all, the talk is not about GDP per capita; there is silence as to whether any immigration has been good when we look at that measure. That one simple mistake — focusing everyone’s attention on GDP, rather than on GDP per capita — has led to flawed immigration policies since the turn of the century; ones that have brought in so many more capita into our country, that even when GDP grew, GDP per capita usually didn’t.

All the political parties say that growth is the number one priority, upon which more jobs and higher wages and prosperity are created. But the next snag quickly emerges: few of these politicians seem to have a clue about how the economy works, how to change it so as to achieve growth.

The last government kept claiming their “economic plan was working” when it was unclear that they had a coherent economic plan at all, let alone one focused on growth. They were, of course, hampered by their economic record. In 2022–23 Britain had almost the highest growth-destroying inflation of all the major developed economies. This was caused by the incontinent levels of Covid spending by Rishi Sunak as Chancellor.

Thus a year or two on, he could hardly admit, as prime minister, to those hit by the cost of living crisis, that inflation is “always and everywhere” caused by monetary excess — which necessarily meant Boris Johnson and he were to blame for the huge inflation-driven misery caused by their feckless spending, in particular the prolongation of lockdowns and furlough schemes.

Across the world, the economies of certain democracies are growing rapidly, whilst those of others are standing still. The latter are in the main pursuing a social democratic model and are mostly in the EU. Look at a heat map of growth around the world: the EU stands stark in its lack of growth, particularly when we look at its original members, where the social democratic approach — high spend, high welfare, high taxes, a cobweb of regulation — is now at its peak.

The squabbling economists on Twitter/X are still fighting the Brexit Wars, arguing over whether we are growing somewhat faster, or slower, than Germany and France; but both those countries are catastrophically failing to grow; it is ridiculous to exult if we’re growing just slightly faster than them, or to weep if we’re growing slightly slower.

Britain’s currently zero-to-negative level of growth per capita is primarily because it has increasingly adopted the social democratic approach. We should be seeking instead to emulate the structure, and the growth rates, of more free market economies in developed countries further afield, whether the United States, Switzerland or Singapore.

You don’t get economic growth when state spending is approaching nearly half of the economy

There, growth in GDP per capita continues merrily apace, and their standards of living, and consequent fulfilment of aspiration for their citizens, draw further and further ahead of ours.

How they succeed when we don’t is devastatingly obvious: you don’t get economic growth, particularly per capita, when the level of state spending is approaching nearly half of the economy (the UK’s public sector spending is around 45 per cent of the country’s GDP), when taxes are as a result equivalently high, and above all when regulation is strangling the life out of entrepreneurs, small businesses, and the possibility for any investor, large or small, to make a reasonable return on a new business initiative.

Emulate the free market economies? Impossible, they say: the challenges of society, post-Covid, post-Ukraine, are now so much bigger, so we need so much more government expenditure, more taxes, more regulation.

Really? In the first few years of Tony Blair’s premiership (up to the time he and Gordon Brown stopped following the spending plans of the previous Conservative government), the size of government spend was at about one third of the economy, and so were taxes.

Look at it this way: when government expenditure is nearing half of the economy, its cost needs to be paid for by the other half, the workers in the private sector. A quid from each individual to pay for each pound per capita spent by the government. If, instead, government spend was one third of the economy, the cost each would have to pay would be only two thirds of the 50 per cent, and those in the private sector paying for it (now two thirds of the economy) would be a third larger in number than before; so the amount of GDP per capita to be paid for by each private sector worker would be one third times two thirds — two ninths, 22 per cent, of GDP per capita.

That’s less than half as much per head as needed to be paid before. Suddenly, households would be significantly richer and there would be enough money for the economy to grow.

Why is it that it should be seen as so difficult for our country, our economy, to revert just to a size of government, a size of taxes, and indeed a level of regulation, that existed just a couple of decades ago? Why is it, for example, that the number of civil servants has shot up by 100,000 since 2019 and by over 4 per cent in the last year alone, and that’s impossible to reverse?

Is it just that the civil servants now run things, and the politicians have no ability to rein them in? Is it that Professor Adolf Wagner, who in 1865 enunciated Wagner’s law, roughly saying “in any democracy, the size of government inexorably expands and expands”, has been proved correct? Is Britain still equal to the task of electing politicians, if they can be found, who will take us to a more sensibly structured, growth-promoting economy?

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It’s all very well talking about growth in these abstract quasi-scientific terms, but in human terms, it is everything. Around the world, billions live in poverty. There used to be many more billions in that state, but in the past 30 years economic growth lifted them out of it. Economic growth can do the same for the rest of the poverty-stricken around the world.

It’s not even or just about getting people out of poverty: for all of humanity, it’s about the opportunity for each individual human, of the 8.2 billion living around the world, to be offered ever-greater opportunities to live, love, fulfil themselves, and realise their dreams; the growth opportunity, certainly at humanity’s current stage of development, is — as we are seeing from ongoing scientific and technological breakthroughs — limitless.

To understand how important this is, look at past generations. There are some 104 billion dead humans. Their remains, from the beginning of the human era down to those who died last month, range from bones in the ground to far-disseminated atoms. When these 104 billion humans died, their age at death — averaged over the 6-million-year period from the origin of humanity to the present day — was, on average, 30.

But in developed countries now, and increasingly across the entire world, the average age of death is in the mid-80s. This development in longevity is no more than 100 years old. What did around 80 billion of our 104 billion dead die from? Infection. Then, 100 years ago, Alexander Fleming noted the antibacterial properties of penicillin. This one observation, plus its exploitation through capitalist processes and its development into other antibiotics, have together eliminated infection as the biggest cause of death, leading to that huge increase in longevity.

What hopes, loves, joys, achievements would you have missed out on if you had died at age 30? Is not your life, the life of all of humanity, enormously enriched and fulfilled by your being able to live some three times as long as was the case a little more than a century ago? That’s called economic growth.

This elimination of infection as the major cause of death was due to a process that started with the Enlightenment, moved on through the Scientific and Industrial Revolutions, and on into the flourishing of capitalism. That process is what created the explosion of economic growth over the past couple of centuries.

It’s a process that is now being strangled by numerous extractive groups demanding enormous subventions from government; by governments who demand a floribunda of taxes from their populace to pay for these subventions; by a host of parasites who, declaring “we know best”, impose nutty theories and appalling regulations on anyone trying to pursue the commercial activities that lead to economic growth.

Wouldn’t it be great if our social democrat-inclined politicians repented and got out of the way, so that we could revert to instigating at speed the enormous advances, across so many fields of human endeavour, that will create ongoing economic benefit and growth? Wouldn’t it be great if our current leading cause of death — diseases of inflammation — could, through the free market capitalist system, be conquered in the same way as was infection? (Some say that achieving that could increase average longevity, from where it is now, to an age of 130 or so. In your lifetime, if you’re younger than me. Think about it.)

Whether large or small — earth-shattering as with medical breakthroughs; or modest as when an individual sets up shop for themselves, or a small business takes on a couple more employees — economic growth is the result of striving human activity that leads to growing human happiness.

Our current politicians have more or less universally defaulted to seeing every alleged problem as something to throw money at; to pass regulations to prevent the problem; to loudly denounce it: all in the hope of picking up a few votes, but thereby ever-expanding the state, pleasing extractive interest groups, feeding the crony capitalists.

And so the problem gets worse, which it will go on doing until we get a government in power that understands what economic growth is; why it is uniquely important; and why we won’t get it until we shrink the state, reduce taxes and remove swathes of growth-restricting regulation.