Monday, February 07, 2011

In search of solutions for economic growth: but who to ask?

The UK's coalition government consisting of the Conservative Party and the Liberal Democrat Party have been in search of solutions for economic growth. They sought out leaders of industry for their proposed solutions to how growth might be stimulated, such as by cutting various amounts of so-called "red tape". Today, we learn some recommendations on offer by the Institute of Directors here.

Predictably, much of these recommendations for cutting "red tape" are recommendations to cut regulations that support and protect workers, such as national bargaining. It is interesting to discover that "wasteful bureaucracy" in the eyes of some is perhaps better understood as "minimal standards of decent working conditions". It is these such regulations that raise most concerns and not other barriers to growth.

But why ask them alone? Industry bosses do not have a monopoly of knowledge on how to stimulate the economy. It does not then make best sense to limit one's search for solutions to this group alone -- even if you thought they might have the better answers. Here are at least two groups that should be consulted by government as well:

1. Economists, both professional and academic. Both professional and academic economists have something to contribute, especially the latter because they might have a less vested interest in how plans might pan out. Such persons study the phenomena of markets and economic growth for a living and not simply to create profits for their immediate bosses alone. They might provide further invaluable and more independent advice.

2. Trade unions. Whatever one's political allegiances, trade unions have a part to play in this well. Economic growth is more than about shareholder dividends. It also depends on the greater majority to undertake the activities that will help contribute to economic growth. Trade unions can play an invaluable role in this process and they should not be overlooked.

Of course, it is highly doubtful the government may take up this advice. Nevertheless, our public policy decision-making would be better for it.

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