Why has the UK suffered weak economic growth for years? Is it because falling profits have choked off investment? Is it because there’s a dearth of good innovations? Or because of fiscal austerity? Or because the Bank of England has failed to target money GDP growth? Or because bosses are lazy mediocrities? Or because pessimistic (pdf) expectations have proven self-fulfilling? Or is it because the financial crisis had a long-lasting adverse effect upon the economy?
No, no, no, no, no, no and no. It’s all because of the great crested newt. In its demand to cut EU-imposed red tape, the Telegraph wails:
Under the EU habitats directive, which covers all 28 member states, [great crested newts] are a protected species. If even a small number are found, newts have to be fenced, trapped and relocated in the spring, which can cost £10,000 even for a small project. In 2011, George Osborne, the former Chancellor, said the directive placed “ridiculous costs on British businesses.”
Despite the fact that scholars of long-run growth such as Chad Jones, Philippe Aghion and Dietz Vollrath have been silent about them (AFAIK – I’d be happy to be corrected) it’s obvious that newts are to blame for sluggish growth.
Economists know nothing: well, what do you expect from so-called experts?
One reason for this is that there really isn’t much of it in the UK. Rick says “the UK is already one of the least regulated countries in the world.” If you don’t believe him, try the Heritage Foundation, a group not famed for its sympathy for state intervention. It says our “regulatory environment is efficient and transparent.”
Why, then, is the Telegraph banging on about red tape and ignoring the many stronger reasons for our economic malaise?
It might be that I’m missing the point. Protecting newts, like laws against bendy bananas, might not have grave effects, but they are examples of the silliness we’ll be rid of when we cast off the yoke of Brussels and bring sovereignty back to Westminster, where it will of course be exercised by wise and all-knowing legislators.
But perhaps there’s something else. For the last 30 years, the right has gotten most of what it wanted – lower taxes, weaker unions and less regulation. And yet macroeconomic performance – as measured by GDP growth per head – hasn’t improved. Their response to this has been a classic example of the backfire effect. As David McRaney says: “When your deepest convictions are challenged by contradictory evidence, your beliefs get stronger.”
Rather than question their support for “neoliberalism” or – God forbid – doubt the underlying health of capitalism, Tories exaggerate the harm done by remaining regulations. They learn nothing, and they forget nothing.
Worse still, as Brexit negotiations will steal cognitive bandwidth for at least the next two years, we face many more months of this. The great crested newt might be protected, but my patience is not.