Happy Monday!
As we’re well into the General Election campaign (with still weeks to go) and as we should be getting the manifestos from the main parties this week I thought I’d write about the overall state of the UK economy and one of its particular quirks – that it is largely based on things which many people consider to be bad. For alliterative purposes these will all begin with the letter ‘B’ in this post.
‘Bad’ Universities
I use the word ‘bad’ although it’s not one I agree with but rather because it is used by people who are dismissive of non-elite universities in the UK. While it is true that many of these institutions are less prestigious than some of the more established ones, I think it is wrong to dismiss them or to welcome their demise.
There is a legitimate debate to be had about which universities and courses are delivering good outcomes for students and taxpayers. However, many of the less elite universities in the UK do play an important role in social mobility by providing opportunities to young people from lower income households and boosting their future earnings.
What is more, these universities have brought economic growth to towns and cities around the UK. The economy of places such as my hometown of Huddersfield are heavily reliant on the University with many businesses and jobs supported by the student population.
Furthermore, universities count towards the country’s export figures. It may seem odd but students coming to study in the UK is technically an export.
However, it is seen as problematic as the University sector is reliant on high levels of immigration. Again, we can have a legitimate debate about whether or not this is a healthy or sustainable way of supporting these universities and the towns and cities which rely on them, but it is the reality we find ourselves in.
Banking
A particular strength for the UK is banking and other professional services such as law and consultancy. Despite the huge number of jobs created by the finance industry and the tax revenue raised, politicians have an uneasy relationship with it.
In many ways this is understandable. Given the role played by banks in the Global Financial Crisis and subsequent Great Recession the public were rightly angry and so banks have been easy targets for politicians. As such, while no government wants to see an exodus of bankers, they still target them for often punitive taxes. Louis XIV’s Finance Minister, Jean-Baptiste Colbert once said that the art of taxation was to pluck the maximum of feathers with the minimum of hissing. The UK government seems to take a similar approach to banking.
Betting
The gambling industry is huge in the UK. It seems as though one can’t move for seeing adverts for gambling – especially while watching a football match (more on that later). Again, this is seen as problematic for many as gambling addiction is an awful affliction which so many people suffer from and has destroyed their lives.
However, it is also a huge revenue raiser for the government. For example, betting and gaming duties alone are set to raise £3.6 billion in 2024-25 while corporation tax and income tax paid by firms and individuals involved in the industry will also provide a significant boost to the Treasury’s coffers.
Booze
Alcohol is considered a demerit good as there are many negative externalities associated with it such as addiction, health problems, and anti-social behaviour. This is obviously not a good thing.
However, it brings in huge revenues for the government to fund essential public services, it supports jobs around the country, and is a major export for the country. The Scotch Industry alone supports 66,000 jobs across the UK and boosts the UK economy by £7.1 billion each year.
Boobs & Bums
Apologies for the crude and childish terms but by these I am referring to pornography. Again, this is problematic to many people as they have a moral objection to pornography and there are also concerns over exploitation. However, the fact remains that companies involved in this industry such as OnlyFans pay a lot of tax, create jobs, and count as an export when consumed in other countries.
Balls
By this I specifically mean football and the Premier League in particular. In many ways this should not count as being problematic but it is heavily reliant on the gambling industry. Once again the Premier League makes a huge contribution to the UK economy and is a true success story in terms of exports.
Unfortunately, politicians cannot help but to meddle with it. The Premier League will likely be hobbled by the new football regulator and one of the first policy announcements from the Liberal Democrats has been the requirement that certain games be shown on free to view TV.
Bombs
While we do have strict export controls on weapons manufactured in the UK, the grim reality is that some of them are going to contribute to the deaths of innocent civilians. However, again in reality it is obviously vitally important that we have a strong defence industry as it is essential to protect national security and support the country’s allies. What is more, the defence industry also makes a significant contribution to the UK economy and is a major exporter.
Buds
I almost forgot about this one when I tweeted about it the other day so a hat tip to Andrew Bennett. The cannabis industry in the UK is a major exporter and so again makes a major economic contribution. Unfortunately, the industry is heavily regulated and the government has made the error of not following the example of other countries and American States of legalising cannabis in the UK – a policy which would not only bring huge savings to public services, it would also be a significant job creator and revenue raiser.
So, there we have it. Many politicians, commentators, and members of the public may not like these industries. There are often calls for more regulations and taxes on these industries which would have a detrimental impact on them. Even when politicians are not actively working against these industries, they do very little to actually support them as they choose to prefer more popular sectors of the economy such as agriculture.
Politicians might not like it, but this is the economy we have. The government should resist the temptation to meddle or interfere to fundamentally change the economy as doing so would reduce the nation’s exports while placing jobs in jeopardy and decimating the economies of many towns and cities. Instead it should embrace the economy it has, get out of the way, and focus on delivering supply side reforms such as building more homes and energy and transport infrastructure alongside reforming the tax system in order to deliver economic growth.
Thanks as ever for reading. If you’d like to support Opportunity Lost you can do so here: https://buymeacoffee.com/opportunitylost