I recently came across some great articles discussing productivity issues in the English-speaking world. Paper by Ben Southwood, Samuel Hughes Sam Bowman It begins by showing that the UK lags far behind France in building things like housing, motorways, metros, high-speed rail, nuclear power plants and other infrastructure.
France and the United Kingdom are a particularly interesting pair of countries to consider because they have so many similarities. Both have populations of 65 million to 70 million people and roughly the same GDP per capita. (Britain is slightly higher in nominal terms, France is slightly higher in PPP.) Both are important suzerains, both have nuclear weapons, and both have an unusually large role for a single dominant metropolitan area. It is a country that is fulfilling its goals.
However, there are also some important differences. The land area of France is more than twice that of France. France is also slightly socialist. French workers are more productive, but their working hours are shorter and their total output per person is about the same. SHB is:
France is famous for its heavy taxes. factorization Employer tax In addition to what employees actually see, French companies Need to spend 137,822 euros For a worker to earn a nominal salary of 100,000 euros, wages and employer taxes are taken, resulting in a take-home pay of 61,041 euros. For UK workers to take home the same amount after tax (equal to £52,715, €61,041), UK employers would only need to spend €97,765.33 (£84,435.6) on wages and employer-side taxes.
But despite these high taxes, onerous regulations, and strong trade unions, French workers are much more productive than British workers and are more like Americans than we are. French workers take more holidays off and work shorter hours, so France’s GDP per capita is about the same as Britain’s.
Why is France so prosperous despite high taxes and strict business regulations? The only reason France can afford such a large and interventionist state is because it does what Britain is blocking. Because it’s well constructed. housing, infrastructure and energy supply.
Basically, both Britain and France do some things well and some things poorly. The UK is relatively (and I would like to emphasize relatively) better at motivating people to work. France is relatively good at building capital. Within the EU, both countries rank only in the middle in terms of GDP per capita.
So why is Britain so bad at making things? First, there is a recent issue. Britain was once an outstanding country in building housing and infrastructure.
It’s a long report, but there are three recurring themes.
1.Nimbyism
2. Excessive regulation and red tape
3. Inefficient production by government
This eerie problem that the US is experiencing in certain places such as California and the North East is a problem all over the UK. And even if projects are approved, the UK faces excessive regulations for new infrastructure and energy projects similar to those faced in the US, driving up costs significantly. And finally, central governments tend to be more wasteful than local governments and private companies.
French cities pay 50 percent, and in some cases 100 percent, for almost all mass transit projects that affect them (local and national governments pay the rest). Naturally, they fight vigorously to contain cost inflation and are usually successful. The Madrid Metro, one of the best systems in the world, was fully financed by the Madrid region. A municipality smaller and poorer than London successfully financed a 203km underground extension, including 132 stations, between 1995 and 2011. This is approximately 13 times as long as London’s current Jubilee line extension. Other countries still operate systems that provide civilian infrastructure. Tokyo’s legendary transportation network is provided by private companies and is regularly expanded. Fund development through land speculation around stations. France’s excellent highway system is built and maintained by private companies, who manage it with vigor and fiscal discipline.
In the UK, the centralization of infrastructure development in central government has fundamentally weakened this incentive. No public entity has the existential benefit of controlling costs as much as a private entity. However, because the costs are spread over very large constituencies, the central government is less interested than fiscally responsible local governments.
The second article is matt iglesiasshows how government regulation reduces the efficiency of the public sector. This finding supports both left- and right-wingers who (depending on your point of view) see government regulations as governments unfairly handicapping the private sector or preventing abuses in the private sector. I think it will surprise a lot of people. Iglesias argues that both are wrong, and that regulation is far more problematic for the public sector.
While some parts of the private sector (airlines) are actually less regulated and others (housing) more heavily regulated, it is the public sector that is most heavily regulated. And this public sector overregulation is trapping us in a vicious cycle. First, it makes it extremely difficult for community center organizations to carry out their mission. Second, this gives the public sector a reputation for incompetence. Third, the low social prestige of public sector jobs leads to selective retirement of more ambitious people. Fourth, elected officials who want to rush something often look for ways to bypass existing public sector institutions and further reduce their prestige.
And what we really need is not more money, or more commentary on how the free market is out of control, or a new anti-growth paradigm.
What we need is to increase the likelihood that when elected officials want the government to do X, X will be done in a reasonably timely and cost-effective manner. is a vigorous campaign for public sector reform.
Iglesias discusses how many counterproductive government regulations apply only to the government sector and not the private sector. These include well-known examples such as the “Buy America Rule” on procurement and the Davis-Bacon regulations on public sector workforces, but there are many others in which governments have shot themselves in the foot. It also covers lesser-known examples.
It is interesting to compare the British study with Iglesias’ post. Both reports appear to be written by pragmatic policy buffs who want to see more built. However, I would describe Southwood, Hughes, and Bowman as center-right and Iglesias as center-left. To be clear, while both believe there is an important role for the public and private sectors, SHB clearly emphasizes the benefits of privatization, while Iglesias clearly emphasizes the benefits of privatization. It highlights how reforms can help restore confidence in government capacity. To accomplish something useful. This may partly reflect differences in the types of public officials they seek to influence.
What I liked most about these two articles is how they go against long-held stereotypes. ben southwood is funny twitter thread It pokes fun at the stereotype that France is more communal than Britain. Iglesias uses the same kind of humor when he encourages readers to think less dogmatically about terms like “regulation” and “neoliberalism” and in a way more consistent with what’s actually happening in the real world. Use frequently.
PS. I suspect some of the issues discussed in these reports are also occurring in other Anglophone countries such as Canada and Australia. I hope commenters from those places will weigh in on this matter. Why is it so difficult to make things in English-speaking countries? What about our legal systems?
