by skippyboxedhero | 2025-12-15 19:00:34+00:00
...i am confused. Yes, we do understand why.

The UK choosing to shut down most of its native financial sector is a good example. With RBS it was particularly mad because the government ended up being a massive shareholder and then they chose to shut down all the profitable parts of the business, and double-down on the worst parts. Natwest rates franchise was probably worth £5bn, they basically shut the unit down in entirety (and a lot of those people went to large hedge funds and just went back to generating hundreds in millions in revenue) meaning that the taxpayer lost tens of billions AND the economy was knee-capped for decades.

This is taken as an example to show that even when the incentives were there, the government took a decision for nakedly political reasons. In the opposite direction, they folded HBOS into Lloyds, this was done to protect Scotland (both the PM and the Chancellor had a large number of constituents who would have lost their job if these banks were shut down...they were bailed out) and the result was Lloyds needing a bailout about one year after the banking crisis ended in the US. Again, this was sold to the public as the result of "risky casino bankers on huge bonuses"...in reality, it was just poorly paid commercial bankers lending very large amounts of money to people who couldn't ever it pay back AND politicians then making terrible choices with other people's money to boost their chances in some byelection no-one remembers.

This attitude permeates almost everything the UK does. Schools, politics first. Healthcare, politics first. Electricity, politics first.

I genuinely do not understand how anyone can't look at the scale of political intervention into the economy in the UK and not understand why this might lead to lower growth than the US. In Scotland, the government is 60% of the economy, this higher than Communist states with no legal private sector, it is an incredible number. If you look at income distribution, after-tax income under £100k is as flat or flatter than Communist states too, again this is incredible.

What is surprising is that the UK's economy is growing so quickly. The supply-side in most sectors is almost completely gone, in some economically-significant sectors you have regulators effectively managing companies, very few workers have economically useful skills because of the strong incentives in place to acquire non-economic skills...and the economy is still growing faster than most of Europe. To be fair, almost all of that immigration of low-skilled labour into the UK which is going to be absolute time-bomb financially and the rapid growth in public-sector pay has also helped consumption (even more so, the UK is running a deficit of 5% of GDP with revenues growing 4%/year in an economy that is shrinking in per capita terms...obviously, this is not sustainable)...but growth is still way higher than reason would dictate.

Comparing this to the US is not serious in any way. You have a country that prioritises growth beyond reason and are comparing that with a country which is hostile to change beyond reason. There is no possible comparison. The decisions every government since 1997 has made have been intended to reduce growth, people happily voted for this, and are now upset that the economy is shit...why?