There’s growth and there’s growth


If you ask which advanced countries have grown fastest since 1999, the answer is the US and the UK.  Real incomes and output are up by around  30% (to 2012) in these two leading economies, compared with growth of around 20%  in France and Germany. Italy and Spain are lower.  Those who write in to this site to belittle the UK’s economic performance should take note. On this measure Japan has done badly, leading to people to talk about a lost decade or two with no growth.

If, however, you ask about growth per head the picture is different. Italy, France and Spain still struggle at the bottom of the table, but Japan fares much better. Falling population in Japan is part of the reason why GDP is not growing. When you measure output for each individual in the society, the Japanese growth rate has been faster than the UK and the US.  Germany also does better on this measure. Japan between 2003 and 2012 grew  by around 7%, the US by around 6% and the UK around 4%.

This week sees the visit of the Japanese Prime Minister to Europe. Last week President Obama was in Tokyo. Unusually, the two close allies did not reach agreement on crucial matters for the planned trade agreement or “Trans Pacific Partnership”. Japan is not willing to go as far as the US wants in liberalising agricultural trade.

Japan sees the need for more allies in the west. Whilst the US has reaffirmed her military and diplomatic support for Japan at a time of tension with China, the move of the US towards less foreign intervention is leading the Japanese to look around for additional security through partnerships elsewhere as well. Japan is easing her restrictions on the export of arms and looking for security partnerships with leading EU countries and NATO.

The curious case of the Japanese economy is worthy of study for those of us wrestling with the aftermath of the Great Recession and banking crash in the west. Japan took a long time to sort out her broken banks and to adjust her grossly overblown property market following the collapse of 1990. Japan has run with very low interest rates for years, has built up a collosal state debt, run large deficits and has printed a lot of extra money. None of this has so far proved inflationary, nor has it boosted output much.

Japan has been able to do this because it has high domestic savings, with savers prepared to put much of their money into Japanese state debt. It has also run a good balance of payments surplus until recently, meaning it has a strong external position. These forces do not apply in the US and UK.  Japanese policy is geared to trying to generate some inflation, which is starting to  happen.

There is growth and there is growth. People in practice value growth in their own incomes and living standards more than general growth, which may in part be based on expanding the population. The figures show Japan has not done as badly as some think, though an ageing population and an economy relatively closed to 0verseas money and talent does find it more difficult to adapt than more open societies. The UK is now going to enjoy both sorts of growth, after a period of poor performance in real incomes  led by the big drop in output and income per head in the Great Recession.

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  1. Mike Stallard
    Posted May 3, 2014 at 5:49 am | Permalink

    Two points stand out very clearly to me.
    The first is that not wanting Gaijin to enter their country, the Japanese are having a labour shortage. We did exactly the opposite to that.
    The second is that Japan has deep problems, but nobody is suggesting that because of their geographical position on the map they ought to enter China as a province of More China.

    • Hope
      Posted May 3, 2014 at 8:24 am | Permalink

      Look across to the Eurozone to see the future that the LibLab Con want the British people to have. Living standards dropped through the floor, destitution and pride taken from them by a few fanatical politicos who want the Euro and the EUSSR. They were prepared to sacrifice Greece, EU were prepared to overthrown governments of Italy and Greece to get heir way.

      Clarke, Heseltine and Blaire shared a platform to convince us this is the way forward and they want the Euro for the country. Clegg an ardent supporter also wants it. The country would be sunk if they got their way. I hope the electorate remembers this. Cameron has these people in his cabinet and are his advisers. There is no different between Labour and Tory because they are content to be ruled and get their orders from Brussels.

      His latest PR stunt to demonstrate his Christianity despite the government fighting in the ECHR to prevent crosses being worn in huge work place, gay marriage without a mandate etc. In contrast he is content for the wearing of the turbans, burka and niqab. At least we knew what Brown stood for even if we did not like it. Time for a change.

      • uanime5
        Posted May 3, 2014 at 8:42 pm | Permalink

        Look across to the Eurozone to see the future that the LibLab Con want the British people to have. Living standards dropped through the floor, destitution and pride taken from them by a few fanatical politicos who want the Euro and the EUSSR.

        You seems to have ignored that Germany and France are in the eurozone, yet recovered far more quickly than the UK. In fact much of the eurozone is recovering faster than the UK.

        They were prepared to sacrifice Greece, EU were prepared to overthrown governments of Italy and Greece to get heir way.

        If the EU wanted to overthrow these countries then why did they allow them to have elections a few years later?

        • Hope
          Posted May 4, 2014 at 8:08 am | Permalink

          Uni, look at All the southern countries and tell us what you find. The rest of your blog is drivel. You might also remember the EU forbid Greece to have a referendum! They put their place men in before any form of election took place. The EU is a draconian dictatorship that belongs to the past and should be consigned to the past.

        • Richard1
          Posted May 4, 2014 at 8:56 am | Permalink

          What are you taking about? Unemployment in France is over 10% and there is a huge exodus of productive and talented people because taxes are too high. Certainly the UK had it particularly bad due to Labour’s Great Recession, so its taking a long time to recover. It always takes a long time to recover from the shambles left by Labour Governments. Hopefully we won’t have a Labour govt again so we can avoid another such bust.

    • bigneil
      Posted May 3, 2014 at 11:14 am | Permalink

      Managed to catch a program a few months ago on Japan. It was showing how much trouble they are in, masses of elderly people yet young ones have a low birth rate. They apparently won’t let many immigrant workers in and one character was a nurse, even he was under tight restrictions on what he could do, as he was not Japanese. The outlook was not very good at all.

      • Hope
        Posted May 3, 2014 at 4:52 pm | Permalink

        Of course the US, Canada, Australia, New Zealand and Japan must have racist immigration policies because they have a sensible immigration policy based on their national need. It does not conform to EU controls and therefore by not kowtowing to the EU the countries must be racist. This of course follows the LibLabCon logic of UKIP’s immigration policy.

        We should also not forget how the EU changed the budgets of some of its member countries because it did not like it. The UK must submit its budget to the EU before it is announced in parliament as well. Something about this appears to be undemocratic to my mind.

  2. petermartin2001
    Posted May 3, 2014 at 6:12 am | Permalink

    I’m slightly surprised you chose 1999 as a starting point. All of the growth since then has been due to Labour Governments. There has been no growth since 2008. To have been fairer to the Conservative Party you could have chosen 1992. Once the stupidity of the ERM and Black Wednesday had been left behind the UK enjoyed a good economic performance for the next 16 years. Credit for the turn around must go to John Major for that.

    The problem has been 2008 and afterwards. GDP is still less that it was 6 years ago. Unemployment is 2.3 million. When Mrs Thatcher won the 1979 election on the slogan “Britain isn’t Working” it was less than half that. That was on the old scale. The new scale has been influenced by over thirty adjustments in the way the figures are collated, each one designed to reduce the total. So on a like for like basis unemployment is now three times higher than it was in 1979.

    Labour obviously has to take its fair share of the blame for what happened in 2008. But the Conservative Party has to accept its share too. The US has recovered much better than the UK since then. There is no need to have unemployment at such high levels. You don’t need to be an economics whiz to know that an economy cannot achieve its potential unless everyone who is capable of working is both required and able to make a positive contribution.

    • Tad Davison
      Posted May 3, 2014 at 9:16 am | Permalink

      Going back to a reply you gave to one of my posts a few days ago Peter, I got the impression you were into blaming people. Personally, I like to apportion blame when people get it wrong, otherwise those responsible for the mistakes can go on making them and never learn. Labour have a lot to answer for, but I do accept that the Tories could have done better. I also agree with your point about people who are capable of working, should work, so what are your views on the scenario whereby public sector employees count towards GDP?


      • Tad Davison
        Posted May 3, 2014 at 9:18 am | Permalink

        *weren’t (two hours sleep I’m afraid)


      • petermartin2001
        Posted May 3, 2014 at 12:10 pm | Permalink

        2008 represents a general failure of the system internationally. So the responsibility, or the blame if you like, has to be shared. I didn’t like the comment that if only the electorate could be persuaded to blame it all on Labour then the Tories would benefit at the next election. Especially as there were no warnings from them until it was all too late.
        Similarly I wouldn’t agree that the Democrats in the US should try to blame it all on President Bush and the Republicans for their own electoral advantage. But of course politics is a rough business so that’s exactly what happens everywhere.

        I’m not quite sure what you mean about public sector workers and GDP. Does it make any difference who owns the Royal Mail for instance? Shouldn’t the business have been counted when it was in the public sector but now its in the private sector then its all different and so it can be counted?

        • Tad Davison
          Posted May 3, 2014 at 7:06 pm | Permalink


          I don’t think any of them were really blameless, but when Sir Stuart Rose, who at the time was one of Gordon Brown’s advisers, told him prior to the crash that there was something wrong with the markets, and then Brown took no heed, I’d say that makes Brown all the more culpable. If Labour voters care to conveniently forget such incompetence, they too can repeat the mistakes of the past, and give us another dose of what made us all ill in the first place.


      • Denis Cooper
        Posted May 3, 2014 at 12:55 pm | Permalink

        Of course if people are to blame then they should be blamed; and I’ve no truck with the idea that “we should avoid a blame game”, which is usually put forward by people who know that they are to blame!

        • Lifelogic
          Posted May 3, 2014 at 7:15 pm | Permalink

          Indeed, also it is never “too early to speculate” as silly reporters and BBC spokes people love to say- after all that is what speculation is it is perfectly sensible and proper to speculate with whatever limited fact you have to hand.

          It does not mean you will always be right.

    • Chris S
      Posted May 4, 2014 at 12:19 am | Permalink

      “There is no need to have unemployment at such high levels”

      You are right but the trouble is, that because of the EU and Labour’s open door policy, the people who have got on their bikes and looked for work, to quote a phrase, have been predominantly Polish rather than British and they have chosen to live in the South and in London.

      They are nice people and I admire their enterprise and their attitude and willingness to work but if they had not been able to come here in such vast numbers, employers would have been forced to recruit and train British people and of necessity create jobs in other parts of the country where they are so desperately needed.

  3. Gary
    Posted May 3, 2014 at 6:29 am | Permalink

    Japan has large export industries and a trade surplus, we don’t.

    You hit the nail on the head yesterday, you either export to cover imports or you sell assets. Surely a country can keep up appearances for as long as it has silverware to sell, and then what?

    This notion that there is no inflation is false. The govt debt has inflated enormously. How long can govt keep growing to cover the shortfall in the economy? It depends on how much equity in the private sector you have to burn through. Japan had the highest savings in the world, they burned through that and its taken 25 years.

    Govt growth contributes to GDP growth. Imputed rent is 10% of our GDP, and imputed rent produces nothing. What percentage of our GDP comes from building and selling each other houses, that contributes almost nothing to to cover imports ?

    GDP growth is a con.

  4. Lifelogic
    Posted May 3, 2014 at 6:30 am | Permalink

    You say (per cap) that between 2003 and 2012 the UK grew by around 4%. Well if you allow for the blatant political distortion of inflation figures used this might will be nothing at all.

    All the benefits of improved technology, science, manufacturing, IT, energy production, agriculture, GM, advances in medicine etc. all wasted by the ever increasing, bloated and largely non productive government. Further depressed by government using taxes to subsidise the private sector to make them do daft things. Electric car subsidies, renewable energy subsidies, subsidies for the feckless, trains, the Olympics and all sorts of nonsense. Also by uncontrolled low skilled and low paid immigration.

    More is also wasted on government propaganda, the BBC, vote buying, the minimum wage, a poor legal system, an absurdly complex tax system and daft employment laws and restricted planning.

    We need fewer lawyers, politicians and bureaucrats more scientists, engineers, builders and business people.

    An appalling record from the UK government. Lots of overpaid people largely living of the backs of the truly productive but often poorer people in the productive sector. These people usually have little or no pensions too thanks to Gordon Brown & George Osborne’s muggings.

    • Livelogic
      Posted May 3, 2014 at 9:58 am | Permalink

      A half decent business might get growth of perhaps 10%+ PA (and large increases in productivity per head) and this is despite the mugging and inconveniencing delivered by the government. Yet despite this, the government presides over virtually no growth (per capita) over the country. This as they prefer to waste it all on over paid and pensioned bureaucrats, lawyers, greencrap, a two jumbos a month killing (in three letters) N H S and the likes with little positive output and often severely negative ones, of just inconveniencing, mugging or even killing the productive.

      • Livelogic
        Posted May 3, 2014 at 10:03 am | Permalink

        10% for nine years is 136% increase the government 3% (and after inflation fiddling) look rather pathetic.

        Still we have lots of green crap, white elephant stadia, HS2, Boris bikes blocking the pavements, the millennium dome, lost of damaging wars, endless bureaucrats and lawyer to show for it I suppose.

      • Livelogic
        Posted May 3, 2014 at 10:07 am | Permalink

        I have a letter from 10 downing street telling my business I get £2000 off my companies PAYE. It does not quite say vote Tory on it. Why from Cameron? I do not get a vote any more but it would make me less likely to vote for the 299 tax increasing ratter not more.

        Good to know they can still piss money away on pointless propaganda letters.

    • Lifelogic
      Posted May 3, 2014 at 11:18 am | Permalink

      “The UK is now going to enjoy both sorts of growth, after a period of poor performance in real incomes led by the big drop in output and income per head in the Great Recession.”

      Well perhaps, but under Labour with a new rent act, a five year production plan and endless other lefty lunacies. Still we get those from Cameron anyway.

      It is a tragedy that Cameron threw the last and soon the next election with his Clegg on TV, ratting on the EU and IHT, green crap and big government & high tax agenda.

      He won’t even dare to debate Farage as Cameron like Clegg has no arguments to put.

      He had on open goal with Gordon but alas he suffers from lefty, anti-science and anti-logic genes.

      • zorro
        Posted May 3, 2014 at 5:31 pm | Permalink

        Indeed, I see that Cameron has the cheek to call Farage ‘a big chicken’ for making the sensible decision not to contest that seat in light of the European elections in particular.

        All I will say is pot…kettle….carbon

        Cameron can say that when he has the ‘cojones’ to debate Farage about the EU issue. Instead, he sends his human fig leaf ‘Clegg’ to get routed. Some mightt say that Cameron is a ‘big chicken’ for flunking that…..after all he is the PM.


  5. alan jutson
    Posted May 3, 2014 at 6:37 am | Permalink

    Growth in GDP per individual is surely more preferable than growth measured in any other way, given that the growth in population seems to be excluded from any other calculation.

    • Mick Anderson
      Posted May 3, 2014 at 8:05 am | Permalink

      Governmental spending should also be excluded from GDP, if you really want to be able to assess growth.

      I don’t care that this measure would be different from other countries; only that we would be able to see how well we were really doing.

      • alan jutson
        Posted May 3, 2014 at 9:13 am | Permalink



      • Lifelogic
        Posted May 3, 2014 at 10:47 am | Permalink

        Indeed this as it so often governments produces little of any real value often the reverse.

        Does motorist clamping for over staying on your meter when little Peter needed the loo or the queue at the post office was too long or straying into a totally empty bus lane really add anything to quality of life or human happiness?

        • Chris S
          Posted May 4, 2014 at 12:27 am | Permalink

          No is the answer !

          Fines just provide income to employ people who would be far more productively employed in the private sector and take money away from the rest of us which we would be able to spend on buying goods and services.

          We reached the height of lunacy when Labour introduced the SORN scheme whereby you can be fined £80 or more for keeping your own car or motorcycle securely locked in your own garage.

          Of course the office dealing with the fines was located in Scotland !

          Roll on Independence, that’s a few more public sector jobs that we can relocate to England.

      • Denis Cooper
        Posted May 3, 2014 at 12:41 pm | Permalink

        Well, I’ll invite execration by condemning that as nonsense.

        Model A: Lots of people pay money to an insurance company to pay for doctors and nurses to look after them when they are sick.

        Model B: Lots of people pay money to the government to pay for doctors and nurses to look after them when they are sick.

        Without saying which Model is the best, it would be absurd to include A in the GDP statistic but exclude B; that would be equivalent to saying that the work of doctors and nurses has measurable value under Model A but is totally worthless under Model B.

        Apart from anything else, on your method of calculation if the NHS was privatised then politicians could claim an instant boost to GDP, even though exactly the same medical staff were performing exactly the same work and were being paid exactly the same.

        • lifelogic
          Posted May 3, 2014 at 3:38 pm | Permalink

          Indeed the government can produce some real and useful output and indeed sometimes it even does. It could produce far more but it is not there money and they (as a body) really do not care in the slightest what they deliver. This even though they are some excellent and dedicated individual there. It is the system (and the political direction that does not work.

          Some medical care, defence, fire service, law and order, some building controls, some regulation, education etc. do some good, but in general they are so inefficient and above all largely misdirected. They produce a net negative output on balance I suspect just look at Bliars pointless wars on a lie. So many in the state sector just inconvenience and over tax the productive. They further misdirect the private sector with idiotic green subsidies, HS2 and other bonkers ideas and religions.

          Miliband rent act will be a disaster for both Tenants and Landlords for example.

        • Mick Anderson
          Posted May 3, 2014 at 4:34 pm | Permalink


          You are assuming that if the NHS were to be (fully) privatised, it would provide exactly the same services as now. I suspect that you would find that the service would be streamlined, and the non-critical procedures that the tabloids like to complain about would not be available.

          A private company has incentive to optimise or improve the way it does things, a publicly funded organisation rather less so. If everyone paid for the specific service provided by your notional private NHS (or the end result of the service) then you could attribute cash value as a contribution to GDP more faithfully.

          At the moment, GDP is more about measuring financial churn, although politicians imply that it represents the Countries profit. This is patently ridiculous.

          • Denis Cooper
            Posted May 4, 2014 at 11:31 am | Permalink

            No, I’m assuming that the day after it was privatised the NHS would be exactly the same as it was the day before, but on your suggested modification to the GDP calculation all its activities would immediately start contributing to the GDP statistic whereas previously they had made no contribution at all.

        • waramess
          Posted May 3, 2014 at 5:19 pm | Permalink

          Hardly the point Denis. The point is that as the Government can only spend that which they have taken from the productive sector then their spending must be part of the calculation of the Gross Product.

          • Denis Cooper
            Posted May 4, 2014 at 11:33 am | Permalink

            Well, I’m not sure whether you’re agreeing with me or disagreeing!

        • petermartin2001
          Posted May 4, 2014 at 11:42 am | Permalink

          Denis Cooper,

          You’re quite right of course! Some of us would prefer model A and some model A but that doesn’t mean that our preference can affect fundamental economic considerations.

          We can also imagine an economy in which the State owns nearly everything . So does this mean that its GDP has to be close to zero? Of course it doesn’t make any sense to say that.

          • Denis Cooper
            Posted May 5, 2014 at 8:49 am | Permalink

            A rare occasion when we are in total agreement!

    • Lifelogic
      Posted May 3, 2014 at 10:43 am | Permalink

      Indeed but to governments they just want more worker bees to milk (honey perhaps) they are interest in tax take.

  6. John E
    Posted May 3, 2014 at 7:49 am | Permalink

    This population growth in the UK also has implications for government spending. I wonder what the increase in government income and spending looks like on a per capita basis as opposed to the totals usually quoted.

    • Lifelogic
      Posted May 3, 2014 at 10:52 am | Permalink

      Government borrows say £10 billion and pisses it away on pointless offshore and onshore wind and electric car subsidies. Causing an increase in GDP but it actually clearly makes us all poorer as the borrowing is just deferred tax and the projects subsidised are bonkers.

      My wife is employed to look after your children and yours after mine – an increase in GDP of two wages but we are no better off than looking after our own children indeed worse off after tax!

  7. Andyvan
    Posted May 3, 2014 at 8:02 am | Permalink

    Since you are basing your argument on GDP figures, Mr Redwood, I reject it entirely. GDP includes government spending which comes either via theft from the productive part of the economy by taxation and inflation or by theft from the future by borrowing. This should not be counted as a plus figure. It should be subtracted from the real economy (private sector). When you do that you can see that all indebted nations are actually getting poorer. That explains why Britain has sunk from the richest country on Earth to the second most indebted country on Earth.
    Japan, UK and US and many others are technically bankrupt. No amount of massaging governments propaganda statistics will change that fact. In time nature will take it’s course and correct the imbalances, then history can judge whether we should have been taken in by our “leaders”.

    • Tad Davison
      Posted May 3, 2014 at 9:25 am | Permalink

      Absolutely Andy! And backed by paper, whilst the Chinese can’t get enough of gold it seems.


  8. Neil craig
    Posted May 3, 2014 at 8:26 am | Permalink

    This limiting it to “advanced countries” is very much begging the question. That basically means the EU (in recession for its own reasons, Japan & the US (& we only match the US by carefully selecting dates taken).

    Is Singapore not an advanced country – it recently had 14% growth in 1 year (granted this was exceptional but if John can chose dates so can I)?

    The fact is that the world economy is growing at 4-5% and if we exclude the recession hit EU that means near 6%. The UK, on a good few months, is making half the AVERAGE. That should not be a matter for pride. Indeed it should not, in a non-Orwellian society, be a matter for the state broadcaster to regularly tell us we are at the top of the world list.

    We could get to the top of the world list by quitting the EU, allowing the building of as much electricity capacity at commercial rates (2% of current government enforced ones) & cutting the size and regulatory burden of the state. With X-Prizes added we could easily exceed the best in the world. I am sure John knows this.

    As these policies are all, to a greater or lesser extent, endorsed by UKIP – would it not be a in the national (as well as party) interest for the Tories to seek some sort of agreement with us.

    • lifelogic
      Posted May 3, 2014 at 4:28 pm | Permalink

      Indeed even just 6% PA growth for 9 years is nearly 70% growth. But the UK had only 3% and even that is questionable after the political manipulations of the inflation index. Not much of an achievement for the three socialist in charge Bliar, Brown and Cameron.

  9. Brian Tomkinson
    Posted May 3, 2014 at 8:43 am | Permalink

    I am clearly not alone in treating with scepticism your claims about GDP growth. I suppose that, having failed to eliminate the deficit, still increasing the debt, instead of reducing it, and adding over 200,000 to the population each year, you need to find something that you can claim as a success and divert attention from your government’s record. Yesterday, you reminded us that “All the time we import more than we export we have to sell assets to pay for the imports”. However, you gave no numbers to help evaluate the scale of that particular problem. Perhaps you will be able to in a future posting.

  10. APL
    Posted May 3, 2014 at 8:57 am | Permalink

    JR:”great recession”

    What’s the difference between a great recession and a depression?

  11. Gary
    Posted May 3, 2014 at 9:22 am | Permalink

    talking about selling the silverware, as details rise out of (words left out ed) the Royal Mail selloff, it is confirmed what we all suspected. It was a deal between spivs and speculators to underprice the offer, and flip the preferential for fat fees and profits all around. God ,these politicians are thick, or (bed ed)
    Throw in that £49billion of our money (put at risk in RBS ed)
    My extreme aversion to govt grows each day.

    • A different Simon
      Posted May 3, 2014 at 3:57 pm | Permalink

      Politicians and many public sector workers are furnished with defined benefit pensions so that they never need acquaint themselves with trading , investing or risk .

      I very much doubt many of them have online trading accounts/SIPPs/stocks and shares ISA’s .

      Until our politicians have their defined benefits pension safety net removed and are forced to invest their own money they will never gain the first hand experience necessary to oversee such a sale or bring The City to account .

      For an example of naivety look at Gordon Brown anouncing beforehand his intentions to sell the gold .

      Look at NEST pensions , devised by Civil servants who would never have to use them . Same thing with regulators of pensions .

  12. bigneil
    Posted May 3, 2014 at 11:39 am | Permalink

    Isn’t the main point that growth should be per person? If the growth was 10% for the country, but ( being ridiculous) population grew 50% in the same period, the drop in money per person would be ridiculous. Plus we are supposed to be in “austerity”, according to a column of yours a few days ago, yet DC wants to borrow even more to have a ( words removed by myself ) train just to get rich people through the destroyed countryside quicker. Another column was on living standards, criticising Labours lack of plans. I do not see any increase in living standards , except for the elite. If we are in deep debt, and borrowing continues, then we can only get deeper in financial trouble. IDS trumpeted his Universal Credit and how much it would save. If it is so successful how come there is not a fanfare? Or is it as I believe, the money saved from cuts to English, is just being diverted to all the people who have arrived here purely for their handouts i.e. same amount (or more) of money to an ever increasing amount of people meaning less for everyone.
    An article a few days ago said that those immigrants on low wages were paying minimal tax, those with families were actually COSTING us to have them here, taking in their tax credits etc and their NHS costs. It cannot carry on quite simply, it’s only a matter of time till the collapse. One poster has said we are the 2nd most indebted country, if true then carrying on dishing out free everything to people who arrive, cuts to all our forces and services, with ridiculous plans for a train really do not make any sense at all.
    Why is the deliberate destruction of this country and it’s people, in fact the whole nation, being allowed to happen. Talk of growth seems to be a diversion, while our destruction seems to be more important.

    • ian wragg
      Posted May 3, 2014 at 4:49 pm | Permalink

      Try looking up Agenda 21 and you will see why the LibLabCon are signed up to destroying us.

  13. Denis Cooper
    Posted May 3, 2014 at 12:17 pm | Permalink

    Others have pointed out serious flaws with the GDP statistic, to which I would add that because it depends entirely on the volume of transactions where money changes hands it ignores all the unpaid productive work in our society.

    Hence if politicians want to be able to boast about increased GDP one way is to change unpaid work into paid work, and one particular favourite is to increase “labour force participation” by persuading women not to do so much unpaid work looking after their families but instead find paid work, for example looking after other women’s children in a nursery, or working in a factory where ready meals are prepared, and so on.

    Not that I am in any way opposed to women going out to work – or having careers, not the same thing – I just think that it should be recognised that a fair chunk of recorded GDP growth has been attributable to that trend of more women doing things for money rather than for love as they did before.

    But, JR, having accepted that the GDP statistic is deeply flawed, aren’t you venturing onto rather dangerous ground by suggesting that what matters most is per capita GDP rather than total GDP?

    Because if it’s per capita GDP that matters most then the government’s already very weak economic case for allowing and encouraging mass immigration is totally shot to pieces.

  14. Richard1
    Posted May 3, 2014 at 12:40 pm | Permalink

    The most useful exercise is to ask what growth could have been with different policies. In the case of Japan, performance over the last 20 years would have been far better had they had a US style clean out and great reckoning of bad debts in the banking system. Japan has a lot going for it – state spending and tax /GDP c. 10% lower than Europe’s average for example, like the US, but they could have done better. In the UK the big mistake was of course the Labour govt’s huge expansion of state spending, poor monetary policy and inept financial regulation, leading to a credit boom and bust with banks 50x leveraged, which they then compounded by wasting our money on bank shares of doubtful or nil value. Its the same mistake as the Japanese made, extend and pretend. So we could have been better off without Labour’s Great Recession.

  15. lojolondon
    Posted May 3, 2014 at 2:07 pm | Permalink

    If France has grown by 20% since 1999 then that must be based on the effect of EU funds, mostly the CAP, because France has become less and less hard working and more and more dependent on Britain and Germany’s contributions to the EU.

    • uanime5
      Posted May 3, 2014 at 8:59 pm | Permalink

      If France has grown by 20% since 1999 then that must be based on the effect of EU funds, mostly the CAP, because France has become less and less hard working and more and more dependent on Britain and Germany’s contributions to the EU.

      What exactly is your evidence that the French have become less hard working? If you’re basing this on the hours worked per week you’ll need to remember that the average German works 35 hours per week.

      • Tad Davison
        Posted May 4, 2014 at 10:19 am | Permalink

        Would you not agree that because of the policies and tax hikes of a socialist president who incidentally is the least popular in history, that the French economy has done badly?

        It is often the case that it isn’t so much about the French not being as hard working, than not working at all. Pity you always refuse to see the failings of the EU and try to justify socialist drivel. It must be grand to live in a world of such detachment.

    • sjb
      Posted May 4, 2014 at 8:17 am | Permalink

      lojolondon wrote: If France has grown by 20% since 1999 then that must be based on the effect of EU funds, mostly the CAP […]

      Not sure about 1999, but France has been a net contributor to the EU budget for every year since 2000.

  16. acorn
    Posted May 3, 2014 at 5:02 pm | Permalink

    “Japan has been able to do this because it has high domestic savings, with savers prepared to put much of their money into Japanese state debt.”

    You have got it the wrong way around. The Japanese insisted on having high savings, so the government had to run a large deficit to supply those savings on top of the BoP surplus.

    “The UK is now going to enjoy both sorts of growth”.

    I do so hope you are right JR; but, it is not going to happen if you insist on a zero deficit for 18/19. UK citizens are much more likely to spend what little they have got, than the Japanese. They are much more likely to borrow to spend than the Japanese, which is good for GDP. But; eventually they will max out their credit cards.

    • petermartin2001
      Posted May 4, 2014 at 12:11 pm | Permalink


      In an economy which imports and exports are of equal value, it must be true that the government deficit equals the net savings of the population.

      So does this mean that the population saves because the government runs a deficit, or does the government run a deficit because the population net saves? Incidentally , I think both Mr Redwood and yourself favour the latter, so you aren’t in disagreement.

      If we bring exports into the picture we can say the government deficit equals the net savings of the population plus the value of net imports bought by the population.

      So does the population import more than it exports because the government runs a deficit or is it the other way around?

      I’m not sure it is at all easy to assign cause and effect. But, it is isn’t too difficult to notice that accounting principles must hold when trying to bring the govt deficit under control. Consequently, the desire of the population to net save, or net import, must at least be considered a possible reason for the government to be in deficit.

      • acorn
        Posted May 5, 2014 at 7:17 am | Permalink

        In a sovereign floating fiat currency economy, the government has to spend first before anything happens. Eventually, the government will get all its spending back by taxing anytime its tokens (money), moves around the economy.

        Humans like squirrels have a propensity to save, or even hoard. If the government’s tokens are not moving from account to account, it is difficult to tax them; so, the government does not get it back while it still having to “spend” to cover its promises to supply the collective goods and services (health; education; pensions). The result is the governments “budget deficit”.

        Similarly, if the Chinese turn up on our shores with 60 inch plasma TVs; cheaper and better than anything already available here; we buy them with our “money”.

        The Chinese end up with a bucket full of our governments money in a BoE current account. They will swap that “money” (£ Stirling) for bits of paper from our Treasury, that pay interest and later, possibly pay £140 million for a penthouse flat in west London.

        My links get edited out now we are into the 2014/15 elections phase, which is understandable on an MPs non-party website. So with luck you could Google:- Modern Money and Public Purpose 2: Governments Are Not Households. Otherwise, Google:- Why I disagree with Martin Wolf and Positive Money .

  17. Terry
    Posted May 3, 2014 at 5:41 pm | Permalink

    By “Growth”, John, do you mean a rise in GDP?
    The problem with GDP is that it is an Government controlled index and based, surprisingly, on expenditure rather than profit or returns on investment. Past Governments have manipulated this figure by (unbelievably) actually spending more. Godo Brown successfully created a ‘no more boom or bust’ scenario using this very tactic. It beggars belief that a Chancellor can borrow more then spend it on wildly inefficient welfare schemes then rightly claim “growth”.
    Who was it that said”There are lies, damn lies and Statisitics?

    So, for us who live in the back streets of Britain, let’s have an independent assessment – a growth index based on OUR cost of living and OUR disposable income, rather than one generated by and strictly for the benefit of the Government. Whoever they may be.

  18. Dennis
    Posted May 3, 2014 at 7:59 pm | Permalink

    If Japan’s finances are in a chronic state I still greatly regret changing all my earned Yen in the 1990s into Sterling at the time – I’ve lost a lot of money.

    But I remember hearing from the Chancellor on my shortwave radio that Britain is NOT going to leave the ERM – I immediately informed my H.K. bank to change all my Sterling (getting 15% interest) into US dollars – one of my very few wise currency moves.

    • Tad Davison
      Posted May 4, 2014 at 10:26 am | Permalink

      Good point Denis, and one where the finger of blame this time must be pointed towards that doyen of financial wizardry, John Major. Although George Soros wasn’t complaining!


  19. Lindsay McDougall
    Posted May 5, 2014 at 2:33 pm | Permalink

    For decades the role assigned to Japanese banks was to lend cheaply to Japan’s export industries to maximise their world market share. Now they appear to have kicked that habit.

    Japan has done very well for a nation with an ageing and declining population. Large fiscal deficits and tight money, leading to debt and deflation, were a bad idea. Smaller debts and looser money may suit them better.

  • About John Redwood

    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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