Trevor Davies: Britain must avoid the economic insanity trap

THE public want a system that works for them – and the New Economic Foundation has the answer, writes Trevor Davies

‘We are now approaching Falkirk High”. On the train from Edinburgh to Glasgow that’s what you expect. Same journey. Same announcement. You’d be insane if you got on that train one day and expected to hear “We are now approaching Lochaber”.

That’s my take on Albert Einstein anyway. The great genius once said “Insanity is this: doing the same thing over and over again and expecting different results.” Same journey. Same results. If you want something different you have to do something different.

Does anyone dispute that our country and our economy really need something different?

The British people don’t.Polling in Britain by eminent American pollster Stan Greenberg found that two out of three people think our economy is “too harsh on ordinary working people”.

And by a margin of 47 per cent to 35 per cent, British people think “we need to fundamentally change the way our country and economy work”. Those are clarion calls for change.

And what does David Cameron do? Well – he has a reshuffle and he proposes to change some planning laws.

The same old idea that cutting red tape somehow produces growth hasn’t worked before and won’t work now.

He’s fallen into the Einstein insanity trap.

And what does our First Minister do? Well – he has a reshuffle and he thinks about changing some planning laws.

With almost all the powers of a full nation state at her command, his reshuffled deputy has just commissioned some of our Scottish great and good to consider how to perk up town centres.

Alongside David Cameron, Alex Salmond has fallen into the Einstein insanity trap.

The only difference between them is that Cameron falls in to the category out of misplaced ideology, while Salmond does it for a rather better reason: strategy – the less he does the more he can blame ‘lack of independent powers’ as a reason for nothing much happening.

They ignore the urgent need to think differently, act differently and seek out different results.

There’s another hugely important scientist, a physicist like Einstein, who fifty years ago wrote a book, The Structure of Scientific Revolutions, introducing the world to a new idea: the paradigm shift.

Thomas Kuhn’s great notion was – and here I extend it beyond the world of scientific research – that for a while everyone shares a common ideas framework and works away within that trying to solve all the puzzles that it throws up, to make it work better.

Until something happens which shifts everyone over to the other side of the street: a paradigm shift. That’s what the British people in that poll are asking for – a fundamental shift in the way our country and economy work.

Instead our leaders – Cameron and Salmond – sit inside the old political paradigm. A reshuffle here, a policy review there. They are, good for them, trying to solve the puzzles, trying to do things better – but they are trying to do the wrong things better.

And it’s not just them. There’s not much sign Liberal Democrats or Labour in Scotland are making efforts to shift their thinking either.

We live in a time of almost unprecedented global financial and economic decline and a public spending drought.

And, to our shame, we live in a country, Scotland, which has the widest gap between the richest 20 per cent and the poorest 20 per cent than any other country in Europe. So it’s time to stop trying to do the wrong things better, time to stop believing, insanely, that we’ll get better results without doing different things, time to make that paradigm shift.

Not every change requires money throwing at it: we could make efforts to break down the power of vested interests, from the banks to our largely foreign-owned press; we could enhance our freedoms by giving the poor better access to justice and employees equal rights to shareholders in running big firms; we could make public services better by localising them and sharing their control with the people who use them.

The most urgent matter, though, is to shift the way our economy works. It’s insane to think doing what we’ve been doing is going to get the different results people want. It’s insane to believe, as Cameron and Salmond both do, that cutting regulation, reducing business taxes and “freeing up markets” is going to get more people into productive and useful work, when all the evidence says taking those very actions was at the root of our economic collapse.

Insane to think that more and more growth is possible without the ice-caps melting. As economist Kenneth Boulding says: “Anyone who believes exponential growth can go on forever in a finite world is either a madman – or an economist.”

The New Economic Foundation is out campaigning now on what it calls “The Great Transition”. It sets aside the foundation of orthodox economics, and what you and I often believe – that more is always better. There’s no doubt that the poorest in the world need more – but you and I? More stuff? Really? I doubt it.

What many of us want is more security, more fairness, more time, satisfying work and enough to raise our children well and look after ourselves when we get old. We want clean air, good relationships, health.

And it is a valuation of all those good, but outside-the-market parts of our lives that marks the starting point for NEF. Normal more-is-better economics is turned on its head. By squeezing that gap between rich and poor and taxing unearned wealth, by making markets work for all of us not just the top 20 per cent, the well-off will consume less and headline indicators we’re used to such as GDP (which measures “stuff”) will fall.

But the “real value” in the good, sociable, secure, healthy parts of our lives will grow at the same time, exceeding the drop in GDP.

Happiness and satisfaction in place of ever-increasing ‘stuff’ is the great transition we need say NEF. Now that’s called changing trains.

• Trevor Davies is honorary professor in urban studies at the University of Glasgow, click here to visit neweconomics.org