Tuesday, 19 December 2017

Differences between theory and practice

In recent days, the Welsh Government has been busily producing economic strategy documents.  Some of what they say is a welcome change, some rather less so.  The original idea of having specific target sectors for economic development was basically sound, but undermined by the peculiar Welsh insistence on leaving nobody out, which meant that all sectors were target sectors.  And, as the old saying goes, if you have more than two priorities, then effectively you have none.
The bigger problem than the content of the strategy however is whether any strategy is actually deliverable in practice.  The record is not good; fine-sounding words rarely get translated into effective action.  No doubt at least some of those in the Assembly would argue that it’s a question of powers – the Assembly / Welsh Government simply don’t have control over the main economic levers and their influence is therefore limited.  I agree with that, but if it’s true, then what exactly is the point of spending time and effort on producing strategies which you know you can’t implement?
The question of the extent of devolved powers isn’t the only issue though.  In theory, all those missing powers reside in Westminster, but the record of effectively setting an economic strategy isn’t much better.  The real powers over the economy don’t reside with government at all – in Cardiff or in London – they have been outsourced to the owners and managers of capital.  And unless governments are prepared to tackle that stranglehold of economic power, they will continue to have minimal influence on the real economy.
And there are those who even challenge whether the government should be making any attempt to spread prosperity more evenly.  This report suggests that if the goal is to improve productivity in the economy, then investment should be chanelled to those areas where the wealth already resides.  I don’t like the conclusions; such an approach leads to a concentration of investment and growth in some areas at the expense of others which simply provide the labour force and suffer the loss of young people stemming from that.  But if the objective is to improve the overall productivity of the country as a whole, and the overall average GDP per head, then I tend to agree that it’s the most effective strategy.
That is, though, a very big ‘if’.  For those of us who believe that the success of economic policy should be about more than overall averages, there is a trade-off here.  Increasing the average in this way might look like ‘success’, but it is success bought at the expense of increasing inequality and deliberate abandonment of more rural and far-flung areas.  The problem is that, for all the fine words from the Welsh government about strategies for spreading growth across Wales, their actions look more like implementing the approach laid out by the iea author – concentrating investment and growth in the south-east of Wales.  Actions speak louder than words.

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