Growth, growth, growth, how can we get growth?

Posted 6 Mar 2013 by Walaa Idris

There is no denying, for the state of our economy to improve we need growth. So how do we get growth in a sluggish almost stagnant global and local economy? The simple and short answer is to invest more. This means we need money, both for development and to spend. The left will argue that government should create the jobs. They will say it needs to invest in infrastructures by building roads, hospitals, schools, housing, and the like. But, it is not as simple as that, because, this type of growth is temporary and unsustainable. Now that does not mean no to improved infrastructures, but it takes the conservative view, where improvements should be carried out without having to put undue pressures on existing projects or by increasing taxes.

We saw how in 2008 when the then Labour government, in anticipation of an increase in unemployment, the DWP (Department for Work and Pensions) hired and trained 1000s of case workers across the country on 9 to 12 months contracts but was unable to renew any of them. I know this is just one example, but most government fashioned jobs end up with input outstripping output. And the same will happen to this ‘government needs to create jobs’ scenario. Once the roads, hospitals and houses… extra, are built they will need more money to get them filled, make them operational and keep them maintained. And since none can self-sustain, they will ultimately become a problem, because governments predominately make their money from collecting taxes on goods and services. That is why the Conservative model for growth depends mainly on private sector growth, ideally small and medium size enterprises (SMEs). Hence, helping more SMEs is far more productive and sustainable than central government expansions. Big governments are expensive business while a big enterprises sector is a lucrative taxes and jobs revenue business.

Furthermore, unlike governments, where the decisions to build and do more are central, made by committees, enterprises on the other hand, are private individuals who tend to be personally (both literally and figuratively) invested in their enterprises. Today, it is that feeling what is holding back many enterprises from creating new businesses or even expanding existing ones.

For month now, both the public and politicians, have been accusing banks of not lending. Only to find in the past few days, from bankers, that they want to lend but can’t. They can’t because people don’t want to take the risk in a sluggish market – especially when the rewards for that risk are not encouraging.

Entrepreneurs and business-people go into business to make money – pure and simple. So if the environment is anti-enterprising (tax them more, making money is bad, greedy this and that). The little guys will just sit on their hands while the big guys will go to where they are appreciated and welcomed. Appreciated by not getting taxed to death at every turn, and welcomed by simply not be vilified and made to feel dirty for making and having money. Two factors we can’t hand on heart say is the case in the UK today. And until, our attitude, both the public and politicians is improved about making, having and inheriting money, our enterprises and enterprising will suffer. The hate culture of tax them more because they have more is destructive to enterprising, innovation and in the long term commerce. Taxes should not be a punishment for success but a duty for services reflective of them.

As someone who grew up in a socialist autocracy and saw first-hand what large state, big government and high taxation can do to an economy and public morale. It pains me to see the country I love and call home socially and economically regress to where China, Russia and the Eastern Bloc are escaping from.

For business confidence, economic growth and enterprising to flourish in the UK, our attitude about money (particularly other peoples’ money), having it, making and keeping it needs to change.

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