‘What kind of Supply-side policy for the UK and What implications for Scotland ‘

Nick Crafts is Professor of economics and economic history at Warwick University and appears to have advised many organisations across the world.

His lecture was interesting and much of his slides can be found at the following website

http://www.res.org.uk/SpringboardWebApp/userfiles/res/file/res_policy_slides.pdf

No doubt they will appear on the DHI website in due course.

Crafts covered a lot of ground and the points that got to me were:

1. Industrial growth can be either sector based or horizontally oriented.  The UK has been best recently at horizontal and Crafts picks on Pharma, ICT application and finance as success stories
2. Growth particularly in ICT has been by best application of other peoples innovations (mainly I suspect US).  In this respect Germany has not been nearly as good.
3. What drove the 1900^th century was Steam – ICT is driving the 21^st.
4. UK investment in Rand D is the worst in the western world. We are relying on Diffusion.
5. Likewise development in Human Capital has been pretty low.  Crafts certainly gave the impression that education should be skills based.
6. Inequality is growing; but exclude the 1% very rich – their wealth comes from the globalised capital markets not individual counties.
7. The bigger the city the higher the output.  But this leads to urban difficulties and welfare loss.
8. The UK has been bad in investment in infrastructure – roads are a prime example.
9. Public capital should complement private capital.  Banks need to be the source of private capital.  He featured Germany.
10. Private capital is short term but Government is worse.  Long term investment is needed on the supply side.
11. Incremental steady investment.
12. Productivity is difficulty to measure – not like in the past, coal dug per person in the pit.
13. Regulation can encourage but can impede – regulation of land in England
14. Don’t look back to 1970s; Save the High Street is doomed.  HS2 is vanity – remember Concorde.
15. Tax revenue should come from general taxation on consumption rather than from industry.
16. The UK is good at the service industry; even Rolls Royce was more value coming from the supply side than from the engineering.
17. As to Scotland – Scotland should focus on the horizontal industries.
18. Scotland is higher than the UK as a whole in service industries.
19. The Celtic Tiger got it right before the crash with its low corporate taxation.
20. Edinburgh is the 4^th most prosperous city in the UK.
21. Regulation can be a stimulus to innovation.
22. Don’t yearn for the 1970s.

I found this all good stuff but I feel that Crafts time may well be fading as he considers the 1970s have faded.
Western civilisation is realising that continual growth may no longer be achievable and should not necessarily be the target for a future Scotland.