The population at large benefits from the effective management of the consequences of economic growth

The majority of the public neither wants nor even remotely understands “Economic Growth”. What they do like are the consequences of a healthy economy for which growth is a prerequisite.

Growth is the market value of goods and services produced. But the benefits of growth do not accrue to the population at large evenly. Which is where Government comes in. The only source of government revenues (other than borrowings) is market value. So if that value increase the potential for redistribution is increased. The Welfare State depends on Growth.

The government’s role in stimulating Growth is often exaggerated. In a mixed economy infrastructure projects, funded by taxation, can be a stimulus. Roosevelt’s New Deal, based as it was on Keynesian economic theory, helped America’s recovery after the Crash. So, a little later, did the Arms expenditure of WW2.

Deficit financing of infrastructure projects, like for example large transport capital investments, can be justified if proper Cost/Benefit analysis is used. The third runway at Heathrow is definitely in this category as was Crossrail. And probably the much derided HS2.

The management of the interaction between what the public and private sectors do is the main challenge. Ideology never helps ! The strident voices for nationalisation or privatisation are grossly simplistic. Take the NHS. Yes it is publicly owned but it is substantially serviced by the private sector. Similarly all private sector businesses also rely on public services.

It is not enough for an Economy to grow there must be a clear policy on how the products of growth are handled. In a complex economy like ours this is not easy. Politicians should never talk about expenditure without also talking about tax. They should also never decouple a call for growth from a presentation of how the fruits of growth will be handled.