Monday 14 May 2012

Jesus, the Sabbath, Man and the Economy

Jesus taught that the Sabbath was made for man and not man for the Sabbath.  In my view much the same applies to the economy: it exists to serve men and women - men and women do not exist to serve the economy.

In this context I'm not too enthusiastic about the government's proposals to scrap "red tape", including parts of the  Working Time Directive.  We have to remember that although some "red tape" is a bit odd (eg the rule that prevents shops displaying liqueur chocolates in their windows for fear of turning the young to drink) most exists to protect our health, safety and security.  The Working Time Directive places a limit on, for example, the number of hours that lorry and bus drives can work without a rest. Presumably we can all see the sense of that.

More generally, the limit of 48 hours in a working week may infringe the liberty of someone who wishes to work more, but it is possible, voluntarily, to opt out. The danger of removing the pre-supposition that 48 hours is the maximum, is that it then becomes very easy for employers to require  more.

When Sunday trading became the norm there were many assurance that no-one would actually be required to work on a Sunday. Although I have no personal experience I suspect that that guarantee, though it may still exist in theory, has become a hollow sham, and those who want to opt out of Sunday work either  don't get employed in the first place or remain shelf-stackers all their days, with management posts beyond their reach.

In any case, the idea that Britain is full of eager entrepreneurs anxious to to invest in all sorts of exciting innovations which will bring joy and prosperity to all, but are held back by excessive regulation, is a convenient Tory myth.   As the distinguished Cambridge  economist Ha-Joon Chang pointed out in the Guardian on 30th April ,the requirement for 299 permits in order to establish a new factory in South Korea in the 1990s did not prevent their investing 35% of GDP and growing  at 10% per annum. 

What holds entrepreneurs back is not over-regulation but lack of demand. It is high time the government accepted this basic Keynesian premise. Then we can all enjoy the very comfortable standard of living, with plenty to spare, and leisure to boot,  which our still very high per capita income makes possible.

1 comment:

  1. Indeed- most of the cabinet seem to have done very well for themselves despite over-regulation. It should be evident that demand rules the market - it certainly was to Adam Smith. With the complex tax and benefit system it is unlikley that red tape will be cut.