Bailouts. Repair isn't progress.
Britain has spent 15 years bailing things out and calling it economic policy. We have mistaken repair for progress.
THE GIST ON BAILOUTS: "Repair isn't progress"
What is the broken window fallacy?
A shopkeeper's window gets broken. The neighbour says the glazier gets paid, so that's growth. But the shopkeeper would have spent that money on new shoes. Now the glazier eats and the cobbler doesn't. The shopkeeper is out of a window and a pair of shoes.
It was invented by the French economist Bastiat in 1850, and the central point is that repair isn't growth.
What has Britain done since 2008?
First the banks went bust, and it cost $130 billion to bail them out. Then COVID, $70 billion on furlough. Then the energy crisis, another $40 billion capping people's prices. Thames Water is on the ropes, and this week we're bailing out British Steel by nationalising it.
Every one of them is a broken window, masquerading as economic support. Every pound fixing things is a pound spent not building new things.
What did we not build?
Homes, factories, infrastructure. The whole country we could have been in 2026, gone to the windows. It's a debt to the country we didn't build.
What is the way out?
Britain has lost its muscle for long term thinking and its imagination for what to build. Every crisis feels enormous because we have no idea of an alternative. No long term plan, no industries we're looking to properly grow, and nothing bigger than the current crisis.
We're fixated on process and legislating against risk, so rescue is the only move available. The way out is ambition so big it makes the fixes look small. Have we forgotten what that is?
Repair or build: where should the money go?
Your take. One tap, then see how everyone else voted.
Quick answers
What is the broken window fallacy?
The idea that repair isn't growth: the glazier gets paid, but the shopkeeper loses the shoes he would have bought. Bastiat set it out in 1850.
What has Britain bailed out since 2008?
Banks, furlough, energy price caps, and now British Steel, according to Huw.
What is the way out?
Ambition so big it makes the fixes look small.
See you on the next one.
What should the next one be? Suggest a topic for Huw to explain
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