The Political Economy Review 2017

and the MPC (Marginal Propensity to Consume- i.e. the proportion of additional income spent) increased. These policies created the Lawson Boom- the “big bang” of the 1980’s. The graph below shows GDP growth and Inflation over the 1980’s when these policies were implemented. In addition, privatisation of public services occurred in a push for a smaller state. This was, once again, effective, as it opened up once inefficient outdated public services to private sector competition, leading to better prices, and better service for the consumer. Why public support is so high for re-

nationalisation is a mystery. It is clear than services are better now than they were 40 or 50 years ago. Take the railways for example. Now, there are 1.5bn rail journeys per year. When the railway was nationalised, that figure dropped to 750m in 1995. It is through competition, open and free markets and not through state monopolies that prices are lowered and services are improved. Re-nationalising the railways would be a backwards step. It is not just buying up the railways that is costly, but also upkeep and maintenance. If the NHS is anything to go by, it would be plagued by chronic underfunding. It is such supply-side policies that we should adapt and use today if our economy is to pass the telling test of Brexit. This would require a brave politician, a politician who would actually be “strong and stable”, not just repeat that they are in a semi-robotic fashion. Privatisation is politically toxic, but it works, and we need to take the process further. The NHS, for example, requires more and more money to be committed to it each year. But no party’s commitments to the NHS comes anywhere near to fulfilling its Long Run Average Cost. The harsh reality is that the NHS is bulky and inefficient; A&E wait times are increasing year-on-year. What worked back in the 1950’s under Clement Attlee simply doesn’t work anymore in a very different time. With a larger population, and changing expectations and demands that the NHS should be a care service and a health service, it is unsustainable. It now constitutes a black hole in our deficit, and no party has a long term plan aside from pouring more money into it. Yes, it is a national treasure. But other national ‘treasures’ such as BT or BA improved dramatically following the process of privatization. Looking back at the 1980’s and 1990’s, we can see privatisation as the natural evolution in a service sector economy, when government services become too bulky. Privatisation of the NHS is an inevitability, and opening the NHS, or at least more parts of the NHS to private companies may be unpopular with the electorate, but competition will surely improve services as it did under Thatcher and Blair. Finally, we need to continue Thatcher’s policies of lower income and lower corporate taxation. These were the main proponents of the 1980’s boom, and following them today will put us in good stead for Brexit. This is where the issue of our global competitiveness comes into play. I passionately believe Brexit was, and still is, the right thing to do. Regulation and tariffs of the EU bloc makes it virtually impossible for trade deals to be formed. Just take a look at the TTIP (Trans-atlantic Trade and Investment Partnership). Protectionism is never the answer, and that is exactly what the European Union is. Protectionist, to favour in-EU trade. Leaving the EU leaves the UK able to negotiate trade deals freely with emerging economies around the world. It presents the opportunity for the UK to truly open up to the world. But as we leave the protective arms of the EU and prepare to go-it alone, we must ensure our economy is competitive, and lucrative to attract private enterprise and


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