Laboring under illusions
If, during recent years, we have in Britain done so much less well than we might have done, it is not because we are bad or incompetent, but because a layer of illusion has smothered our moral sense. Let me list a few of the illusions which have blinded us:
The illusion that government can print money, and yet the nation still have sound money.
The illusion that every loss can be covered by a subsidy.
The illusion that we can break the link between reward and effort, and still get the effort.
The illusion that basic economic laws can somehow be suspended because we are British.
For years some people have harbored these illusions which have prevented us from facing the realities of the world in which we live. It is time we abandoned them so that we can tackle our problems. Government and people both have a part to play.
For government, facing our national problems entails, above all, keeping the growth in the amount of money in line with the growth in the amount of goods and services. After years of printing too much money, to which the economy has become addicted, this will take time: but it must be done.
But it is not only the totalm amount of money that matters. It is how that money is distributed between on the one hand the public sector, which produces little real wealth, and on the other hand industry and commerce, the mainstays of our economy.
At present too much is spent on the public sector. It follows that the government's second most important task is to reduce state spending, so that more resources can be put to investment in industry and commerce. This too takes time but it must be done.
Too much money spent by government has gone to support industries which have made, and are continuing to make, heavy losses. The future requires that industry adapt to produce goods that will sell in tomorrow's world. Older industries that can't change must be slimmed down and their skills transferred to new products if they are to serve the nation. This, too, takes time but it must be done.
Economics means harnessing change instead of being dominated by it. But government cannot do it alone. These policies are a necessary but not a sufficient condition for recovery. The British economy is the British people at work -- their efforts and their attitudes. Success will only be achieved insofar as people relate the rewards they receive to the efforts they make; insofar as managers, freed from restrictions imposed by previous governments, respond to their newfound freedom to manage. They and their companies are responsible to those who invest. They are responsible for their fellow employees and responsible to the customer for the quality, delivery, and price of their goods. I believe that they are welcoming this new challenge.
Among management and wage earners alike, there is a widespread sense of relief that the potential of this great people is now matched by the resolve of the government.