Reality and warning from Sir Niall Ferguson.

This is a link to a recent opinion piece written by Sir Niall Ferguson:

The Rot In Britain—and the Remedy

Here are some quotes. Perhaps this might sound familiar:

The British economy is stagnant. The International Monetary Fund thinks growth will total 0.46 percent this year. That may be overoptimistic, as the economy essentially flatlined in the third quarter. Real wage growth has been flat for 16 years. Average weekly wages are only 0.8 percent higher today than at their previous peak in 2008. Annual real wages are 6.9 percent lower for the average full-time worker than they were back then.

Scratch out Britain and put in Australia.

The comparison with the United States is stark. Productivity growth between 2019 and 2023 was 7.6 percent in the United States, compared with 1.5 percent in Britain. In 2003, UK per capita GDP was 81 percent of the U.S. equivalent. Today it’s 69 percent. No Anglosphere country has seen its share of global GDP shrink more this century than Britain, down nearly a third (−31 percent) since 2000. Subtract London from the UK economy, and the rest of the country would be as poor in terms of per capita GDP as Mississippi.

Were it not for China’s voracious appetite for Australian comodities, there would have been another Anglosphere country which has seen its share of global GDP shrink so much. Yet it is current government policy to destroy these wealth, empoyment, and tax generating enterprises.

The country’s public finances are a disaster waiting to happen. The national debt (public sector net debt excluding public sector banks) is very close to 100 percent of GDP (99.4 percent) and set to rise, compared with lows of just over 20 percent in the 1990s. Since 2021, debt service costs have jumped above 10 percent of revenues and 4 percent of GDP, their highest levels since World War II. Fiscal constraints are only part of the reason Britain is on its way from being a key U.S. ally to being a geopolitical nonentity.

Tick tock. Tick tock. Australia’s public finances are too a disaster waiting to happen.

To explain this malaise, Ferguson points to analysis by Ben Southwood, Samuel Hughes, and Sam Bowman:

Comparing Britain not with the United States but with neighboring France, they argue that at least since the global financial crisis, and arguably since the 1990s, Britain has fallen behind in three distinct areas: investment in housing, in energy, and in transport. “The most important economic fact about modern Britain,” they argue, “[is] that it is difficult to build almost anything, anywhere.” The problem, they conclude, is that no government since Margaret Thatcher’s (1979–1990) has done anything to reform a system of “planning” that imposes prohibitive costs and delays on building.

The emphasis in the above is mine, but worth repeating:

“The most important economic fact about modern Britain,” they argue, “[is] that it is difficult to build almost anything, anywhere.”

Hmmm. Sound familiar? Woud you like some more:

To make matters worse, chronic under-investment in infrastructure has coincided with significant population growth. The British population has grown by 13 percent since 2005, or by 19 percent since 1990. The striking thing is that nearly all that increase is due to net migration, as the total fertility rate has been below the replacement rate (2.1 live births per woman) since 1973.

Ahh. But it’s al Brexit you say. Well:

In the eight years since the Brexit referendum, there has been even more immigration, most of it from non-European countries. “In the year ending June 2024,” wrote Goodwin recently, “some 1.2 million people—equivalent to a city the size of Birmingham—migrated into Britain. . . . And more than 1 million of them came from outside Europe—typically from India, Nigeria, Pakistan, China, and Zimbabwe. . . . Since 2012, net migration has added 4.5 million people to the country, equivalent to four cities the size of Birmingham.” The total figure is even higher if one calculates gross migration: just under 7.4 million since Britons voted to leave the EU, and 11 million since 2012.

Oh and:

Those who argue that an aging population cannot do without immigrants for economic reasons fly in the face of the evidence that most immigrants to the UK do not come on work visas. Only 18 percent of non-European nationals came on work visas. The great majority are students (29 percent), students’ dependents (8 percent), workers’ dependents (23 percent), and asylum-seekers (8 percent).

But, and a warning to the LNP:

And yet it is very hard to imagine how Britain would continue to function if net migration were abruptly reduced to zero. Most British universities, which have become heavily reliant on foreign students to finance themselves, would tip over from being merely broke to being insolvent.

The parallels to Australia are very uncomfortable. Get ready dear readers. It’s going to get worse before it gets much worse.

I can’t see anyone in Australia’s parliaments prepared to speak to these issues. Worse still, I can’t see a majority of the electorate being prepared to listen.