A recent report on the British economy (CEBR) again emphasises the need for more tax reduction, less government involvement and benefits so that the economy can thrive and produce more innovation. This traditional approach to managing a country seems to ignore the fact that this is what we have been doing for the last few decades and the whole world economy has come to grief at least twice and once with a vengeance in the 2007/2008 crash.
Perhaps it is time for a change in our approach? Maybe uncontrolled markets don't have the answers after all? Or are the few running the show too well-off and rewarded by the present system to look at what is happening dispassionately and make changes? I guess he answer is to change the ones who are making the rules, along with the rules themselves.
Acemoglu and Robinson, in their book Why Nations Fail, argue that nations that are doing well over the last 15years have allowed multiple runners with lots of experimentation and whose societies have been harnessed into taking risks. This happens best when the whole society is involved, openly and inclusively, not just a few self-interested oligarchs. We need to constantly push against the wealth extractors as opposed to those who create wealth and productivity.
When a society is more unequal in its wealth distribution and hence involvement in governance, innovation is less likely to occur and the wealthy organise more workers to protect their wealth than to produce more for all eg. in Britain, about a fifth of all workers are involved in security, policing, surveillance and IT control and monitoring systems. This 'guard-labour' increases with increased inequality in a society and does generate much value and productivity for a society.
It is easy to read about about these problems occurring in other countries without accepting that for many of them, New Zealand is leading the way. We have become more unequal more rapidly over the last there decades than nearly every other rich country in the world. Much of the control of our government and commercial systems is in the hands of a few (oligarchs?) and security, surveillance and monitoring are becoming more prominent in our society.
It is time we allowed everyone to be involved in trying out new ideas, experimenting with potential products, even encouraging mistakes as part of their innovation. This means many small enterprises, individuals having a chance to try out ideas and not being restricted to large companies with too much focus on their budgets.