Douglas Carswell

Can Britain be more prosperous than America? Not if we are run by cartels

"There is no reason why Britain cannot be the richest major economy in the world" George Osborne has declared.

In a sense, the Chancellor is absolutely right. Britain ought to be booming.

We are witnessing the emergence of a global middle class around the globe. Each year, tens of millions of people join a sprawling network of innovation and exchange. Britain, with our global ties and outlook, ought to be thriving as never before.

Yet for all that, there is one central, thudding reason why Britain is definitely not the richest major economy in the world: government policy.

With an election looming, Mr Osborne wants to "talk up" the economic mood, with heady suggestions that Britain might become richer than the United States within the next fifteen years. For that to happen, we will need to see some fairly radical changes, and fast.

Over the past decade, governments of all three parties have deliberately increased the cost of energy. Why? In pursuit of various "renewable targets". Yet burning fossil fuel remains the cheapest way of generating energy. Shale gas technology means that the costs are likely to be even lower.

While Mr Osborne's government has been pricing British businesses out of world markets by pushing up energy costs, the United States – awash with cheap shale gas – has been re-industrialising (In 2012, gas prices were 55 percent lower in the United States than in Britain).

If the Chancellor wants us to be richer than America, we will need to be as productive as the Americans. Yet on Mr Osborne's watch, the opposite has happened. In the United States productivity has risen. In the UK, it has deteriorated. Why? Perhaps it has something to do with a tax credit system that subsidises low wages at public expense and provides disincentives against productivity gains.

Since the advent of the European Single Market in 1992, Europe's economic growth has been slow in both relative and absolute terms. North America's NAFTA has created many more jobs, attracted more investment, and raised the living standards of hundreds of millions of people ever higher.

Why the difference? Because Europe's Single Market does not mean more free trade. On the contrary, it means that an entrepreneur can only produce and sell something if they do so in compliance with what the regulator permit. Why else do you imagine that a supposedly free market block requires an endless blizzard of regulation and red tape.

Perhaps the real reason why Britain is unlikely to be as prosperous as we could be is down to politics. Again and again, our sclerotic political system fails to offer us a broad range of public policy answers. Instead we get the same cliché-addled politicians and their Westminster group-think.

Imagine how we might flourish if we changed that?

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