Take a breath and take stock

By Mike Emmerich | 10 February 2021

In the pre-lockdown days of dinner parties, one of the books that often cropped up in debate was Daniel Kahneman’s Thinking Fast and Slow.

At its heart is the notion that we have different ways of using our brains: we have instinctive reactions based more on prejudice and a slower mode of reasoning based on logic. Too often, it is argued, our innate desire to conserve mental energy leads us to rely on the former, often to our own cost.

But what exactly might thinking slow mean for readers of The MJ?

Perhaps a good starting point is a degree of humility: admitting that we neither fully know what is going on at the moment nor what to do about it. Absolved of the need for omnipotence we can start to grapple with the vitally important task of assembling what we do know, analysing and acting on it.

Secondly, if the present isn’t clear, the future is even less so, making it all the more important that our critical faculties are fully employed on the task of using what we do know to plan a way forward.

But what is the ‘it’ here? It could refer to almost anything. It seems to me though that the foregoing is as true of what we do in relation to the impact of the pandemic as it is what we do in these early weeks of the post-Brexit settlement. Since these are probably the two most important exogenous (in the sense of being things we can’t change) factors affecting the UK at the moment, how we handle them is important as we consider what we need to do to grow our economy and what we do to ensure it is inclusive, and delivering the needs of everyone.

But not everything is unclear.

The UK’s poor productivity still lies at the heart of our economic woes. The new Economic and Social Research Council-funded Productivity Institute based at the University of Manchester needs to help us work out what to do about the fact that the output of the average Briton still lags woefully compared to nearly all our major competitors.

We know we have a wholly inadequate social safety net when the Financial Times’s editorials conclude so, echoing another hard-hitting report from Sir Michael Marmot on how the pandemic has served both to mirror and highlight health and social inequality.

We also know with all but cast-iron certainty that we are in the first wave of a climate crisis. We need the right sorts of investment to protect and adapt our way of life.

Add to these longstanding issues the hopefully short but precipitously sharp COVID slump and the immediate impact of the Brexit transition, and the scale of challenge seems dauntingly clear. We would do very well to think slow as well as fast in framing our national response.

In practice that means challenging and refining our own prejudices as well as considering those of people with whom we traditionally disagree.

The re-emergence of the debate on the foundational economy that I recall from my time at the Centre for Local Economic Strategies in the 1980s is welcome. We can and must do more to innovate, to support the foundational economy while not over-claiming what policy can achieve.

Reading David Smith in The Times earlier this month, you could almost hear in the background HM Treasury hawks at work, sharpening their swords for a battle of tax rises and spending cuts to reduce our ballooning deficit.

Yet the experience of over a century of booms and slumps teaches us that the instinctive cry for small Government and balanced budgets applied any time soon would create utter carnage. Now as much as ever we need the power of the state to be used to sustain and support the economy.

If, as seems likely, this is the biggest challenge we have faced since the 1940s, and even if a Roaring Twenties boom is a possibility, not all of us will recover. Significant parts of the economy and large parts of our society will feel somewhat broken, and still with a climate emergency upon us.

Our response to crisis in the 1940s included the creation of the modern welfare state through the Beveridge Report and what became the 1944 Education Act.

On welfare, we built the consensus we needed to rebuild. Britain’s post-war economic policies had no such consensus and our poor performance subsequently may reflect that fact.

This time, we really do need to build back better. But, before we instinctively reach for our nostrums of choice, we might do well to pause and remember that while we have got much right in the past, we have got plenty wrong too.

We could do much worse than take a breath before we reckon with the gravity of our national situation and the common cause that it demands. 

Mike Emmerich is founding director of Metro Dynamics

@metrodynamics

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