“The most decisive mark of the prosperity of any country is the increase of the number of its inhabitants.” – Adam Smith, The Wealth of Nations, p. 80
For politicians to succeed in France, they must win the British vote. The previous assertion surely has some readers wondering, but there’s very real truth to it. National politicians in France campaign in London simply because the French inhabitants of London would render the British capital one of France’s largest cities.
Readers can probably deduce the why behind this political oddity. England is where the opportunity is. Economic freedom is quite a bit greater in England, which means many of France’s best and brightest have taken their abundant talents there over the years.
We hope Liz Truss internalizes this truth as she takes over leadership in Great Britain. As she gets to work, it’s no reach to suggest that she’ll be inundated with all manner of detailed policy ideas that will allegedly lift England’s listing economy. In a broad sense, it would be easy to nod along to proposals purported to reduce Britain’s tax and regulatory burdens, along with efforts to liberalize trade. Economies are just people, and people benefit the more that the barriers to their production and exchange are shrunk.
At the same time, legislation is hard. That it’s difficult is probably for the best in that free-market types like Truss aren’t always in power.
Which is why we think a more effective approach for Truss will be freedom. Put another away, Truss will do best the fewer things she does.
The simple truth is that per Adam Smith, the most decisive mark of prosperity for any country “is the increase of the number of its inhabitants.” Modern politicians more and more promise to keep foreigners out of the country they aim to improve, but economic logic says the better approach is openness to outsiders. Really, is England poorer because so many from France have brought their skills across the English Channel? Are the French “taking” British jobs?
The answer to both questions is a resounding no. The reality is that jobs and economic growth are only limited by investment, and investment follows talent. If Truss leans toward more freedom and more openness to the world’s ambitious, greater prosperity will follow. Freedom is a lure for the enterprising, and where the enterprising go is where the future is created.
Some will say that Truss must focus on “energy policy” at a time when prices of the commodities that power the modern world are expensive. Along these lines, Truss has already announced a policy of “freezing” household energy bills. She can do no such thing. Politicians can’t decree prices. At best they can decree shortages by stepping on market signals.
Conservatives in the U.S. would say that Truss could more ably achieve cheaper energy through policies that encourage production and exploration in England. Once again, policy. In truth, the only closed economy is the world economy. It doesn’t matter where energy is created or extracted so long as England is free and open. When a country is free, it’s as though every producer of market goods is headquartered in the country open to same. As long as Britain is free, its people will be free to access energy at the best price.
To the above, some will respond that an open stance to foreign plenty will come at the expense of British jobs. That’s not true. Just as the migration of the French to England hasn’t been an opportunity suppressor, just as the lack of “British” automakers hasn’t shrunk car manufacturing jobs in England, the arrival of foreign goods doesn’t harm the recipients of those goods. Truss’s England taught us this essential truth in the 19th century with the repeal of the Corn Laws, while Adam Smith taught us this in 18th century with his essential reporting on a pin factory in The Wealth of Nations. The more that the British people are free to divide up work with others, the more that their productivity will soar. Productivity is a magnet for the investment without which there is no growth.
Which brings us to money. So often the genius of money is rooted in doing nothing. Smith somewhat nonchalantly observed in the greatest economics book ever written that “the sole use of money is to circulate consumable goods.” Precisely. Money isn’t wealth as much as it’s an agreed upon measure of value among producers that enables the exchange of wealth. Again, it’s the division of work that powers staggering leaps in productivity.
We hope Truss will view simplicity through a brilliant lens. No nation needs a “monetary policy” as much as it requires a currency that is trusted by producers. Applied to Truss’s Chancellor of the Exchequer, “less is more” is apt. If England renders the pound quiet through pursuit of currency that is unchanging as a medium of exchange, the wealth creation that stable pounds will facilitate the circulation of will be awe inspiring. Freedom from money mischief has a powerful impact on actual wealth creation.
Some things to think about with Truss’s arrival at 10 Downing Street. The endless focus on policy and results has blinded policymakers to the aforementioned truth that economies are once again people. Free people prosper, and their prosperity is a magnet for others eager to improve their circumstances. Liz Truss has the chance to show the rest of the world how to grow by reducing her emphasis on the “policies” allegedly necessary to stimulate progress. Freedom truly works, we say.
