5 february 2011, no magic bullet

The much maligned nick clegg is right in his protestations that there is no magic bullet to create economic growth in uk plc. Clichés they may be, but there is usually some truth at their heart: selling out the next generation is the ultimate short termism he says, politicians can fall prey to the myth that somewhere there is a lever they can pull to generate growth and that they should simply pull as many as possible in the hope of finding it. His prescription of moving away from dependence on debt-financed growth (excruciatingly painful if actually done), investing in real infrastructure and in knowledge, skills and education and attempting, to the degree possible, to diversify sources of growth, is surely right. At best though, this is going to lead to an export-led feel bad recovery, with the great majority feeling not an updraft but rather a dwindling of their spending power. Worse, there is a risk of a rump at the bottom, especially the young (first victims of all recessions) all but cut adrift. It is not just their spending power being hit, but also the various (expensive) layers of national and local support previously in place and now being stripped away as an unfortunate consequence of the cuts. This generational timebomb is worrisome not just to the left, but also the right - "youth unemployment permanently scars its victims' lives... even when they get a job, someone who has been out of work for more than a year in their youth will earn as much as 28% less over their lifetime, and is more likely to be convicted of a crime". There, that question is coupled with another, "why, with 150,000 young unemployed in london, does your waiter so seldom have a london accent ?". Following through both clegg logic and its downside, the result is that there is indeed the need for the "plan b" that everyone is talking about, but it is not fiscal splurge on business and sexy sectors, but instead mitigation tightly-targeted on unfortunates ready to work and firms ready to employ them - future jobs fund anyone ?