The Rule of 70 (1)

It is obvious: politicians should be carefully listened to.

Today the Chancellor said that his aim was for “long term sustainable growth”.  The questioner left it at that.

The chancellor had also just said that he expected growth to be 1.5% next year.

Pull out your rule of 70 and discover that 1.5% growth doubles the economy in 47 years.  Is that sustainable?  Is that long term?  Will anyone believe that growth will do that over 47 years?  It will take 4 years to get to where we were before the recession, yet the government has a bill to halve the deficit in 4 years.  Is that believable?  Pull out the prostitute joke and ask what growth will be achieved if doubling is not possible?

In 10 years the economy will have grown by a net 10% if 1.5% growth is achieved over all those years.  This means there will be 4 million more jobs than we have today.  What will they be doing?  Steel production in Redcar?  Car production in Oxford?  Shipbuilding on Teeside?  Making silicon ships in Scotland?  Pulling oil out the North Sea?  Doing anything for a dollar a day as they do in China, India and Brazil.

Yet we have a generation of people just out of education unlikely to get a job, unlikely to be a first time buyer and unlikely to have a family.  This is just at a time when we baby-boomers are starting to die in serious numbers, the survivors demanding that our children pay our pensions.

Suppose then that sustainable growth is 0.5%.  Then GDP will take 10 years to get where it was 2 years ago.  This does not solve our deficit problems.

Suppose that we achieved 4% growth.  Then the economy will double in 17 years…ho ho ho ho ho ho.

It is obvious: politicians should be carefully listened to, and then equally carefully questioned.