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A Different View About the British Economy

February 22, 1986

My attention has been drawn to the letter that you published on Jan. 17 from the consul general of Great Britain in Los Angeles. I write to tell you that there are many many people in Britain who see things quite differently from him.

Unlike Donald F. Ballentyne, I have not found it has become at all "fashionable" here to run Britain down. If the consul general has a different experience, he has every right to speak up. What he has no right to do is to make out that the United Kingdom economy is in better shape than it is.

There are two main reasons why the picture painted by Ballentyne is misleading: (1) he uses a single, unrepresentative, year to compare U.S. and U.K. growth rates, and (2) he plays down the problem of unemployment, which has stood at much higher levels than most other countries for several years.

Single years are rarely sound bases for comparisons of economic performance. But when the consul general chooses 1985 to write proudly that the estimate for the growth rate for the U.K. is 3 1/2%, compared with 3% for the U.S.A., one wonders how many of your readers realize that the previous year, 1984, witnessed a yearlong strike by coal miners, which substantially held back growth in that year. A recent estimate suggests that, without that strike, U.K. growth would have been about 1% higher in 1984, and 1% lower in 1985--i.e. 2 1/2% not 3 1/2%. (National Institute Economic Review, November 1985) A comparison of U.S. and U.K. growth in the 1980s taken as a whole cannot fail to favor the U.S.

As far as the unemployment record goes, U.K. experience in the present decade can only be described as dreadful. It is, I submit, misleading to say simply "we do still have a problem," while hiding that the unemployment rate in Britain is about a third higher than in France, Germany and Italy, and getting on for double that in the United States.

What, however, may have sent your readers into hysterics was Ballentyne's "we are suffering from nothing that Prime Minister Margaret Thatcher's medicine will not cure"! But, just in case anyone took him seriously, I should say that there are many many people who do not share that faith. In truth, while the "old country" is far from finished, I doubt that anyone knows how to solve the acute British form of stagflation, without destroying important elements of the fabric of our society. But we are trying very hard to find solutions.


San Diego

Harbury is a professor of economics at the City University, London, and a visiting scholar at San Diego State University, 1985-86.

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