Adam Smith once said that there was a great deal of ruin in a nation. 250 years since he said these words of consolation, Great Britain, his country and mine, seems to be trying to test that hypothesis to destruction. Just yesterday, whilst the U.K. was reeling from yet another horrifically violent attack, The Atlantic published an article, “How Britain Became as Poor as Mississippi.” Whilst it is true that the British economy is in almost as parlous a state as its social fabric, the article makes several key mistakes when trying to work out what is breaking Britain.
What is really going on? As The Atlantic notes, by some measures, Brits were better off than their American cousins in the run up to the Great Financial Crash. We had nudged ahead in GDP per capita, and that’s with shorter working hours, more holiday, and the “socialized medicine” that many Americans seem to desire (more on that later).
The crash hit Britain particularly hard, however. The last Labour government has run huge deficits in the good times, sold off gold reserves, and overextended itself in Iraq and Afghanistan, whilst pouring money into unreformed public services and welfare. The national debt literally nearly doubled.
When the tide went out, we were in a desperate situation and in need of serious fiscal retrenchment, regardless of which party won the 2010 election. The Left will tell you that the bone-crushing austerity that brutalized the population caused this. The truth was that real spending was cut just 3%, over four years, from the highest base in British history.
The real problem with the crash, beyond an explosion in debt and the cost of servicing it, was the spread of a safetyist culture that prevented the bounce-back growth enjoyed by the U.S.A. and other countries. Instead, traumatized by the subprime mortgage scandal, regulators seized control of huge swaths of the economy and prevented the kind of robust economic growth needed to sustain a large welfare state and improve living conditions.
As growth left the equation, so too did a belief that things could get better. And this doomerist safetyism extended to a Quasi-Autonomous Non-Governmental Organization, the Office for Budget Responsibility (OBR), that held a sword of Damocles over every budget. The OBR scores tax cuts as almost pure cost, crediting them with virtually no growth feedback, while scoring mass immigration as a fiscal positive; so the official arithmetic blesses one and damns the other before any minister opens his mouth.
More important even than the loss of understanding in economic growth is the way the British state operates. The fusion of the executive and legislature has traditionally given government powers that the U.S. presidency could only dream of. Britain has been famously described as an elective dictatorship in a mode that would have pleased Thomas Hobbes. In Britain’s uncodified (and in parts entirely unwritten) constitution, it is Parliament which is sovereign.
But the growth of the managerial (deep) state has gone much further even than in the U.S., and absent the federalism that allows America to build and compete, unitary Britain and its Parliament have become paralyzed from doing anything.
Lilliputian lawyers, charities, and NGOs have bound Leviathan, making it impossible to build data centers, aqueducts, houses, runways, and power plants. This, combined with net zero fanaticism, means Britain has the most expensive energy in the world (of course, we banned fracking years ago). To its credit, The Atlantic highlights some of the most absurd stipulations that overmighty Non-Governmental Organizations have insisted on, like the bat tunnel over a train line to allow bats to safely pass (there is in fact some evidence that it became a bat-killing tunnel as the poor creatures couldn’t escape it, but of course, no one lost their job over this).
Perhaps most alien to American readers is the fact that when Keir Starmer and Labour took over in July 2024, only 200 people across the whole of the British state changed jobs. One hundred ministers (including the PM and cabinet) drawn entirely from the 411 Labour MPs and 215 Labour Lords, and 100 “special advisers (SpAds),” the only political appointments allowed in the whole system. As a former SpAd myself, I can attest that the civil servants would always outnumber and outlast us. Not that it mattered much anyway; SpAds have no legal power to direct officials; we can only advise the minister.
In this way, all the same people, bar a minuscule number of figureheads, stay in post regardless of who wins the election. And because they never leave the system (it’s a job for life) they are extremely hostile to capitalism and the private sector, and frankly to outside ideas of any kind. It is, of course, fanatically fond of mass immigration.
This “blob” is the biggest hindrance to Britain’s prosperity and security. It breaks the Lockean feedback mechanisms that meaningful elections provide, and ruins the Hobbesian idea of the Sovereign’s power to act decisively. It never suffers if the economy does, and any scandal sees the elected minister (essentially a figurehead) fall on his sword, not them.
The reason for Brexit was that the European Union had become sovereign over Parliament. Now it is the officials who are sovereign and in control of the economy. Until there is a true restoration of the sovereignty of Parliament, Britain will remain poor, insular, and at risk from threats both at home and overseas. There is a great deal of ruin in a nation, but Britain cannot survive these problems endlessly without utter ruin.
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James Price is a former Chief of Staff to the Chancellor of the Exchequer and a senior fellow at the Adam Smith Institute.
