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What does the economy want for Christmas?

Writing in the City AM newspaper, Graeme Leach asked: What does the economy want for Christmas? The answer, was what it always wants, but never gets, which is more economic freedom.

What does the economy want for Christmas? The answer is what it always wants, but rarely gets, namely more economic freedom.

Economic freedom is actually 2 presents not 1. To make Christmas one to remember, the economy wants to unwrap both public and private sector freedom. Public sector freedom comes in the form of a smaller state as measured by taxation, public spending and regulation. Private sector freedom comes in the form of increased competition, the stronger entry and exit of firms, less market concentration and reduced monopoly power.

Every year the economy asks for a smaller state, but unfortunately Santa has become a ‘big state’ man. The queue for Santa’s grotto is full of politicians who want to sit on his knee and whisper how kind it would be to increase the size of the Government. So as far as Santa is concerned all anybody should want for Christmas is big government.

Exasperated, the economy has come up with a different letter to Santa this year. It doesn’t just ask for a smaller state, it also points out that there is very strong economic evidence of a negative trade-off between the size of the state and economic growth. In fact, recent research suggests that if the size of the state is reduced by 10 percentage points of GDP, the GDP growth rate is likely to accelerate by 0.5 to 1.0 percentage points. The economy hopes this approach will appeal to Santa, but unfortunately the progressive elves who advise him on such matters have a nasty habit of tearing up any letters from the free market economy.

But the free market shouldn’t be disheartened. Anybody who can coordinate all those reindeer, and all those presents, is not daft. And as Santa flies his sleigh across the globe he’s noticed that the economies with the most freedom send the biggest Christmas presents. They’re also the ones most able to help those least able to buy presents. Every year as Santa flies his sleigh across the globe he sees for his own eyes the blessings from economic freedom, and yet the politicians sit on his knee and tell him the opposite.

All is not lost though. Santa has noticed that as the state has got bigger, the reindeer and elves have become far less efficient in certain countries. The Singapore elves are outstanding. The French and Italian ones much less. Santa has also known for a very long time that when the reindeer turn north from South Korea, they get lost because there aren’t any lights to guide them at night outside of Pyongyang. Even the reindeer comment that the difference between north and south of the 38th parallel must have something to do with economic freedom, and if that is such an important issue, why do western politicians not see it?

The worst part of Christmas for Santa is when he’s in his grotto with politicians sitting on one knee and big business on the other. He knows that when that happens nothing good can come from it. Big business hates competitions and loves to be protected. But this year Santa has had enough. To make a point he’s going to give one country the opportunity to reduce the size of the state and increase competition. That present is called Brexit, and if Santa can sort out his ‘remainer’ elves, Christmas will come late on 29th March next year.