As you might guess, there is no silver bullet, no one-size-fits-all approach to economic transformation. But there are perhaps two factors they have in common.
First is that each starts from a position of economic crisis and/or underdevelopment. This creates a clean slate in which the only way can be up, together with the political will and public support needed to make it happen.
With post-war France and Germany, it was the need to rebuild after the destruction of the Second World War. “Jaw jaw” replaced “war war”, and the protectionism of the past gave way to free trade principles that were to lead to a European common market.
Strong political leadership enabled post-colonial Singapore to apply its own unique brand of state-directed capitalism and make the leap from third-world poverty to advanced economy status.
Institutional reform, privatisation and economic liberalisation instructed Poland’s dash for freedom after the tragedy of communist rule, while low tax, small state, free market, rule-of-law principles were a touchstone of Hong Kong’s economic success.
Driving all these success stories was strongly rooted political support for economic transformation, catch-up and advancement. This was born of crisis, drift, national humiliation and destitution.
The same was true of Thatcher’s Britain; the economic liberalisation of the 1980s could not have been driven through without the degradation of the 1970s, when Britain seemed irredeemably to be slipping beneath the waves.
What perhaps explains today’s lack of political urgency is that it is not yet clear that Britain is in anything like as perilous a position as it was back then.
We are merely stagnating, rather than plunging into the abyss. In any case, it may require British decline to get a lot worse before it generates the political will needed to do anything about it.
The same is true of Germany, where the air of lost prowess is if anything even worse than in Britain, and where there is an equally potent sense of hopelessness when it comes to addressing the underlying weaknesses.
The second unifying factor between Policy Exchange’s eight economic success stories is – with the possible exception of Thatcher’s Britain – relatively high levels of domestic savings and investment.
It has been a longstanding hobby horse not just of mine but of much of the economics profession, that Britain is a profoundly unbalanced economy which routinely puts current consumption ahead of investment in the future.
Repeatedly, we fall victim to the Juncker curse, named after the former European Commission president Jean-Claude Juncker; we know what has to be done, we just don’t know how to get re-elected after doing it.
Mortgaging the future to prop up the present is a cultural addiction that instructs both policy and behaviour.
