Politicians claim skills training can solve Britain's economic woes, but is this an excuse to not deal with the real causes of our stagnation?

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Last week I gave a talk on the fall of the Soviet Union to twenty undergraduates at the IEA’s Future Thought Leaders Conference. Though the causes of the collapse were numerous, one of the USSR’s most acute problems was low agricultural productivity. By the 1970s, the average Soviet farm worker was only 20 per cent as productive as his American equivalent.

The communist leadership had a simple solution – tractors. Believing that the problem was a lack of mechanisation, the Soviet Union went from producing three tractors for every one sold in the US in 1976 to a ratio of 12 to one in 1986.

Yet agricultural production continued to fall behind the US. Collective farms produced little, not because they lacked farm equipment but because the system destroyed any incentive to produce a surplus. But because this was a politically inconvenient conclusion, the central planners preferred to let the tractors pile up uselessly in warehouses until it was too late.

I was reminded of this history listening to The New Statesman podcast ([link removed]) on economic growth. Bridget Philipson, Labour’s Shadow Education Secretary, promised to establish a ‘National Skills Taskforce’ while Tory MP, Bim Afolami, discussed the importance of encouraging apprenticeships. Prime Minister Rishi Sunak has also emphasised ([link removed]) skills training to boost productivity.

It’s understandable why British politicians love to focus on skills. The prospect of growth without making difficult and unpopular decisions cutting red tape, compromising Net-Zero or building anything will always be appealing.

The problem is that Britain already has a highly skilled population; we spend well above the OECD average ([link removed].) on education, and our PISA educational results on reading, mathematics and science are among the best in Europe, beating more productive Germany by every measure.

We must face the reality that training more scientists will have a limited impact if there is barely any available lab space ([link removed]) near our best universities. ‘Upskilled’ workers aren’t going to move into higher productivity areas if virtually all their wage gain is eaten up by higher housing costs. Training more apprentices isn’t much use if high energy prices cripple industry.

Unfortunately, like the leaders of the ailing Soviet Union, it seems our politicians prefer comfort blanket policies to tackle the real causes of our stagnation.

Daniel Freeman

IEA Research Assistant
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** The Mirage of Swedish Socialism
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This week, the Realities of Socialism project launched The Mirage of Swedish Socialism: The Economic History of a Welfare State ([link removed]) , a publication by Johan Norberg which dispels the myth that Sweden is some kind of socialist utopia. Instead, Norberg demonstrates Sweden’s prosperity is based squarely on free market foundations.

The Realities of Socialism project is led by the Fraser Institute in Canada in partnership with the IEA, the Institute of Public Affairs in Australia, and the Foundation for Economic Education in the United States.

The project highlights the grim reality of socialist policies imposed worldwide during the 20th Century. The project has already released polling on socialism’s popularity across the Anglosphere and publications on Poland and Sweden’s experience with left wing policies. New publications focusing on Singapore, Estonia, and Denmark will be released over the coming months.
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** Sweden is NOT socialist
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Not quite the full story… Communications Officer Harrison Griffiths explains why Sweden’s economy can hardly be described as socialist and gives an overview of the country’s economic history.

The idea of a ‘socialist’ Sweden is a Left-wing mirage

Harrison also wrote about the paper in CapX this week, arguing that the British left’s platform of deficit spending, nationalisation, and burdensome red tape bears little resemblance to Sweden’s free market economy.
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** Perspectives on Capitalism and Socialism
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In case you missed it… Realities of Socialism published polling on the popularity of socialism and capitalism across Australia, Canada, the United Kingdom, and the United States.


** Poland: Socialism in reality
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The first case study published by Realities of Socialism looked at Poland’s economic history since 1939, analysing the country’s experience under Nazism, communism, and capitalism.
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** More to come…
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Stay up to date with all new publications from Realities of Socialism on the website.

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IEA Latest.
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** Bank should hit the brakes on interest rate rises
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Economics Fellow Julian Jessop, The Daily Telegraph and The Guardian

Resist the rate rise… This week’s inflation figures show a fall in the headline inflation rate, while the base rate, excluding energy and food, is stuck at 6.9 per cent. Despite this news, inflation is expected to fall, and the Bank of England should avoid another unnecessary rate rise.
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** Seven years after the referendum, the UK is still in thrall to EU regulation
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Editorial and Research Fellow Prof. Len Shackleton, CapX ([link removed])

Rampant regulation… Seven years have passed since Britain voted to leave the European Union, yet leftover EU regulation continues to damage our economy. The Retained EU Law Act poses a vital opportunity to fix this.
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** Reintroducing wolves to Britain is pure insanity ([link removed])
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Head of Lifestyle Economics Christopher Snowdon,

The Spectator ([link removed])

Big bad wolf… Veteran eco-fanatic George Monbiot has advocated the reintroduction of wolves to the UK. What Monbiot has failed to grasp, however, are the negative externalities that such a policy tempts.
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** Australia’s blocking of Qatar airways is a parable in anti-competitive intervention ([link removed])
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Director of Public Policy and Communications Matthew Lesh, City AM ([link removed])

No fly list… The Australian Labour government has rejected Qatar Airways’ application for 21 extra annual flights. By doing this, the Australian government has stifled competition in a sector with robust demand.
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** Is Brexit Being Betrayed? ([link removed])
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Matthew Lesh interviews Fred De Fossard, IEA YouTube Channel ([link removed])

Brexit brouhaha… The government's recent decision to allow products to continue to carry the EU CE mark has been painted by many as a Brexit climbdown. But is this really the case?
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** Western governments believe they can ban populism. They’re dangerously wrong ([link removed])
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Senior Policy Advisor Sam Collins, The Daily Telegraph ([link removed])

Illiberal democracy… An argument in mainstream German politics has gained popularity that the right wing AfD should be banned. Not only is this illiberal, but also risks alienating more of the population.
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** Why Are Most Women Attracted To Socialist Ideas? ([link removed])
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Communications Officer Reem Ibrahim, IEA YouTube Channel ([link removed])

Why so popular?… 55 percent of women prefer socialism over capitalism. But why? In this week's episode of Breaking Barriers, Reem Ibrahim sits down with the Director of Operations at the Ladies of Liberty Alliance, and Founder and Co-Leader of LOLA Canada Ana Rizo.

IEA Insider.


** The Genesis of the IEA ([link removed])
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Within a few short weeks of taking over as Chairman of the IEA, Linda Edwards found time in her busy schedule to join the annual Fisher Family gathering at the graveside of Flying Officer Basil Mark Fisher on 15 August 2023.


Basil was the only brother of Sir Antony Fisher, founder of the IEA; Basil was killed while flying his Hurricane in 111 Squadron during the Battle of Britain on 15 August 1940. As a fellow member of 111 Squadron that day, Pilot Officer Antony Fisher watched the entire tragedy unfold from the cockpit of his own Hurricane flying alongside his brother; to witness the loss of his sibling in such traumatic circumstances had a profound impact on Antony, directly influencing his thinking which ultimately evolved into the creation of the IEA.

Linda’s presence at the annual Fisher Family event, and the interest she has shown in the history of the IEA, clearly demonstrates her commitment to the organisation’s heritage. The Fisher Family are supremely grateful that she is carrying the baton forward, and wish her well in her new role.


To see the unfolding story behind the grave of Flying Officer Basil Fisher, buried in St. John’s graveyard, Eton, click here ([link removed]) .


** A Discussion on International Energy Agency’s Net Zero Report
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Date: Wednesday 30th August

Time: 3.00pm — 5.00pm

Location: 2 Lord North Street, SW1P 3LB

Lucian Pugliaresi, President of the Energy Policy Research Foundation, will present A Critical Assessment of the International Energy Agency’s Net Zero Scenario, ESG, and the Cessation of Investment in New Oil and Gas Fields ([link removed]) . The analysis claims that the International Energy Agency’s assumptions are unrealistic, internally inconsistent, and often support the case for increased hydrocarbon fuel production. IEA Energy Analyst Andy Mayer will join Pugliaresi for a discussion about the report.

RSVP: There are limited spaces available, please request a place by email (mailto:[email protected]?subject=null&body=null) .

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** Apply to be the IEA’s next Director General ([link removed])
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The applications close tonight, Sunday, 20 August at 12.00 am

The Institute of Economic Affairs welcomes applicants for the Director General role. We are looking for a visionary leader who will provide strategic direction to promote the growth and effectiveness of the IEA.
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