#196 - Sam Bowman - The U.K. Is Becoming a Poor Country

**Sam Bowman** (0:00)
We are approaching two lost decades, 20 years of basically zero median wage growth, zero wage growth for the person in the middle. And that to me is the sign that we are a poor country.

**Peter McCormack** (0:12)
I think this country is grinding to a halt.

**Sam Bowman** (0:14)
They've had to produce a planning application that runs to 360,000 pages.
And the 360,000 pages of what? And the production of this planning document has cost 297 million pounds. The world's longest road tunnel is in Norway and was built. The entire project cost less than the planning application for this tunnel. Everybody wants a veto. And as a result, nothing happens. Nothing gets built. Vetos are always used. What we've got wrong are things that we could fix. You and I could fix in six months.

**Peter McCormack** (0:47)
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Anyway, Sam, it's really glad to do this.
I really like your writing. Thank you. I appreciate it. You've helped me particularly understand things from a direction which I hadn't thought about things or especially housing. We'll get on to that. But I was trying to summarize what I think your main point is across all your articles. And I think it's that increasingly we have the boot of the state on the neck of the productive parts of society. And we're now feeling the consequences of that.

**Sam Bowman** (1:41)
That's one way to put it.
I'm not as anti-state as I think that would be. I think that states can, in the right ways, sometimes help growth. I think it's rarely happening from the center. But I think, for example, like local governments can do a good job of making a city a better place to live. I think if you look at China, for example, the story that we hear about China is Beijing driving huge amounts of growth across the country. That's completely wrong. In fact, what's happening in China is local governments, city governments, having huge amounts of discretion to invest in their own cities. They capture a lot of the benefits, a lot of the spillovers because they own the land, so they lease it out.
They get the returns from investing in a certain industry, attracting an industry to that place. They're in competition with each other, so you don't have the dead hand of like the whole country goes all in on something that I think ends up failing almost all the time.

**Peter McCormack** (2:40)
So it's a little bit like the US federal system.

**Sam Bowman** (2:42)
Yes. I think that historically, that's one of the reasons the US grew so well.

**Peter McCormack** (2:47)
Competition.

**Sam Bowman** (2:47)
Competition, right. But it wasn't just that the state didn't do anything. It was that the federal government didn't do that much, but city governments often did a lot. They would build infrastructure, they build airports, and places like Atlanta, Chicago, those kinds of things make a huge difference.
My take is not really that the state is always the problem, it's that centralized states very, very rarely succeed in driving growth other than by removing barriers to growth. But local governments with the right incentives can drive growth, and investing in infrastructure is one really, really good way they can.

**Peter McCormack** (3:23)
Right. That's really interesting because we are a centralized nation.

**Sam Bowman** (3:26)
One of the most centralized countries in the world, Britain.

**Peter McCormack** (3:29)
Our local governments, and really the central government here has been offloading a lot of its problems to local governments in terms of delegating them to pay for certain provisions they want to give.
Local councils don't really have the ability to change too much locally on the tax front. So really, they've become, well, most of them are bankrupt or near bankrupt, and they've become dysfunctional.

**Sam Bowman** (3:54)
So to my mind, the story of British history or of modern British history is the Victorian era all the way up to the Edwardians, all the way up to the Second World War, really. You have extremely decentralized government. You have city governments that have a lot of discretion to invest in public works, to invest in better sanitation, electrification, things like that.
They collect a lot of the taxes that they raise. So they build a lot of houses, they build a lot of infrastructure, they get rich.