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Outline of Comments by The
Rt.Hon.Lord Howell of Guildford at the Plenary Session of the Forum Istanbul
‘Leapfrogging to the Knowledge Society – How did others do it and how should we
do it? 5th May 2005
‘The knowledge society’ is a useful expression but great care must be taken in
elevating it into an objective of government policy or an overall policy vision.
Leap-frogging is also a tempting notion but governments and bureaucracies are
not sufficiently agile to do this very well. It is an exercise best left to
enterprise and innovative individual minds. Governments can create a framework
and help grapple with outside events and pressures, such as energy crises. But
it is people who by their actions and imagination take a nation forward to
economic dynamism and prosperity.
Lisbon Agenda – a flawed model. Enterprise the missing ingredient.
The fate of the Lisbon agenda for the EU shows clearly why caution in this
sphere is needed.. Its almost total failure so far to galvanise the moribund EU
economy confirms a simple but central fact - that top-down strategic thinking by
central governments or institutions very rarely initiates economic growth and
dynamism and may actually impede it.
It is this kind of thinking which has today paralysed the major EU economies –
which are in effect in a sort of coma – and which paralysed the UK before the
Thatcher reforms of the nineteen eighties.
Ironically, it was the information revolution itself, with its colossal powers
of increasing access to knowledge , its huge potency in dispersing power in
society and in e-enabling markets in entirely new ways , which permitted the UK
to break free of the old fashioned, state-dominated mode of thinking, and the
old-fashioned interests which sheltered behind it.
In short, the Lisbon strategy is not a model to follow in the information age.
From the start it was based on a misconception about the nature of modern
societies and this is enough to explain why it has produced such slim results.
Europe will prosper, as it has in the past, from its diversity and the
intelligence and vigour of its peoples, not its governments..
More frameworks, less plans and strategies.
Of course there are examples in history of Governments and national leaders
imposing big changes in their societies’ character and behaviour. The Meiji
modernisation strategy in Japan in the middle of the nineteenth century was an
example of this.
But when I was in Japan recently and I was asked whether Japan needed a Margaret
Thatcher I said ‘No’. Not only is each society evolving differently but the very
question rests on a misunderstanding.
Margaret Thatcher steered us through a huge transformation in the UK, and fought
many crucial battles against entrenched interests. But the forces which drove
the transformation came from outside and above – from technological change ,
from the determination in the UK to reverse past humiliations and from the clear
perception of past errors – in particular the error of over-government and too
much central direction and regulation.
Where Governments can help is not by enunciating grand and unenforceable
strategies but by framework actions along the following lines:
1. Ensuring the best possible educational facilities, with open avenues for the
brightest minds and high quality skill training for the majority. (It should be
noted that even today in the UK only 28 percent of the workforce is qualified to
intermediate skill level, compared with 51 percent in France and 65 percent in
Germany).
2. Insisting on maximum openness and democracy in society, with freedom to
express, to innovate, to compete and to challenge conventional methods and
ideas, combined with restraint and responsibility on the part of all those who
hold power.
3. The lightest possible taxation and regulation. Tax should also be simple. In
the UK we have drifted back into endless tax complexities, making lawyers and
accountants rich but benefiting neither the public revenues nor business. I hope
Turkey will look closely at the idea of a single flat-rate tax, now adopted by
six Central European nations and by Russia and Hong Kong.
But the springs of national economic transformation lie deeper still.
These things are important but are by no means enough to ensure momentum. The
papers for this Forum emphasise ‘heavy investment in research and development’
as well as building up human capital. Of course these are necessary – but again
not sufficient. If the heavy investment is misguided, as Government ‘investment’
often is, it leads not to growth but to waste . The world is full of such
examples.
And remember that the old Soviet satellites had very good systems of training
and skills, and massive spending on research. But it got them nowhere.
So one needs to probe still deeper to understand and touch the mainsprings of
economic reform and advance. And at this deeper level lies the key ingredient of
all – which gets little mention in the Forum papers – which is enterprise and
enterprising people.
What motivates people to be enterprising and innovating? Not alas, government
strategies and agendas.
No, the driving motivations to create wealth and adopt new techniques spring
from a complex and subtle mixture of causes, anomalies, discoveries, ambitions,
determination to overcome obstacles and even resentments.
In the UK case we had to fight on two fronts – on the left against powerful
state monopolies, over-mighty trade unions and sheer bureaucracy, on the right
against entrenched professional interests and a suffocating class structure, as
well as a general defeatism which argued that Britain was ‘finished’ . Only when
these were tackled and overcome could people become free to seize the
opportunities of the information revolution, and to do so in ways which blended
with UK characteristics and natural advantages – such as London’s fortunate
positioning as a global financial centre.
Two further ingredients for success – fairness and national confidence.
I have still omitted two further crucial ingredients, without which all efforts
to move forward may prove sterile.
The first is the need to ensure the benefits of growing wealth are properly
shared - ideally not by complicated welfare and income redistribution so much as
by asset and wealth distribution. Ownership – of business, of stocks, of
property, of savings - must be spread widely in any society if it is to stay
balanced and imbued with a sense of fairness.
Actually, despite extensive privatisation and greatly widened share ownership ,
I am not sure the Thatcher Governments did enough to spread wealth , with the
result that despite the surge in prosperity there also grew up a deep sense of
grievance, which eventually led to her downfall and the opportunity for Tony
Blair to take over with his ‘Third Way’.
The second ingredient is the most crucial of all – perhaps it should have been
put at the beginning of my list instead of the end.
It is quite simply that for a nation to develop rapidly and succeed it requires
a sense of identity and a spirit of confidence.
The Thatcher era gave the UK back its confidence. We ceased to apologise and
ceased having things to apologise for. From being the sick man of Europe we
became, and remain, the pace-setter of Western Europe.
I am not talking about just beating the nationalist drum. That is yesterday’s
message. I am talking about a society having the self-esteem, pride and
confidence to play a good and constructive part in world affairs and to be
convinced that it can overcome all obstacles by its own exertions.
Concrete proposals and Policy Messages for Turkey.(Humbly offered by a Brit
since all countries are different with different needs).
Your Forum paper asks for me to end with concrete proposals and policy messages.
So here they are:
1. Avoid patronising top-down formulations and visions and build on the unique
skills and qualities of the Turkish people with practical and liberating
measures.
2. Do this not by brewing up futile official strategies and plans but by lifting
every possible burden and tax impost on enterprise and innovation. Become a low
tax society.
3. Put the encouragement of enterprise, small and large, at the centre of policy
and welcome good quality foreign investment warmly.
4. Tackle all monopolies, especially state monopolies, privatise carefully where
possible and maximise competition on all fronts.
5. Maintain a fair but not over onerous framework of regulation and law within
which markets can work sensibly.
6.Put resources into education and training, to promote maximum literacy and
numeracy, but remember that it is the individual brilliant minds and the
innovators who carry a nation forward and must not be held back.
7. Spread the benefits of growing wealth generously through wider ownership of
assets and property.
8. Harness both private enterprise and the public sector to deliver a high and
reliable quality of public services and national infrastructure.
9. Look wider than the European Union for markets and partners. The great growth
areas of the coming decades will be in Asia, not in Europe , and Turkey is
uniquely placed (in fact better placed than Western European states) to interact
with the new economic superpowers of Asia.
ENDS
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