2nd January 2009: Review on Amazon by D Martin | Amazon website

This is an outstanding book and I thoroughly recommend it. It should appeal to anyone interested in a mature political and economic analysis, which yields practical suggestions for making our country better.

Jesse Norman points out that the economic growth in the UK that preceded the recent crash was fed by such factors as house price inflation, increasing government spending and increasing personal debt
- none of which could continue for ever. Even then growth was not impressive in relation to our international competitors. The increase in GDP per head was even less flattering, because population in the UK has grown more quickly.

But unfortunately we get much higher marks on such measures of social problems as alcohol and drug abuse, teenage pregnancy, welfare dependency etc.There are plenty of other problem areas, such as education, and "clone town Britain".

All this suggests that we in the UK should expect to do things much better.

The author argues that for too long politicians have been snared by an arid contemporary economic orthodoxy. This tends to treat people as merely self-interested units of production and consumption. It employs mathematics which cannot do justice to different individual motivations and complexities.It lacks the cultural and social context that you can in fact find in earlier classics such as Adam Smith.

He explains how this current approach is intimately linked with the tendency of government to believe it can calculate in detail what is best for different sectors in our society. Increased state control is expressed through over prescriptive interference with providers of public services, such as schools, the burdensome imposition of detailed law and regulation on private business, and a lack of genuine perspective and leadership.

Jesse Norman provides some interesting insights into why some recent developments, such as the happiness theory of Professor Layard, are not likely to lead to a breakthrough out of this straitjacket.

What is needed is an attitude which has far more respect for the capability of people, their energy and their ability to take responsibility. This is not to be naive - there is much evidence for the validity of this approach. Government will still need to set and enforce standards, but it can afford to give much more free rein to individuals and also to institutions to make their own choices.

Institutions, at their best, promote order, yet restrict government power. They can command loyalty, affection and give life meaning. Yet there is no recognition of their place in the current economic orthodoxy.

The new approach suggested sheds much needed understanding on the workings of competitive markets (very lacking in the lead period to the recent crash), and on the creative and unpredictable activities of entrepreneurs. It yields a compassionate economics, which respects people and their individual talents.

Compassionate economics has specific policy implications, some of which the author then explores: simplification of much law - take pension credits and tax credits for example; the need for shareholders to exercise their individual responsibilities of ownership; the revamping of civil service manuals to help create a new relationship with the public.

The author sets out cogently how we might achieve wiser government. It is an important book, which deserves to be widely read.

D. Martin