Reviving Economic Thinking on the Right

Sam Bowman and Stian Westlake have just published a pamphlet about what the right should be doing in terms of economic thinking. I have not read it fully, but spent some quality time with the procurement section, which focus on procurement of innovation.

Bowman and Westlake do not seem overly keen in the whole idea, a view Westlake confirmed on twitter. Their assession of tight budgets and lack of connections with entrepreneurs rings true as does the assertion that adding further procurement goals are orthogonal to the act of procurement itself. In this, their view of additional procurement goals is virtually identical to mine (paper).

They are also correct in mentioning risk-aversion as a disincentive for more innovative or risky public procurement.

It is a shame then that in terms of proposals their suggestion is simply of picking a few political wishes and pipelining it into an innovation friendly environment with real procurement at the end. It is not that different from existing challenges but goes a step further (and rightly so) by elevating the whole thing at a political level. Again, that is in line with my own views and in the past I have suggested a mixed incubator + innovation partnership model to incentivise innovative procurement. A key difference of my proposal was the inclusion of some equity for the state in the startups going through the programme.

I think it is a shame that Smith and Westlake decided to simply focus on innovation in terms of public procurement. They understand the importance of competition for economic growth and their assessment of the limitations of procurement in general are correct. In addition, the argument they are making about the orthogonality of objectives between economic efficiency/other policy objectives is a defining issue for public procurement.

Public procurement represents a significant percentage of GDP in the UK and elswhere, so I feel there is a lot more that a view from the right should be doing to improve it for the benefit of the economy. In addition to the usual suspects (resources, professionalisation and incentive alignment) I would add lowering barriers to entry and transaction costs as well.

As the left seems smitten with additional procurement goals and (the right as well) industrial policy making a comeback, it is important to keep the discussion alive about the importance of procurement being used for its primary goal.