The Paradoxes of Inclusive Growth

Growth, economic policy and devolution possess deep paradoxes, making inclusive growth a tough nut to crack. The first meeting of the Inclusive Growth Commission has shown that we must question conventional wisdom to find a more inclusive model of growth.

The Inclusive Growth commissioners have now met for the first time, under one of the many painted ceilings at the RSA in London.

That means two things. First, that the commission is now under way, charged with puzzling out how, in practical terms, the economic success of cities with devolved powers might spread itself across the predictable boundaries of rich and poor, inner and outer, city and periphery.

Second, it means that all the commissioners have now been appointed. And most of them were in the room – or virtually, down the line from the Brookings Institution in Washington, in the case of Richard Reeves.

Together, they cover a multitude of different fields – a fintech pioneer (Giles Andrew), an entrepreneur (Indy Johar), a leading industrialist (Sir John Rose), an economics professor (John van Reenan), a prominent researcher (Julia Unwin), a government advisor (Naomi Eisenstadt), a philosopher (Richard Reeves), a leading local government official (Rob Whiteman), a creative leader (Sue Woodward) – and two ex-officio members who were behind the success of the previous RSA commission, on city growth, which managed to launch the current devolution drive.

And with Stephanie Flanders in the chair, guiding the proceedings.

It was immediately clear that this is a deeply paradoxical topic. The following paradoxes are ones that struck me, not because they are proved – or even provable – but they are uncomfortable for conventional thinking. Most of them came up during the first conversation in one form or another. They also explain why this is such a tough problem to crack.

1. Growth without inclusivity may make people poorer.
2. Economics without a social dimension may be impoverishing.
3. Devolution to cities may make their neighbours worse off, unless there are successful, working connections between them.
4. Devolving powers to the cities and regions doesn’t necessarily mean that central government has less to do.

To which we might add another, related paradox that is an important feature in Vince Cable’s latest book After the Storm: there is some evidence to suggest that, the bigger a nation’s finance sector becomes, the less well off the other sectors.

Could that be the case? These paradoxes need unpacking, they need backing – and they need understanding. We are only at the beginning of the commission process now. But, by the end, we hope to understand their scope a little better.

The extent to which they are true – and why they are so – are among the key questions the commissioners will have to answer before they get to grips with the issues in a meaningful way. It struck us that there may be other paradoxes out there related to inclusive growth. Perhaps we have been ignoring them in the same way because they are so uncomfortable for conventional wisdom.

Either way, we need your help to identify them. During the commission process, we are planning to ask anyone involved by reading these blogs to tweet key questions that need answering to understand inclusive growth to @IncGrowth. We will try and tweet a key question of our own regularly. 

Find out more about the Inclusive Growth Commission

David Boyle is a Research Associate at the RSA.

You can find him on Twitter @davidboyle1958.