By Carlos Boix

After weeks of bad omens, we finally have the autumn budget. Yes, it is as bad as predicted—more taxes, more spending, more empty promises. Nothing new or unexpected. The funny thing is that the government keeps claiming that they will deliver more growth and less inflation. These wild statements have made me doubt anyone in the government understands what growth is or what causes price inflation. This budget will neither tackle growth nor inflation.

Growth is not an increase in GDP, as this measure has many problems. Real growth in an economy means more economic activity, that is, greater private production and exchange of goods and services. That is how we should measure growth. My quality of life is better than my grandparents because I work less and get more in exchange.

Necessarily growth implies improving production—producing more with less by doing it better. The only way to do this is, by the capitalist mentality, saving to invest in capital goods to improve production. The incentives for this only happen in a free market where people compete to attract customers and only profit through serving their specific preferences. This constant competition and improvement has created our modern economies, with high levels of material wealth and better working conditions.

There is no other way to grow. As Professor Bastos—an economist from Santiago, Spain—says, “saving and hard work, there is no other way to prosperity.”

Here I refer to “price” inflation, and I am fully aware that inflation should mean an increase in the money supply.

There are two ways in which an economy can suffer from price........

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