Not usually ones to blow our own trumpets, we nevertheless don’t plan to let the world forget we were well ahead of the game in predicting the current jobs crunch.

But, as we have also said before, it was blindingly obvious this was going to happen.

Yesterday*, Britain’s Prime Minister, David Cameron, said his government was doing everything possible to create jobs.

This is, of course, a lie.

(In the Prime Minister’s defence such mindless exaggeration has become a quasi figure of speech and few take it literally. Nevertheless, it behoves politicians to be accurate with their use of language.)

There are many things the British government could do, some of them cost free, to boost employment.

The two most obvious are the abolition of jobs taxes (Employers National Insurance) and the abolition of employee rights legislation.

The first of these raises a lot of cash for the Exchequer and its doing away with would be seen as dealing a very substantial blow to Britain’s already parlous financial circumstances.

However, there is a fiscally neutral way of getting rid of it: simply convert this from an employer to an employee contribution, while at the same time imposing a time period during which employers must increase employee gross salaries by the equivalent of the National Insurance payments they would otherwise have made.

This would protect employees from being out of pocket, but would also avail them of the knowledge of just how much their job actually costs and how little of their 'hard earned' they get to see at the end.

It would not save employers a penny from existing employees. However, it would pave the way to reducing substantially the costs of new jobs created. Those who are currently unemployed might well prefer a lower salary than no salary.

But, the really big fish to fry is the abolition of employee rights legislation. This wouldn’t cost the government anything but would make British companies far more competitive. They would grow, new ones would start, and employers would no longer be fearful of hiring.

It’s not that the government doesn’t know this. It will be blindingly obvious to them. But they find it just too politically unpalatable to take action.

The Conservative Party is still trying to detoxify its brand, and shake off the image of being the nasty party: hence seemingly obscure obsessions with promoting gay marriage and ring fencing the overseas aid budget (one of only two areas of spending so protected).

It is the same fear of being seen to be nasty that obstructs the political will to tackle the uncompetitive employment burdens Britain has shackled itself with for the last 15 years or more.

So, though received wisdom says “it’s the economy, stupid” really “it’s politics, stupid”.

But, in time, the economic argument and the political argument will converge. Democratic governments pursue paths of least resistance and there will come a day when there is more to be lost politically by keeping these employment burdens than by getting rid of them.

Employee rights and jobs taxes are not the only barriers to economic growth but they are huge ones and their removal would certainly be a big step forward.

Sadly, as the drastic austerity measures now being imposed in Greece suggest, things have to get very bad indeed – which means much more unnecessary suffering for us all – before politicians find the political courage to do what they knew, deep in their hearts, they would need to do all along.

* This blog post was first published on 13 October 2011

Today, in front a joint congressional session, Barack Obama will talk about America’s weak labour market.

Politicians talk a lot about “jobs”, especially at the moment, since their own might depend on generating more employment for voters. Yet most of them remain uninterested in business – except, perhaps, when they leave office and look for a way to exploit their contacts. The rest of the time they seem incapable of understanding the link between jobs and business.

It is in fact very easy to “create jobs”: simply pay people to do things. The problem is finding the money to do so. For a job to be viable, it must generate enough additional income, or save enough money elsewhere, to cover its total costs – not just the salary but payroll taxes, administrative costs, additional workspace, employer contributions to healthcare and pensions, etc, etc, etc...

Or, to put it in economist-speak, the marginal revenue of each new job must be greater than the marginal costs.

So there are two ways to increase the viability of jobs: increase the marginal revenue or decrease the marginal costs.

Politicians seem obsessed with the first option. They think in terms of “stimulus” to increase the amount of money in the economy in the hope that will increase revenues – but there is no guarantee the money will go in that direction: much of it is spent wastefully or saved or used to reduce past debts or spent on imports.

Decreasing the costs of employing people is a far more efficient option. However, politicians seem determined to increase those costs, through increased taxes, healthcare contributions, minimum wages, regulation, etc, etc...

The bottom line is that viable jobs can be generated only by viable businesses.

Attempts to find quick-fix alternatives are counter-productive. If money is borrowed, it must be paid back. If money is printed, it is the same as borrowing from the future. If money is taken from viable businesses by coercive taxation to subsidise the unviable, it is destroying viable jobs to buy a little more time for those that cannot survive – the strategy that devastated the British economy in the 1970s.

If the politicians are serious about wanting more jobs, they should listen to the people who actually provide them – business. If they set us free, they would be amazed by what we could do.

The British government has, apparently, told the Federation of Small Businesses that it will consider abolishing up to 22,000 business regulations.

The first response from any right minded person will be “What the ...? How on earth did we ever get in a position of having so many regulations in the first place?”

If the government will consider abolishing this number we ponder how many there are in total – 40,000, 50,000?

But, don’t get too excited. As ever, the devil is in the detail. First, the government has said it will abolish up to 22,000 regulations. It could only abolish one regulation and still, technically, comply with this undertaking.

Second, regulations will only be abolished if officials do not find good reason for them to stay. These are same officials who introduced the regulations in the first place. No doubt in the crazy, alternative reality in which they inhabit there were – and more importantly, remain – so called good reasons for all this nonsense.

As optimists we’d like to believe the government. As realists we know this is just another cynical exercise in vote grabbing that will have desperately little economic effect.

The government should realise at this stage of the electoral cycle – the next election is over 4 years away – populist measures are a waste of time, as they will be long forgotten come voting day. Instead, now is the time to do what it is essential, though possibly politically unpopular, to do.

Two years ago we predicted the recovery would be a jobless recovery. As with so many of our predictions, we have been proved right. Economic recovery, and job creation too, will not come about by silly, vote grabbing gestures.

Tomorrow sees the annual UK Budget, trailed as the most pro-growth budget in a generation. If we are to see genuine economic and job growth the government has got to take real action to decimate the swath of anti-business employee rights legislation, abolish jobs taxes and provide meaningful incentive to risk takers.

Alas, tomorrow looks like it’ll turn into just another disappointment.