Playing the ‘what if’ economics game

27th September 2011

So "What if Hitler had been aborted by his mum?" Would the history of much of the twentieth century have been different or would someone have taken much the same course?

 Or "what if the internal combustion engine had never been invented?" Would we still have steam engines or would we have leapt to a new technology, avoiding pollution and dependence on oil-owning regimes?

This is more than just a silly game for history fans stuck in a fogbound airport. Assuming history has any purpose at all, the answers can be relevant to our behaviour now and in the future.  Here's five "what-ifs" from the UK economy over the past 15 years  – Mindful Money readers are invited to comment, and to send it their own favourite economic "what ifs" for a future series.

 

What if the UK had joined the Euro?

Conventional wisdom holds the UK is and has been much better off outside the single currency, especially now as it seemingly hits crisis after crisis. But economics is all about life at the extreme margins. Just as a butterfly fluttering in Brazil can cause a tsunami in Thailand (at least, according to chaos theory), then UK membership of the euro could have altered the course of the currency some time over the past decade or so. The discipline of single currency membership might have changed our domestic course as well. And what if individuals did not have to pay banks up to 10% in charges every time they want a European holiday? Would we have had staycations?

 

What if Gordon Brown had not raided pension funds?

In July 1997, two months after coming into power, Gordon Brown, then chancellor, announced he would strip pension funds (and non-taxpaying share owners) from previous rights to reclaim advance corporation tax deducted on dividend payments. He claimed on television news that "Pensioners, in my view, will not lose out over this in the way that people are suggesting" and "We are not raiding pensions – that is just ridiculous". The change occurred in April 1998.

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