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Why doesn't Britain make things any more? (2011)
- blackflame7000 7y agoThe United States should study how the lost of manufacturing impacted Britain globally when dealing with China
- H8crilA 7y agoIt's perhaps inevitable. The Chinese, then the Dutch, then the British, now the American. It may simply be that China becomes the next top power. Ray Dalio on the matter: https://youtu.be/Mh0vEaac78U https://youtu.be/Mh0vEaac78U
- julienreszka 7y agoNo way
- IllogicalLogic 7y agoThe only reason China dropped out of super power status was tremendous sabotage/criminality by the top 5 economies of the world. There rise is not a fluke, this is an inevitability of the planet we live on, India is next and it will outperform China by the end of this century (like it did in the past, pre-British invasion). General ignorance of world history in the West will make this transition harder than it needs to be for Western populations.
- emmelaich 7y agoThe biggest saboteur of the Chinese economy was Mao. If you're going to pin this on the west, then pin it on Rousseau, not (say) Adam Smith.
- deleted 7y ago[deleted]
- IllogicalLogic 7y agoThe problems with the Chinese economy did not begin in the 1950s, this is quite a misunderstanding of history. To fully understand China's economic path, you would at least need to study the economic terrain/decisions/outcomes starting in the 1750s-1800s.
- sharpneli 7y agoBit more perspective. At the end of 1800’s and start of 1900’s China was still almost feudal agrarian society that didn’t modernise due to internal reasons. Neighbouring Japan had their Meiji restoration that made it a powerful modern country, that happily joined others in bashing China. So at that point China was already decades behind Japan. After this came the Chinese civil war between Kuomingtang and the Communists, interrupted by Japan attacking again. After the Communists won it spent the next 40 years shooting itself in the foot, again delaying its rise. Comparable places like ROC (Taiwan) and South Korea have taken off like rockets economically, and are now great places in relation to their populations. China will be the biggest superpower if it reaches same production per capita as their non communist counterparts in Taiwan. tl;dr: China mostly shot itself in the foot repeatedly. First Qing dynasty then commies, pushing them back over a hundred years.
- deleted 7y ago[deleted]
- IllogicalLogic 7y ago>Bit more perspective. At the end of 1800’s and start of 1900’s China was still almost feudal agrarian society Starting in the 20th century? Skipping the first 100 years of Western criminality in China is like talking about the Titanic sinking and ignoring the iceberg it hit. Western powers collapsed Chinese/Indian/African trade routes. An industrial revolution is great, but it works even better if you murder/colonize/enslave all the competition. Western powers engaged in industrial espionage and stole trade secrets (Ex. Notice the countries with tea industries (the most consumed beverage on the planet)? Almost all didn't exist before this UK crime in the 1800s). In fact Chinese leadership even offered tons of free tea (one of the most valuable commodities at the time) to the UK if they could just stop producing poison (opium) around the world. The UK ended up stealing tea production secrets from China instead of accepting this offer. Western power's "opium as a way to avoid trade deficits" policy not only led to countless murders and abuses but also led to 30% of the under 25 population being addicted to opium in China. Even worse, when this turned into an epidemic, Christian missionaries then started giving opium addicts morphine and promoting it as a cure (not a doctor but quite sure that is adding gas to a fire). Western powers (primarily US) gave the Japanese authorization to expand West into Asia in 1905, after all the drugging they did for the better part of a century (Teddy Roosevelt was a douchebag and his wealth was mostly inherited drug money, unpopular historical fact). If you don't know why Pearl Harbor happened, it is because we reneged on this secret treaty with Japan and assisted China in the 2nd Sino-Japanese war. The problem with popularized historical narratives (very true in the US especially) is they can be manipulated and mischaracterized for propagandizing effect. Economic history, on the other hand, cannot be played with the same way and what originally was characterized as exceptionalism now we can see is just criminality on an unprecedented scale. We can track most of the opium money, domestic and international trade flows, and economic outcomes of these countries during this period more accurately and thoroughly than using any other set of data points, like political speeches/rhetoric etc...
- julienreszka 7y agoIt can't be a superpower because it is neither military, nor cultural power.
- Aloha 7y agoA loss of political support for manufacturing has caused a loss of manufacturing in the US too - we wanted nice clean information jobs, no dirty factory jobs spewing chemicals all over
- all2 7y agoThis isn't true at all. The US has more manufacturing capacity than it ever has. https://www.federalreserve.gov/releases/g17/ip100_f2.svg https://www.federalreserve.gov/releases/g17/ip100_f2.svg
- skrebbel 7y agoWhat's the unit on that Y axis?
- tedeh 7y agoIt is an index that starts at 100 at the beginning of the graph.
- Aloha 7y agoAn index of what? Units? Weight? Volume? Dollar Value?
- _iyig 7y agoI recall an article (or blog post) from a couple years ago- it made the case that US productivity had been grossly mis-indexed since the 80s, in part due to assumptions about CPU power relating to economic productivity where Moore's Law essentially inflated the numbers. Does anyone happen to remember this same article, and have a link? EDIT: here it is, from 2012. I saw it again in 2016 when it was brought up to explain Trump's election, by way of reminding American elites just how bad "deindustrialization" and globalization really had been for the heartland: https://www.washingtonpost.com/business/economy/economists-offer-more-pessimistic-view-on-manufacturing-in-upcoming-report/2012/03/19/gIQAKSpZNS_story.html https://www.washingtonpost.com/business/economy/economists-o... "Moreover, at least some of the productivity gains shown in U.S. computer manufacturing reflect the increasing power and decreasing prices that come with innovation. When a computer chip doubles in efficiency, that can turn up in a doubling of output and productivity in computer manufacturing. But that is not what is ordinarily thought of as manufacturing efficiency. “It is innovation that makes it look like they’re manufacturing a whole lot more in the U.S. than they really are,” Atkinson said."
- viburnum 7y agoBritain makes the best cars in the world, the problem is they only make a few dozen a year. All that hard work, just for Lewis Hamilton to lead a parade.
- deleted 7y ago[deleted]
- CapricornNoble 7y ago>>>Britain makes the best cars in the world Which ones are the those, the unreliable McLarens, or the unreliable (but at least beautiful) Aston Martins? https://www.youtube.com/watch?v=aGK7XPNFhpQ https://www.youtube.com/watch?v=aGK7XPNFhpQ
- exar0815 7y agoHe's talking about the Formula 1 cars. I think except of two teams all current teams are based in Britain (Ferrari and Toro Rosso). Even more, most of them are in a 50 Kilometer radius in the Midlands. And that has historical precedence. Since the beginning of the F1 World Cup, there has been only a single year when the Championship-Winning car was not either from GB or Ferrari.
- sambeau 7y agoI assume the comment refers to Formula One racing cars
- samlittlewood 7y agoMercedes are in Brackley, UK. Ferrari, Sauber & Hass are the only ones outside UK. (I think Hass may have a UK facility as wwell)
- blululu 7y agoJust to add to the complexity of the issue: Part of the problem for the UK lies in the strength of the pound. The financial sector is so strong that it drives up the value of the pound beyond the demand for anything made in Britain. This makes it hard to compete on price in pounds. https://en.m.wikipedia.org/wiki/Dutch_disease https://en.m.wikipedia.org/wiki/Dutch_disease
- IllogicalLogic 7y agoOnce the pound became the global reserve currency, the trade deficits started increasing. I expect the same was true for the US. Does this inevitably lead to less domestic manufacturing? I think that's the outcome, yes. This is the case for a global reserve currency that isn't controlled by any single country.
- afarrell 7y agoBut doesn’t this also mean that as a country, Britain or the US can “tax” the economic growth in an arbitrary country which uses its currency as reserve? As Botswanna’s economy expands, it needs to print more money to conduct all the transactions and take advantage of the increased resources provided by an increasingly-skilled workforce. As that country’s central bank prints more money, it tries to acquire more GBP or UK treasury bills to hold in reserve. In order to do that, Botswana spends its own currency in Britain. Britons can trade this Botswanan currency in exchange for the right to receive some amount of goods/services from the people of Botswana. So britons have gained some goods as a result of Botswana’s economic expansion. ... in exchange for the possibility of needing to give someone goods whenever GBP stops being a reserve currency. Or have I completely misunderstood international monetary policy interactions?
- neilwilson 7y agoLargely you are correct. It works like this. If you are a net exporter, you are essentially giving away your own output to a foreign nation in exchange for bits of paper. The reason you can't spend that paper is that it would destroy your exports (your own currency would go sky high as the system tried to eliminate the imbalance) and you'd have to find something else for the people working in exports to do, or you'd get a Dutch Disease problem internally (and likely end up in a situation like Venezuela) So Botswana sells its natural assets to the US in exchange for US dollars. Those US dollars find their way into the bowels of the financial system and are discounted into the local currency. Either directly - like the Chinese do, or indirectly via some fancy financial system (normally a Sovereign Wealth fund, or Pension schemes with compulsory contributions). They then sit there (the Norwegian fund for example cannot spend anything - ever) - largely to avoid a Dutch disease in the country and to stop the local currency appreciating against the export target. The result is that the rich countries get stuff essentially for free from the poorer countries so that the poorer countries can issue their own money without people getting agitated. The whole thing is a conjuring trick. The poorer country would be better putting people to work creating domestic infrastructure straight away and only exporting what is necessary to get needed goods and services required to create that infrastructure. But to do that requires you to operate the central bank in a way that appears 'wrong'. You have to issue liabilities against 'Other Assets' rather than 'US Treasuries' and that upsets people who don't understand how banks actually work. The GBP/USD gets 'locked' in the financial system. Because it is being used to discount to the scrip used locally you can never get rid of it. To do so would reveal the central bank illusion and explain how the trick is done. Then people might start asking question like: why don't we use our own money in our own circulation to ensure everybody has a job and solve unemployment permanently and forever? And that would never do ;-)
- sleavey 7y agoAll of the main parties in the UK keep skirting around the start of the solution to "rebalancing" the economy: massively increased taxes on the rich to pay for the required investment. This is not a new idea; low taxes for the wealthy are a relatively modern phenomenon yet the social mobility gap has been getting wider. There is surely enough support for it among a properly informed plebiscite, but they are never given the option or they are lied to or given the idea that this tax might affect them when they get super wealthy.
- goatinaboat 7y agoThat’s one possible approach. The one I favour is a total moratorium on new building work in the South East. That’s the only way to force both workers and companies to look to the North. The problem with “tax the rich” is that the numbers of truly rich are tiny and you could swallow their entire fortunes and they’ll be gone in a week. Exercise for the reader, how long would Richard Branson’s entire wealth run the NHS for?
- sleavey 7y agoWhy not tax the merely rich too? I'm probably going to be one of them in a few years. I want to pay more tax to help benefit the society that let me get to where I'm going, but I absolutely want everyone else in my position to pay too. Anyway, I agree with your idea about the south east. As the article points out, Thatcher's policies focused on the south east and ignored the "North" (part of the problem being no one can agree where the North starts or ends). Ideas like HS2 pushed by the new Tories are also just making it possible to live in the north and yet still work in London, not solving any problem.
- goodcanadian 7y agoIdeas like HS2 pushed by the new Tories are also just making it possible to live in the north and yet still work in London . . . I would also argue that it allows businesses and industry to operate in the north without the location penalty. In other words, it effectively brings the areas served closer together. I won't argue whether it is the best solution, but it isn't as harebrained as some of the detractors try to imply.
- phendrenad2 7y agoThis article provides no evidence that deindustrialization is the cause of any of the ills it reports on, it just lays out facts about the economy with a few sentimental appeals to serve as tentposts. I personally think that the UK has outsourced manufacturing without investing sufficiently into STEM to make up for it.
- pjc50 7y ago> Pearson Engineering's Tom Clark has a good story about how the firm's previous owners used to handle industrial relations. Every time the workforce went on strike, which was often, one of the Pearsons would buy a new Rolls-Royce Silver Cloud and drive through the picket line, waving two fingers at his own staff. That does rather sum up 1970s industrial relations. Can you imagine managers like that implementing the Toyota Production System? Or anything else where the workers have an individual autonomous contribution? Of course not. So that's why the remaining large car factories are foreign-owned. What has survived and flourished is the small high tech manufacturing industry - McLaren, satellites, etc.
- Lio 7y agoI remember one discussion around the Nissan car plant in Sunderland (North East England). After the Economist Intelligence Unit described it as the most productive car plant in Europe it was pointed out that what had changed compared to other UK plants was not workforce but the management.
- lazyjones 7y ago> Can you imagine managers like that implementing the Toyota Production System? Or anything else where the workers have an individual autonomous contribution? Of course not. So that's why the remaining large car factories are foreign-owned. I'm not convinced that what you apparently feel is a fair outcome, is an actual logical consequence. Where did manufacturing go? To SE Asia. What is the industrial relations and individual autonomous contribution like in a SE Asian sweatshop?
- pjc50 7y agoI mentioned Toyota for a reason. Car manufacturing did not go to China. And the whole basis of Japanese manufacturing style after W Edwards Deming's influence is very different from sweatshops. I don't know about "fair", but Nissan Sunderland being Japanese-run is not a bad outcome compared with the other possibilities of the 60s and 70s labour relations problem which included fears of both left and right wing coups. In the end we got moderate state violence and mass unemployment. That does need to be put right, but we can't go back to the 70s. Much of what we now import from China did not exist in the 1950s and was developed as a technology in America, so it's not so much "went to China" as "failed to develop here". And there we do need to have a discussion about business and tech development in the UK. (Textiles also worth considering, but that was always a sweatshop from industrialisation onwards. The brief attempt to run it with SE Asian (Bangladeshi largely) workers in Britain didn't stave off the flight to cheapest.)
- otikik 7y agoI misread the title as "Why doesn't Britain make things any worse", expecting another Brexit article.
- fmajid 7y agoThe UK’s big problem is low productivity, whether in industry or services, and it takes good management, worker training and the judicious application of capital to fix. The financial sector sucks up the best and brightest, leaving only the second-class going into industry, in a form of Dutch disease.
- marble-drink 7y agoI've found that many workers in the UK are really not that bothered about work. They'll actually turn down work if they don't feel they'll get enough money for it. Just the other day I was in the garage and they were convincing me not to get work done on my car. At that time there were two mechanics just sitting in the shop doing nothing. My theory is these workers are relatively happy with what they get currently, but the next step up is just so far away that they don't even bother going for it. I wouldn't say the financial industry sucks up the best. In my experience it sucks up the most qualified and pays them too much. But none of the smartest people I know stayed in finance for long.
- mikhailfranco 7y agoSocialism - but The Guardian would never admit that.
- thundergolfer 7y agoAre you actually suggesting Socialism is the cause of this? Do you think Britain has been a socialist country in the last 50 years?
- mikhailfranco 7y agoWhen you read The Guardian, you know that every question they ask about the current ills of the world, will have the blame directed toward "Thatcher and neoliberalism", except occasionally when it is the fault of "neoliberalism and Thatcher". The Guardian has good journalism, but it is not a useful place to get interesting or insightful discussions of such topics. You are either already in the choir it is preaching to, or outside the church and completely bewildered that people can believe in such a strange world view. As to whether Britain has been socialist, my preferred measure is the fraction of govt 'control' to GDP. The 'control' means normal govt spending plus the production of nationalized (hence often also unionized) industries. Just looking at govt spending to GDP shows the chaotic socialist 1970s, the Blair-Brown escalation early this century, and the inexorable growth of welfare spending: https://www.economicshelp.org/blog/5326/economics/government-spending/ https://www.economicshelp.org/blog/5326/economics/government... Any country where the govt controls ~40% of national production is certainly socialist. Obviously countries like France are much worse, where direct govt spending is >55% plus all their ownership shares in industries, including railways, utilities, banks, engineering and newspapers: https://tradingeconomics.com/france/government-spending-to-gdp https://tradingeconomics.com/france/government-spending-to-g...
- mikhailfranco 7y agoTL;DR - Government consumption crowding out private saving that would otherwise support investment and prosperity, see the last two graphs: https://mises.org/wire/malthusian-trap-keynesian-trap-british-economy-1810-2019 https://mises.org/wire/malthusian-trap-keynesian-trap-britis...
- hnsocks 7y agoHalal meat is big export thing.
- repolfx 7y agoThe article is wrong. The UK manufactures more stuff than it ever has before. The Guardian reported this as a "decline" but is only a relative decline, and a decline in the numbers of people employed. Actual value of all stuff made added together has grown.