Weaning places off the state
Today's research for the BBC's English regions on the vulnerability of local areas to cuts in public spending reveals a clear north-south divide. It is a divide which is a legacy of government policy over decades.
I travelled to the area this week to find out why they are apparently so at risk and take the temperature.
The Tees Valley in general and Middlesbrough in particular are places which became rich on heavy industry. William Gladstone famously went to the original town hall in Middlesbrough and proclaimed it an "infant Hercules".
Go to the same spot now, as I did, and you find a sad, boarded up building surrounded by wasteland and a few abandoned, crumbling houses.
What happened was that the area found it increasingly hard to compete in global markets and, over time, government felt obliged to pump in state support to prop up and regenerate the declining economy.
The result is that a town like Middlesbrough has become state dependent.
Today's Experian data finds that 42% of workers are employed in the public sector. In the decade to 2008, it's estimated that while private sector employment created only 168 jobs, 13,000 public sector jobs were created in Middlesbrough, Redcar and nearby Stockton. No wonder today's survey finds this area so vulnerable to a shrinking state.
Over the past few years Middlesbrough has tried to reinvent itself for the 21st Century. Teesside University has expanded and nurtured talent in the high-tech, high-skilled digital economy. I visited Boho One, a nest of young, vibrant companies working largely in the IT sector.
The town has opened an impressive gallery - the Middlesbrough Institute of Modern Art (MIMA) - and a few weeks ago a huge Anish Kapoor sculpture was unveiled on the waterfront.
It is as though Middlesbrough is trying to emerge, Phoenix-like, from the red-hot furnaces of the old industry, reborn as an exciting and competitive international player. But a lot of the regeneration money has come from the state - a tap that looks certain to be tightened over the next few years.
The town's elected mayor, Ray Mallon, is very bullish about Middlesbrough's prospects but he does accept that there are challenging times ahead.
"We will lose something like £6m this year from the budgets and something like £12-18m next year and over the next three years it will be over £30m" he told me. "Clearly we will get job cuts (but) we will survive this because we have the get up and go and the will to deal with what we have got."
It is estimated that 11,000 public sector jobs could be lost following the cuts in the Tees Valley and the big question is whether the private sector can replace those workers as fast or faster than they disappear.
In the past, Middlesbrough might have looked to the Regional Development Agency, One North East, for help. But, separate to the cuts, the government has decided to abolish RDAs. Local Enterprise Partnerships (LEP) made up of area councils and businesses will replace them.
Whether they can hope to have the same clout when competing for bit international investment is a moot point, but I encountered realism and determination in equal measure on my visit. This is the future and Middlesbrough is going to make it work.
Earlier this week, five councils in the Tees Valley along with business backers put in their bid to central government to be one of the first LEPs in England. Leading the group is Les Southerton who sounded very positive about their prospects.
When I pressed him on the risk that Teesside is going to find it difficult to throw away its crutches of state support, he sounded a note of caution.
"The government has to recognise that there has to be a period of transition. We faced up to 100,000 job losses since the 1970s. We are still here and still heading in the right direction. But we need the government to come aboard and say we recognise that you are making progress, you do have a strategy in place, but it will take some time to wean yourself off some of that public sector employment."
What is interesting talking to people on Teesside is the recognition that the weather has changed. They know that there is no point just arguing for more state-aid, more public sector investment to dig it out of its economic hole.
But the anxiety is around how fast the coalition decides to pull the plug. After decades of dependency, they fear that they are not in a position to go cold turkey on their addiction to the state.
I'm 
~RS~q~RS~~RS~z~RS~15~RS~)
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Just one small comment - you keep referring to 'the Tees Valley'. The places you identify are actually in the County of Cleveland and are commonly referred to as 'Teesside'. The Tees Valley actually stretches many miles inland from there and is in many respects a different country.
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Mark
Very interesting survey results - but please - where is it? All I can find are comments on the findings, not the data itself. Please help! This is very frustrating.
Oliver
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In your dreams, this is fantasy economics. Companies will need strong incentives to relocate (at some one else's lost opportunity) Without the substantial existing industrial and commercial base the growth (when and if it comes)will will develop elsewhere. If government does not actively promote and pursue re-generation and also takes large sums out of the local economy the workerless family will become the norm. The coalition have got this wrong. They are not making tough decisions but idealogical decisions with tough consequences for those well out of sight.
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Mark
I too have looked for the original report and can't find it. Is there a link on the BBC site somewhere that we can download it from?
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Yes. Hello UK, there is an area called the North East that never gets into the national news unless it's bad news...
Teesside (not Tees Valley, please) homes the 'University of the Year', a growing digital industry, is now actively changing our old industrial buildings to serve new purposes for the growing 'green' power industries which we will all need to use as time goes by.
We may well have a lot of public sector workers, but we will survive the downturn, and we will emerge from it stronger. Why?? Because what these surveys fail to take into account is the PEOPLE who live here, people who are friendly, people who still understand that money is not the be all and end all of everything, people who still will give away their last ten pound to someone who needs it more than themselves.
We live 15 minutes from the beautiful coast here in Middlesbrough, and 15 minutes away from beautiful countryside. Our public parks are beautifully kept, and our leisure facilities are second to none AND affordable.
I for one am fed up of all the negative publicity we receive - I'm in the market for a job right now, is there a post for someone who cares passionately about their home town who can take the case for Regional Development to the government?? Because I'm well qualified, articulate, and certainly raring to go.
From a proud Smoggie.
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So called 'private sector' jobs are the first to go as the cuts are made - eg. all the construction workers who would have been building schools/roads and have already lost their jobs in the very first round of cuts.
The idea that there is going to be a move back to manufacturing on a mass scale is laughable.
Countries like China already have unasailable advantages in labour costs and most importantly cohesion and will.
They are now forging ahead in terms of advanced education in science, engineering and business whilst we go backwards. Recently they designed/built their first jet airliner from scratch - can the UK do that anymore?
If China can assempble an I-Phone at 1/10 the cost of the UK and can build an airliner from scratch, which we can't do at all, what exactly does Cameron think millions of unemployed UK citizens will be doing?
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It is always the poor that pays the price!
The rich always say it will be different this time and they are always wrong. So no surprise. The surprise is that journalists believed the tosh that said it would be otherwise. Why don't journalists know any history? Why are they so prepared to believe the blandishments of the latest gorilla up a tree with a machine gun? [ No specific Tory MP in mind!!!]
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Regarding cuts within local councils. MORE than £90,000 is being spent every year on providing water coolers at council offices and schools across the Highlands. This is a total waste of money when tap water is freely available and sickening when they just cut 3 assistants from the local disabled adults centre to save £7000. Surely we need to address waste within the council itself (staff efficiency rates and free lunches & transport for councillors would be my first target) LONG before we start axing vital services which enhance the quality of life of our community?
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When did the BBC gain credibility as a social research organisation ? Who exactly did the research ? Who verified it, and why would anyone consider it accurate? Can we see the data, or is it confidential ? Perhaps it's conclusions are flawed?
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. At 09:32am on 09 Sep 2010, jon112uk wrote:
....what exactly does Cameron think millions of unemployed UK citizens will be doing?
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Are average people beginning to understand why there have been anti-globalisation protests for years now? These have never been explained in mainstream news except as actions of hippy anarchists.
The barriers (trade) will have to go up. Global finance will hate this. It will be a difficult few decades but will it be better in the end?
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"William Gladstone famously went to the original town hall in Middlesbrough and proclaimed it an "infant Hercules".
Go to the same spot now, as I did, and you find a sad, boarded up building surrounded by wasteland and a few abandoned, crumbling houses."
Well no, you clearly did not. As an actual resident of Middlesbrough, I know that Middlesbrough Town Hall is not boarded up or remotely sad, infact it's a quite beautiful old building which is still used as the main entertainment venue in the town. The interior and upkeep of the Town Hall is of an excellent standare. Also, where these 'abandoned, crumbling houses' are again is another mystery, as the Town Hall is flanked by a popular nightclub and restaurant/bar. Quite quite why you've chosen to publish something so factually inaccurate is beyond me. I hope some form of retraction can be published about something so grossly misleading.
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8. At 09:37am on 09 Sep 2010, lizlochness
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Someone (or some committee) in the council obviously feels that it is more important to enhance the quality of life in the council offices than provide services to those awkward service users outside.
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Can I echo the pleas of others for you to publish the report so that we can see what sources and data were used and assess how relevant the analysis really is.
The results as reported are not a suprise. We are well aware from our own analyses and the work of the Centre for Cities, Core Cities Group and the Work Foundation and others about the weaknesses of our economies and what needs to be done. We are also aware of our strengths and the opportunities we have. For example prior to the recession the Newcastle city region was one of the fastest growing in the country and this growth was being driven by the private sector not the public sector.
Your reporting and a lot of comment implies that our public sector in the north east is too big and should be cut. In fact we are providing the same services as other areas through local government, health and education and have also become an efficient base for the delivery of central government services. The problem is that we need to grow the private sector at a faster rate. A need that will be increased by cuts in jobs in the public services. There is no lack of ideas and will to do this. What we do need is time to make it happen and continued investment that enables businesses and the public sector to continue to develop the climate that will enable private sector growth to happen.
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@Domo - the original Town Hall is over the border and is just a shell - our excellent Gothic Town Hall with it's crypt replaced it, and as you rightly put it, it's a hub of activity.
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If you think Middlesbrough is bad then you should try some of the other towns in and around that area - Redcar springs to mind.
Apparantly there are towns in North East where nearly 75% of the working population is either dependent on benefits or working for the public sector.
Anybody with any entrepreneurial spirit leaves those places (even though some of them are very pretty towns)
To wean them off the state is not something that can be down in a few years but in one or two generations
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I have a great admiration for the people from the North East and all the old industrial areas of the UK. I feel that they have been ill-used by successive governments.
I have to ask: 42 % working in the public sector? Since our nationalised industries have all vanished, how much public sector activity is creating wealth?
I appreciate public sector work is better than unemployment (or 42 % employed in the unemployment offices), but is it growing a future?
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The BBC is a PUBLICLY funded organisation and as such this research is a PUBLIC good. The BBC has a duty therefore to make this available and it is frankly pretty poor reporting to make this report the central story of the day without releasing it to wider scrutiny.
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"Area's that aren't London and it's commuter belt may suffer more from public sector cuts"
Like I needed an expert to tell me that. London keeps Crossrail, the Olympic regeneration and regulated public transport, the rest of the country gets two fingers. Plus ca change.
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17. At 10:47am on 09 Sep 2010, qwerty
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There is a link to the data on this news page
http://www.bbc.co.uk/news/uk-england-11141264
to these:
[Unsuitable/Broken URLS removed by Moderator]
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I'm sure the private sector would have created more than 168 jobs. It's probably true that the net increase was that small, but surely that has to be taken in light of the huge decline in traditional industries on the area between 1998 - 2008.
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Who does Mark Easton think he is?
"Middlesbrough has become state dependent"
It's people like him that create a self-fulfilling prophecy and perpetuate the myth that Teesside is in decay. He seems to get perverse pleasure from detailing his personal opinion about the state Teesside and Middlesbrough is in. Don't get me wrong it's far from perfect up here and things need to improve, but headline grabbing stories and articles like that on the BBC aren't going to do anyone any favours. Business is more likely to stay away.
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3. At 09:10am on 09 Sep 2010, watriler wrote:
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Yet, thirteen years of sucking the Public teat has done nothing for this part of the world, as the article makes clear. So why continue to pour good money after bad when it is clear that relying on the state for everything improves nothing?
We keep hearing about strong communities in the North East. If that is so, then why is there so much reliance on the state still, when billions have been poured into the region? This would seem to suggest rather that these "strong" communities are anything but, and are content to live of the fruit of the work of others. That, quite simply, is not sustainable, as Brown has emptied the well.
Time for the North East to come up with its own solutions.
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Nick Clegg claims that the spending cuts will be evenly spread over several years @ 6% pa.
Would he therefore care to explain why local authorities are currently announcing that they plans to cut 25% of their workforce RIGHT NOW?
Cornwall has done this - Somerset has just done it too - and local authorities are freezing their capital works programmes, even to the extent of cancelling projects already in construction.
As so much of local authority work is now sub-cntracted, the receivership of Connaught shows the reality of cutbacks - short-term, panic cuts by local authorities who are cutting anything they can legally get out of to prevent their finances going over a cliff - it also shows the nonsense of the idea that the private sector will expand to replace public jobs.
SHORT-TERMIST, WASTEFUL, UNPLANNED AND IRRESPONSIBLE DECISIONS DRIVEN BY CENTRAL GOVERNMENT, whilst Nick Clegg dares to claim the ConDems are trying to move to long term decisionmaking?
Government agencies are shutting up shop right now - the south West Development Agency staff were told not to bother tidying up their cases, just to clear their desks. New discretionary grants applications are not being accepted by a number of agencies and central government departments have gone so far as to ban their staff from travelling to outside meetings or having overnights away to work with suppliers, as well as freezing purchasing, recruitment and putting major projects on hold.
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The report leaves many questions unanswered:
How much licence fee payers' money did the BBC expend on the commission of this report?
Why and when was it commissioned?
Has the BBC commissioned and paid for other reviews? If so when, on what subjects and how much did they cost?
Do you imagine that commissioning a report to support your opinion gives it more weight?
There is to be a spending review in October and as yet no-one knows the details of what it will say. So how do you know in September what will be the effect of October's spending review before it is announced or published?
Don't you think its a little dishonest not to make plain that the BBC commissioned the report?
(A bit like the BBC's enthusiasm for obesity operations yesterday that you omitted to mention was based on research was funded by a gastric band manufacturer?)
This morning Nick Clegg was trying to explain to dim-witted journalists in words of one syllable how the coalition plans to pay off our debts. Laura Kuenssberg used up her question by asking about Coulson. Are we really supposed to take the BBC, or anything it says, seriously?
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Our own solutions JeremyP? Our own solutions?
Well I shudder to be the one to bring this up, but we did have our own industries:
Shipbuilding
Steel
Coal
To name but 3. Then what happened? Oh yes, Margaret Thatcher. Villages up and down the east coast completely devastated. What people like you fail to realise is that it's far far easier to transfer office skills from one job to another than it is to transfer high end specialised manufacturing and extraction skills.
Yes we've become far too dependant on public sector jobs, we all know it. How we're expected to find these solutions from nowhere I simply don't know.
We can't afford to move to the South seeking jobs as one Tory minister has suggested we should, (earnings and house prices are far lower in the North East than in your green and pleasant land away from us plebs) and even if we could move, the South hasn't got the housing to support us "geordies" "smoggies" "mackems" and so on.
We're a proud group of people, and we'll fight as ever. Not even the Tories are going to break our spirit. Come on the People's Republic of Teesside.
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".... If China can assemble an I-Phone at 1/10 the cost of the UK and can build an airliner from scratch, which we can't do at all, what exactly does Cameron think millions of unemployed UK citizens will be doing? ...." (jon112uk, @ #6)
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I would like to hear from you, jon, what YOU think that our UK citizens should be doing.
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Knowing the current circumstances, and being aware of the reasons for manufacture moving elsewhere, what would YOU like to do with your productive (salaried) time?
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What would provide Quality Of Life, and an adequate income to the millions whose jobs have been exported abroad? For it's abundantly clear that the Brits would rather stay-put in penury than go where the jobs are for the salaries that are on offer there.
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If employment can only come out of profit achieved by 'somebody', how can we create an environment where our millions WANT TO become 'somebodies' rather than survivors?
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Come on, jon, give us YOUR proposals ( eg. a bullet-pointed, 10-line, Ten Point Plan) designed to make these things happen rapidly.
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This is dodgy...
"Today's Experian data finds that 42% of workers are employed in the public sector."
Middleborough definitely has a high proportion of people employed in the public sector but I think it’s a few percentage points less than this. The 42% figure is taken from the ONS annual business enquiry – it is the number people who work in public admin, health or education, many but not all of whom will be public sector.
For reference, the same figure for the UK is 27% and for St Albans, one of the “most resilient” places, it is 22.8%. It is also worth remembering that Middlesbrough is the administrative centre for a wider population in the Tees Valley and we would therefore expect it to have more public employees (working in the NHS, higher education etc); Neighbouring Redcar and Cleveland has a much more run of the mill 28.4% of people working in public admin, health and education.
"In the decade to 2008, it's estimated that...private sector employment created only 168 jobs"
This is clearly nonsense. I think what Mark meant to say is that there are not many more private sector jobs than there were a decade ago, which isn’t quite the same thing.
Anyway, the public sector jobs thing is a red herring; in fact, the decade leading up to the recession saw little or no change in the proportion of people in the north east employed by the state. What we should be talking about is the more complicated question of the proportion of economic activity that is government driven.
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Mark
has anyone compared the tory constituencies to the regional resilience data? The reason I ask is because I believe one of the road schemes (A556 bypass)still going ahead is in george osbournes constituency.
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I'm an historian in the North East of England and I'd like to say that Mark Easton makes a serious and deceptive factual error.
It is quite true that Middlesbrough's original and rather humble town hall (built 1846) is now a rather sad, boarded up building in what is actually the most run down area of the town, but his reasoning for how this state of affairs came about is incorect.
The particlar area that he mentions was the original dockside town of Middlesbrough. It was rather trapped between the river and a neighbouring railway line (of 1877) with little room for growth. When Gladstone visited Middlesbrough it was a boom town, experiencing the most phenomenal, Herculean population growth ever seen by any English town.
The original dockside settlement was not a satisfactory setting for a place experiencing such a growth in population and prosperity.
So, in the later nineteenth century the town centre was relocated to the other side of the railway where a new, large and very impressive town hall was built (1883-89). This superb building can still be seen in the modern town centre of today, which is, incidentally, a place far removed from the grim picture that Mark Easton paints.
The problem is that Middlesbrough Borough is a relatively small borough, as defined by its boundaries, but it does incoporate some run down districts, such as the area Easton mentions. These areas distort the overall image of the place.
In fact there are still many significant pockets of prosperity in Middlesbrough and the Tees Valley as a whole. Middlesbrough is a town with beautiful leafy parks and the town sits on the edge of some of the most impressive North Yorkshire scenery. In this age of Google street view mapping, journalists should remember that readers now have a much greater opprtunity to check places for themselves without relying too much on the words of writers.
Places in the North East need private investment and enterprise because it is true we have come to rely too much on the public sector.
One important way to encourage investment is to ensure that we promote accurate portrayals of our region, because the North East has so much to offer.
The distorted, grim portraits of poverty painted by journalists to perpetuate the preconceptions of readers do not help this region at all. We have to work very hard to overcome the image that journalists like Easton love to promote.
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I was born in Middlesbrough and spent the first 22 years of my life there. I have since escaped. A victim mentality has permeated Teesside for as far as I've been aware, and a natural distrust of outsiders Ill-equips its natives for the national arena.
Middlesbrough is within spitting distance of some very beautiful countryside, but these days that pretty much all it's got going for it. It is simply unattractive to relocating businesses, not least because of its terrible, terrible (terrible) transport links, ironic for a town so close to the birthplace of rail. Entering Middlesbrough by train is a horror.
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26. At 1:08pm on 09 Sep 2010, GeoffWard
I'm not the chancellor - Bertie Wooster is doing that job.
I see that UK growth has just dropped and multiple forecasters predict further decline: NIESR: "Unfortunately, the rate of growth will continue to decelerate over the coming months." So not doing the job that well.
Where will all these new 'private sector' jobs come from if the tories have sabotaged the growth they inheritted from the last government?
But general principles: people are going to have to accept that the old fashioned mass employment in manufacturing is dead: we are post industrial. Cameron is deluded if he thinks he can change this. Service jobs are real jobs, the wealth they create is real wealth. Cameron seems to understand the principle when it comes to his friends/backers in the city.
The only alternative to this would be to restore trade barriers. Bloated, ill educated, over paid british bosses are not going to compete with China on an even playing field. Has Cameron got the bottle to do this?
I do very nicely thanks. My employer, my colleagues, and myself earn ever increasing amounts of real money from willing customers, including other countries, for our services. We manufacture absolutely nothing. If the tories burst my current bubble for me, I already have a contingency ready to run, I started planning it 18 months ago. Almost none of that income would come from the UK, to ensure it is not scuppered by the impending UK recession.
The tories are back and it is every man for himself. Given the destruction planned by the tories I would suggest everyone should be developing a contigency plan in case the destruction falls upon them.
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To LizLochness at no.8 (nice part of the world BTW)
She writes "Surely we need to address waste within the council itself ........ before we start axing vital services which enhance the quality of life of our community?
She's quite right of course. Where I live the Council has spent over a year widening a mile of pavement by one foot! But it won't happen for political reasons. Labour Councils (and others) will want to cut essential services and then blame the Tories/government for the cuts. They will calculate that closing a care home will win them more votes than closing down the office water coolers. If you think I'm joking then I refer you to Doncaster Council where according to a BBC website "The Audit Commission said.... political rivalries were being given priority over "much-needed improvements" to public services...."
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"Our own solutions, JeremyP? (@ #22) Our own solutions?" (Sounds like a 'shout'!)
.... we did have our own industries:
Shipbuilding
Steel
Coal
We're a proud group of people, and we'll fight as ever. Not even the Tories are going to break our spirit. Come on the People's Republic of Teesside." (bigallyd1985, @25)
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Please don't blame Governments for straightforward economic facts of life in a global production economy.
Shipbuilding - cheaper in the Far East
Steel - cheaper in India
Coal - cheaper in Eastern Europe
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The salary differential of (eg) 10 to 1 proved just too great to prop-up these industries in the face of cheaper products of the same or better quality produced elsewhere.
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The trick now is to find ambition out of heartache; to identify opportunity out of quiescence; and action out of inaction.
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It is my belief that the entrepreneural base of the UK was always much, much smaller than commonly recognised. The country punched above its weight economically because historically captured markets and 'captured' raw materials gave our companies advantage.
Now, globalization has exposed the developed world to production/trading advantage based on technology-transfer to competent yet low salaried environments.
The entrepreneurs of the developed world CHOSE to re-locate to (eg) China, to gain first higher profit, then commercial survival, and now 'supplier status' as the new world-industrial-heartlands upgrade socially as well as economically. This was a positive feedback process - ie. it took on a life of its own and became horrifically irreversible.
Now, the Monopoly Hotels on the global monopoly board are owned by others; eventually and progressively, our land will become the outsourced locations for production, distribution and consumption of companies operating out of China, India, etc.
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How we get over the 'gap' - the period of time where there is insufficient home production & products and not yet enough foreign re-locations to our land - this is the key subject of debate. We should ALL have opinions, and ALL should be heard.
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In a small way, this blog is your (and my) opportunity to offer our short and medium term solutions.
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There is no rationale in reliance on State employment; this merely recycles money made by the private sector. Creation of wealth can operate at the level of the one-person (eg) tattoo-ing or fingernail-painting company, or, through the injection of State capital, the enhanced growth of already large 'British' companies. Increasingly capitalisation of British companies will involve Chinese money, and the definition of 'British' will become clouded. But it will provide new jobs. This is the globalised world and in it we flounder, survive or prosper. Teesside may be a tight-knit community working together, but its products and services must be integrated into the global economy of world-wide sales and real profit.
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25. At 12:54pm on 09 Sep 2010, bigallyd1985 wrote:
Our own solutions JeremyP? Our own solutions?
Well I shudder to be the one to bring this up, but we did have our own industries:
Shipbuilding
Steel
Coal
To name but 3. Then what happened? Oh yes, Margaret Thatcher. Villages up and down the east coast completely devastated.
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Thats right blame Maggie. It was all Maggie's fault that Shipbuilders in the rest of the world could build the very large ships (due to geographical constraints the North East could not) that customers wanted cheaper than the NE, that they could dig out coal cheaper than NE pits (many of whom had geological issues) and produce steel in higher quantities and cheaper
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The interactive map and methodology is only showing 16 variables, but the Word and Excel documents have 33 (e.g. "Place" shows House price, Crime and Green space, but not Achievement at school, Previously developed land, and Office space).
There seems to be several of the variable measuring very similar things, e.g. NVQ4+, Low qualification, % employed as corporate managers and senior officials, Elementary Occupations, Achievement at school; or Business start-up, Business density, Earnings, House prices, Office Space - where area scores should be fairly similar across variables.
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Thanks, jon @ 31.
I tend to view people through the polarized eyes of political affiliation and frequently get the wrong impression. I value the things you said.
Trade barriers are OK if they do not rebound on the creators. I am presently in Brazil where I spend half the year these days. Brazil has put a variety of trade barriers up against China in a few areas of 'conflict' but, because we have the raw materials and food that China needs, the barriers against dumping of finished products - that were destroying home industries - have been taken in the stride of bilateral negotiations.
It is scarey seeing a sub-continent (Brazil) being asset-stripped to support the development of China, even though Brazil is getting revenue that feeds into massive subsidies for the poor through federal social services. Infrastructure is largely conspicuous by its absence, even though there is (Chinese) money to do it (redolent & remeniscent of North Sea Oil revenues), and in spite of the glaring need in this developing country.
It is truely a new world.
Geoff.
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34. At 2:36pm on 09 Sep 2010, Justin150 wrote:
"...Thats right blame Maggie...."
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I think we can ask Thatcher to take responsibility for the decisions she made.
The route she took was free market. The old industries closed, and the people who bankrolled her in the city did very nicely. We moved into a service based economy - bankers, hairdressers, teachers and nurses.
She could have gone down the protectionist route - eg. the French approach. They still have (3) mass car producers, their own fighter jets, their own capability to build nuclear power stations etc etc. We have nothing like that.
Who is in the better position, us or the French?
But I don't think we should pretend that the closure of the old industries wasn't a conscious choice.
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Am I not right in thinking that growth of public sector jobs in Middlesborugh is due to the relocation of government departments i.e. DVLA and the CPS?
Underpinning Mark Easton's one-sided report, is the rebalancing of the economy from he public to the private sector. This is a red-herring, as the economy needs a rebalancing from the finance to the manufacturing sector, and that is why Middlesborough is struggling.
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"Wean them off the state" . . now, how does that work, again, because it seems to me that every business in the country depends on the state in one way or another, and there's no avoiding it - I'm thinking specifically of infrastructure, the law, and health to name the obvious ones. Then there are other issues to consider such as the financial crash we may be starting to recover from. It involved the strongest and freest operating of our free marketing enterprises . . and what happened to them? They had to be rescued by the taxpayer . . .Up and down the country, and back and forth across the world the capitalist system depends on the taxpayer for its survival, and the price to the taxpayer is exceedingly high indeed in monetary and employment terms.
And withdrawing the state from the more depressed areas won't encourage free market operations to move in: as was shown during the recent years of plenty when it didn't happen. Much has to change before private businesses will be drawn into Teesside in worthwhile numbers. The likelihood is that Teesside will be affected in the same way as other run-down areas in the uk: some of the private industry already based there at the moment will outsource hundreds or thousands of jobs to India and elsewhere to save money.
Logically you'd expect businesses to move to areas such as Teesside because they can get away with paying lower wages there, the cost of property is lower and transportation in and out is less clogged than in the south east. The hard to swallow truth though, is that the market doesn't work unless it's being pumped up by the taxpayer and directed by the government. Smith's invisible hand is a clumsy and irrational thing. I used to be a believer in the capitalist system because the theory sounded so convincing, but reality shows that for the most part it isn't efficient and in addition it has no heart or conscience.
Attitudes in Middlesbrough might be admirably optimistic, and there are certainly plenty of talented and qualified people there who want to work, but, without state encouragement for outside businesses or a helping hand to locals to get them onto their feet the renaissance isn't going to happen.
This would have been the ideal time for the government to invest heavily in improving infrastructure throughout the whole country, to build 2-3 million new council houses to sort out the housing problem and facilitate worker mobility, and to lend a hand wherever possible to modernise struggling business, so that we'll be able to exploit fully the upturn in overseas demand when it comes, instead of pulling the rug out which will mean more businesses failing and lower capacity which of course have implications for sorting out the deficit long term.
It would also have been an ideal time for government to put in place mechanisms for ending tax evasion and avoidance, and taxation deferment, on a massive scale by the main free market players, which deprives the exchequer of at least 30 times as much as is lost to benefit fraud annually - 4 years of that, without public sector cuts, would be enough to sort out the deficit. But that's not an approach that the tories are too attracted to funnily enough! Instead they've got the whips out to drive the unemployed back to work to keep right wing ideologues happy, without acknowledging that there are only half a million jobs out there and ONE AND A HALF million people on jobseekers allowance. That means at least a million simply cannot get a job no matter what they do . . . Plus of course there are hundreds of thousands more who're looking for work but haven't signed on - for it's such a humiliating experience - . . yet. . . some of them will have to though, when the money runs out. I think it's long past time for seeing Capitalism as the saviour. It would be gasping its last if it wasn't for the taxpayer.
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I note that there have been a number of references to Maggie Thatcher and how she closed down businesses in the NE.
Quote "Well I shudder to be the one to bring this up, but we did have our own industries:
Shipbuilding
Steel
Coal
To name but 3. Then what happened? Oh yes, Margaret Thatcher."
In my ignorance of this, can someone explain how a serving PM just closed down private companies in the NE? Did she petition to have them wound up at the High Court? Did she pass an Act of Parliament to have them closed down? I don't understand how she could just interfere with these private companies, which exist as a separate legal entities in English law, and force them to shut up shop.
Surely these companies that dig coal, build ships, and make steel could be started up again if there is an entrepreneurial spirit and skill set remaining to do it? What is stopping these businesses, that Maggie Thatcher forced to close, from re-opening again? Surely the current Govt. would not prevent private enterprise from recreating these businesses, and would also encourage them to start up again?
As there are some very intelligent people who post on here, I'd be grateful if someone explain how and why Maggie T closed these private businesses down and what is preventing them from starting up again?
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Working people in Middlesborough are been asked to pay for the greed and ineptitude of the casino banks that collectively failed two years ago. It is the banks that are 'addicted to the state', not the people of Teeside. They just want useful jobs to do. The private sector cannot provide them. This is now the kind of propaganda we can expect in support of the cuts, under the guise of 'Responsible Journalism'.
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When it comes to the North East there were vast sums of money injected into its restructuring by the Regional Development Fund i.e. European Funding.
Look at Newcastle and Gateshead for example. How else would we have such fine new buildings museums music centres the Angel of the North and you name it and we got it.
But it is questionable whether the money was spent in the right way. All these projects could not really be classified as job creation projects apart from the labour used for the initial construction.
Now we have the buildings but perhaps not the revenue to run them so how long can they last without public funding at a time when this will have to be cut.
There are many reasons why the North East will suffer and one of them is the lack of foresight from those who had the power to decide how all that money was spent or from a job creation point of view just wasted.
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37. At 4:08pm on 09 Sep 2010, jon112uk wrote:
34. At 2:36pm on 09 Sep 2010, Justin150 wrote:
"...Thats right blame Maggie...."
=================
I think we can ask Thatcher to take responsibility for the decisions she made.
The route she took was free market. The old industries closed, and the people who bankrolled her in the city did very nicely. We moved into a service based economy - bankers, hairdressers, teachers and nurses.
She could have gone down the protectionist route - eg. the French approach. They still have (3) mass car producers, their own fighter jets, their own capability to build nuclear power stations etc etc. We have nothing like that.
Who is in the better position, us or the French?
But I don't think we should pretend that the closure of the old industries wasn't a conscious choice.
==================================
Last time I looked UK had at least 4 mass car makers (Toyota, Honda, Nissan and Vauxhall) and we produced 1.6m cars and commercial vehicles which sounds pretty good to me.
UK history has always favoured free trade (after all we are a small island stuck on the outskirts of a big continent), when we did try protectionist policies and govt creating "national champions" of industry the track record was of consistent failure.
No matter how you look at the coal, steel and ship building industries were completely uncompetitive and in the case of the ship building industry we were incapable of producing the size of ships that the customers wanted.
As for a number of posts calling for rebalancing of the economy - I hate to say it but it will not happen. Govt cannot force a re-balancing and economic theory (specifical comparative advantage which as a theory goes back to Adam Smith and Riccardo) predicts that the UK would concentrate of financial services for the simple reason we are much better at it than virtually everywhere else whereas in manufacturering we have the problem of being a small island (so land prices will be high and all products have to be shipped to market).
Going back to jon112uk comments one of the issues which has never been fully discussed is not whether France has a larger economy than UK (it has) but why given all the natural advantages France has (large land mass, part of continent, natural place for imported goods to Europe to land) coupled with, at least in my opinion, a better education system, it is not a lot better than its actuall economic performance over the last 30 years.
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Another debate is how we actually utilise the money we do have:
Items like this:
http://www.bbc.co.uk/news/10281554
Are a complete waste of resources. What good is a piece of art situated in desolate wasteland? Surely a better use of resource would be to rase the education levels of the population in the crime ridden poverty stricken council estates and as such reduce the burden on the state.
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How long before there is a formalized graduation of minimum pay?
If the Redcar steelworks is expected to compete against third world producers then what chance have they got of having decent wages?
The ships on the Tees are already flagged out complete with cheap labour.
How soon will they be "Flagging Out" the steelworks?
It is already foreign owned.
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The banking fiasco, negligence/ineptitude is resulting in a net loss of far over £1TRILLION , including shares, lost tax revenue, unemployment costs, lost pensions values, lost property values + loads & loads more items, which all have a domino effect over time which substantially increases lost wealth.
Presently, the banks are being levied at around £2 billion. £1 billion of which they get back via tax benefits, hence £1 billion levy, basically a naughty punishment levy, which in my opinion is relative as allowing a rapist to have pornograophic material while in prison, it is THAT attrocious.
I personally would enforce a levy on the banks at a minimum of 25% of paid bonuses, based upon levels paid out financial year 2009/2010. Which means that they would still retain their profits, and still retain 75% of bonus pot, which in all due respects is still a very small amount and price to pay for their negligence and ineptidude resulting in such catastrophic consequences to this nation and its people and its very future and ability to sustain itself and prosper, as well as deal with environmental and energy issues.
This levy, would raise £15 billion a year which would reduce needed cuts very substantially and enable the UK to escape from recessionary preasures and even deny from happening some very major detrimental consequences of the forthcoming spending review.
At the end of the day, the banks are STILL NOT functioning to anywhere NEAR the requirment of UK economy.
What people REALLY need to understand, is that it is NOT just the NHS that is being protected, it is the banks.
The banks are basically an endemic part of society, as much a public asset as liability.
It is my belief that the banks should morally and justly be made to shoulder some of the negative economic weight that they have inflicted upon the whole of UK economy.
It is NOT just public services that are going to suffer consequences of the banks, it is a broad spectrum of private businesses, some, highly important and VITALLY essential to the UKs defence, and MANY others highly important in maintaining specific skills/profession which are also vital to UK existance, sustainability and defense, even though such jobs industrys are not altogether directly linked/contracted to defense.
As far as I am concerned any UK government that does not seek and attain adequate compensation from the banking/financial sector, for the damage they have inflicted, is NOT worthy of such a position as government and ultimately has not even the tiniest regard of care of duty to the citizens of this nation and instead have some other selfish, biased and discriminatory purpose for their being in government.
This government, or ANY UK government, is ultimately responsible for justice in this land, and ensuring it is balanced and fair, moral/ethical and underpinned with endemic natural decency.
If banks/financial institutions are not fairly and morally adjudged, then justice in the UK basically has no meaning or no being of purpose or worth/value, hence, come next year, when such attrocious financial pain is imposed upon millions of people while banks continue to pay bonuses and grow ever fat off their gambling practices , I personally believe that the public are well within their rights to tear down that which represents the banks and also that which represents the government which so fails the people in preference for the banks, though I do not condone such actions.
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43. At 5:25pm on 09 Sep 2010, Justin150
So we have 4 plants assembling other countries cars? But only some models, and with a likelyhood that the successors may be assembled in Poland or the Czech Republic?
France does the complete design/build cycle with mass production by their own firms, like we used to do. Three big, proper car firms.
I accept that the outcome of the UK vs France contest is far from clear, I intended to make that position clear.
However, the comparision suggests that the tories usual message of protectionism = retaliation = disaster is far from the case. That clearly has not happened to France.
(I'm not actually pushing for protectionism - I just suggest that they will not be successful in recreating the old mass industries within the current free trade environment, I think you are also saying that)
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11,000 possibly added to the benefit pile in the Tees Valley mmmmmmmm what a good idea that will save money!
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Again we have total biased reporting from a reporter that knows nothing about the town and then puts Middlesbrough in a bad light. The reporter obviously worded his article to make it sound to everyone else in the country as tho Middlesbrough town hall was surrounded by barren wasteland and that we are likened to a ghost town in America mid west in the late nineteen hundreds after the gold or silver ran out from the mine,s. When the town hall he is referring to was replaced last century.
He goes on to mention that huge swathes of the population depend upon government money for jobs. I wonder perhaps the BBC should relocate up to middlesbrough as we pay enough tax (sorry licence fee)for an over bloated corporation that spends a fortune on trying to make news to fill god knows how many radio and tv channels 24 hours a day. Pull the plug on the bbc and lets have 40% cuts on the licence fee
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I agree with @33 and @34. The brutal truth is that labour costs here are higher here than in China/India. We have a minimum wage, a pretty good level of social and environmental protection compared to many countries. I believe these are goo things, but we have to realise that they make our goods more expensive. So the manufacturing moved to places where it could be done cheaper.
Before we blame the 'evil big business' for this - how many of us, given a choice of an expensive UK-made product or a cheaper foreign-made product, would choose the cheaper one? And would complain if the cheaper products weren't available with the result that they couldn't afford the things they want? And lets be honest, nobody is going to accept Chinese wages and air quality in order to compete with them.
People blame Maggie for killing off traditional industries, but did she simple switch off the life-support machine for companies that could no longer compete in the world. In other words, did she just stop delaying the inevitable?
What were the alternatives? Protectionism based on trade barriers? We have depended on imports for a lot of stuff for over 100 years, we would probably have come off worst in any trade war. Government life-support on a permanent basis? While subsidies make products cheaper to buy, you're also paying more tax, so overall most people end up worse off.
We need to rebalance our economy away from relying on banks and Government spending, but I'm not entirely sure what stuff will fill the gap, that we are still able to compete in? Any ideas??
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I spent 15 years working in local government on Teesside. Teesside has never lacked for public investment; a billion and more has been squandered by a marginally literate local political class over the past 20 years.
What Teesside lacks is imagination (and education).
After the big steel shakeout at the end of the 80s a local Tessside council leader (Good old Arthur Seed)refused to accept regeneration monies ("Thatcher's blood money") and that set the tone. Thereafter local political hopes were pinned on a return to power of a truly socialist Labour government (or, at least a labour govenment which understood the strategic requirement to retain steel making capacity).
During the 90s report after expensively commissioned report challenged local policy makers to imagine a future after steel, after chemicals, and plan for it. They refused. (Former leader of Cleveland County Council Dave Walsh even proposed re-opening Smith's Dock shipbuilding yard). [SEE Shutdown - TV documentary and book re Smith's Dock closure - tragic waste of talent, muscle and money]
Local industrial development officers were instructed to not entertain potential Japanese investors for fear of offending WWII Burma campaign veterans (True!).
Council appointed gatekeepers of urban and rural development and European structural funds were instructed to not co-operate with independent voluntary sector proposals. (True!)
All efforts to rebuild the shattered economy then had to be traced directly back to the relevant local authority NOT the then Teesside Development Corporation ("Thatcher's spawn").
Such dinosaur mentality prompted colleagues in other north-east councils to refer to Redcar & Cleveland (Langbaurgh as sometimes was) as the Land That Time Forgot - but then, following re-organisation and the loss of Cleveland County Council,upgraded their assessment to Jurrassic Park.
Teesside politicians ("We're on the edge of a fringe of a periphery")are - in the words of a heckler of a public meeting in Grangetown to discuss local housing - "less use than a chocolate fireguard".
There is a complete lack of political leadership on Teeesside - how else to explain the rise of dodgy Robocop Mallon? and his sneering dismissal of 'academics' in the interview on the BBC page which features this report.
And,listen to Mallon in the BBC interview - "It's really very simple - all we have to do is convince the 1.7 million people who live within one and a half hours drive to visit ...." WHY? Especially when they can visit Durham, Newcastle-Gaeshead, York etc etc.
Imagination is FREE. You don't even have to go scuffing around in the Eston Hills to look for it - let alone pay to extract it - but until Teesside gets imagination - and a sense of after the steel, after the chemicals, well, better late (like Captain Cook)than never (15 years too late).
So, in sum, Teesside's resilience, or lack of, is no surprise to those who know the place. The tragedy is that it Teesside could so easily be reinforced - with imagination.
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@ GeoffWard
Tell me how China is asset stripping Brazil when there is TRADE going on. Give and take. Asset stripping is when one country takes and does not give. I suppose by your definition we (the West) are responsible for asset stripping the Middle East of oil and gas every day?
Also, the patriotism-high cost/foreign-low cost issue will always side with the most cost effective. 100 years ago when the PM wanted to reduce reliance on foreign food imports in increase revenues for WW1, what happened? Mass protests, as the public demanded they buy their bread at a certain price.
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43. At 5:25pm on 09 Sep 2010, Justin150 wrote:
“Last time I looked UK had at least 4 mass car makers (Toyota, Honda, Nissan and Vauxhall) and we produced 1.6m cars and commercial vehicles which sounds pretty good to me.
UK history has always favoured free trade (after all we are a small island stuck on the outskirts of a big continent), when we did try protectionist policies and govt creating "national champions" of industry the track record was of consistent failure.
No matter how you look at the coal, steel and ship building industries were completely uncompetitive and in the case of the ship building industry we were incapable of producing the size of ships that the customers wanted.
As for a number of posts calling for rebalancing of the economy - I hate to say it but it will not happen. Govt cannot force a re-balancing and economic theory (specifical comparative advantage which as a theory goes back to Adam Smith and Riccardo) predicts that the UK would concentrate of financial services for the simple reason we are much better at it than virtually everywhere else whereas in manufacturering we have the problem of being a small island (so land prices will be high and all products have to be shipped to market).”
We no longer “produce” cars in this country, we “assemble” them for foreign manufacturers – there is a difference.
In September 2008 my pension fund took a 40% cut in its value in just three days – if this is Britain being “rather better at financial services, …” I would hate to see us being “rather worse”.
The laissez-faire policies of Adam Smith are incompatible bedfellows with basic humanitarian principles. Wasn’t this approach to famine relief in Ireland in 1847 responsible for one million needless deaths and the enforced emigration of a further three million souls over the following 50 years? Mrs T. was a fervent devotee of Smith and look where that has got us – a totally unregulated financial sector that seems to be beyond reproach no matter what crimes of usury it commits; and a totally decimated manufacturing sector, making us vulnerable to future recessions, with our ability to recover from such events very uncertain.
Of course we can rebalance the economy if it were desired. Economic principles are not decreed by nature or by God – they are entirely man made constructs, and often self-serving ones at that. The recently mothballed steel plant at Redcar is amongst the most modern plants in Europe and is capable of producing high quality steel for which there is a market worldwide. It has closed because – unlike its competitors - it
is not supported by its national Government. Energy supply, steelmaking and shipbuilding should be strategic industries to any island race. The periodic spats between Russia and the Ukraine over gas supply are a warning to us in this respect.
I am really beginning to question the value of economic theory to society. Wilde was so right when he said that economists know the cost of everything but the value of nothing! If economics is a worthwhile academic discipline then it must exist for the betterment of mankind not the other way around.
Mrs T’s government gave the NE another concept – that of worklessness. When the collieries closed in Northumberland and Durham in the 1980s and 1990s there wasn’t a commensurate increase in the local unemployment claimant count during the following months. Under the redundant mineworkers payment scheme the unemployed workers involved where siphoned off the unemployment register onto the invalidity register (now incapacity) in order to massage the count downwards. As well as creating a “benefits monster” that is still with us today, this action penalised the NE in a very serious way; for by significantly depressing the actual level of recorded unemployment - particularly in the EU region of Tees Valley and Durham - it deprived the area of EU Objective 1 status – the highest level of EU structural funding available at that time. Had Objective 1 status been granted, we would have benefited – as Ireland did – from substantial infrastructure developments; which in turn would have given a significant lift to economic development in the area; and then we would have been talking about a completely different NE today.
Finally, the BBC’s research by Experian doesn’t really add anything to the spending cuts debate. A lot of the indicators used are based on sample survey data and will be prone to a sizeable cumulative standard error, particularly for the smaller authority areas where sample sizes are likely to be small. In addition the analysis is scale dependent – you cannot meaningfully compare Hartlepool (circa 100k pop.) with Birmingham (circa 1.1M pop.); for the latter could swallow the former within its boundary without this being too apparent from the resulting averaged statistics.
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@GeoffWard:
It is impossible to compete with Asia in labour costs.
The only way to survive is to make something they cannot - constantly innovate. In spite of technological investment in China, the US and Europe still have a serious advantage in scientific and technological development - it is just not being put to good use in a diffuse effort, and its skill base is slowly vanishing.
From the '40s to the late '80s, research and development departments in companies, in partnership with universities supported programs with clear commercial potential alongside efforts at "pure" research, with the two streams often feeding one another.
The pure research producing new invention 10-20 years down the line.
Since the 1990s, labs dedicated to pure research —to the pursuit of scientific discovery— have seen funding slowly decline and their mission shift from open-ended problem solving to short-term commercial targets, from pure discovery to applied research. We are seeing the results now.
In the past, when western economies exported millions of high-paying jobs to low-wage countries, we replaced them with an even greater number of high-paying jobs in industries whose inception could be traced back to science done decades earlier.
The basic research breakthroughs unleashed subsequent cycles of applied innovation that created entirely new sectors of our economy.
The main problem is that with short-term bottom lines and targets in mind, companies and the government are becoming risk-averse.
Science is funny. It's a crapshoot. It takes hundreds of people with high IQs, and an incredible curiosity, work ethic, and persistence. It also takes critical mass, lab support, the right equipment and instrumentation, peer review, etc. It takes open communication among peers, and other subtle but critical cultural factors. It takes a tolerance for risk. A tolerance for failure.
The innovation path emerging from success is unpredictable. In many cases, the economic payoff is a decade away. Sometimes a decade and a half. And the success can lead in unexpected directions.
For any institution—whether an individual company or government agency—cutting back on investment in basic science research may make great sense in the short term. For a time, you can free-ride off the investments of others. But when everybody makes the same decision society suffers the "tragedy of the commons"—wherein multiple actors operating in their self interest do harm to the overall public good. We've reached that point. We're just beginning to see the consequences.
Pure open-ended research needs to be reinvigorated (to some extent reinvented) in companies, with tax credits if need be. University research needs to be reconnected to the private sector, venture capital and initial public offerings (not to pressure for immediate results, as is happening now, but to encourage lateral movement and rapid commercialization of discoveries). A few big centers, with billions in total value (both private and public funds) needs to emerge, like Bell Labs and IBM used to be in the '70s.
We can't do this as a series of half steps through agency and research council funding to dispersed pursuit, that don't reach critical mass or critical rate of change.
As to the ten-point plan for what the government can do, I offer five:
• Clear national goals in two or three key areas, such as carbon-free energy and preventive medicine.
• Government commitment of £10 billion a year above and beyond spending for research councils to jump-start new industrial research labs.
• Government tax credits for corporations that commit to spending 10% (or more) of R&D on basic research.
• Work on a 10-15 year time-line, not until the next election.
• Provide clear leadership. The most successful program designs of this kind were the Manhattan Project and the Apollo program in the USA. Take a look how they were managed ...
Mass employment has been driven by mass industries — cars and petroleum in the 1920s, movies and radio in the 1930s, defense in the 1940s, appliances and television in the 1950s, pharmaceuticals in the 1960s, aerospace in the 1970s, PCs in the 1980s, the Internet and cellular telephony in the 1990s.
What's next? Biotech, genomics, and life sciences? Alternative energy and synthetic fuels? Preventive medicine and health-care delivery? Each can be the source of millions of high-value jobs. We need them. Soon. And we already need to invest in research for the cycle after them.
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As to the Teesside - the problem is the same as already described in Neville Shute's Ruined City in 1938, and for that matter the same as parts of East Germany ... once most of the private sector leaves an area, it's almost impossible to get it back in without very serious investment. People's mentality changes, infrastructure and personal support networks slowly crumble, and whoever starts up something has to do so in a vacuum, often training labour not just for the specific task, but general work standards. In this respect state employment is vastly better than unemployment, but not ideal.
Infrastructure and technology investment is key.
Wrt. my previous post - setting up e.g. an innovation hub up there only works if it is large enough.
e.g. Right now half the world is making "nanobioscience" research centers. From Braga in Portugal to Winnipeg in Canada, new centers are opening. They will remain largely insignificant, compared to a few good ones.
What distinguishes the good ones? Either of two things:
• long established research culture (e.g. new centres in Cambridge), where people will go to integrate into an existing framework, or
• a truly enormous budget, rather than a half-hearted attempt (e.g. in Delft, Netherlands, where the Dutch government channeled 2 years of North-Sea gas revenue to encourage the development of modern technology ... the centre has a nearly unlimited budget in practical terms - by the by, Phillips is already latching on to some things they created, there will be private sector jobs coming out of it soon).
The UK in general has a great opportunity because established centres exist - they should be used to the fullest.
This advantage can be also projected out from the real hubs, because the *country* still has a good reputation. But this can only be done with proper large-scale planning.
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Why is no one in the mainstream media asking just who do we owe this money too. The monetary system was set up to enslave mankind and this proves it. For years David Icke has been telling people that depressions and repressions in the money markets are caused and created by the so-called elites. Clearly, they are now calling in their debts which they have created through interest on money they create out of thin air, and wars.
When are the people going to wake up to the scam and say enough is enough we need a world wide peaceful revolution.
``Banks lend by creating credit. They create the means of payment out of nothing.''
Ralph M. Hawtrey, Secretary of the British Treasury
``By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens...''
John Maynard Keynes
``It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.''
Thomas Jefferson to A. L. C. Destutt de Tracy, 1820. FE 10:175
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I strongly recommend the response by mivadar (Please read posting 54).
The challenge was to find ten practical and immediate areas whereby UK Inc. can re-tool the country for the 21st century in the face of the China challenge and globalisation.
Mivadar offers the first five:
• Clear national goals in two or three key areas, such as carbon-free energy and preventive medicine.
• Government commitment of £10 billion a year above and beyond spending for research councils to jump-start new industrial research labs.
• Government tax credits for corporations that commit to spending 10% (or more) of R&D on basic research.
• Work on a 10-15 year time-line, not until the next election.
• Provide clear leadership. The most successful program designs of this kind were the Manhattan Project and the Apollo program in the USA. Take a look how they were managed ...
................
I offer four more (slightly different):
* Create a UK HE-&-Monsanto-type industrial research complex (akin to ADAS/Rothamstead/CSIRO etc) to produce GM variants of the 'Third World crop species', variants that will cope with climate thermal change, desertification, salinization, inundation, etc. (eg. For tropics: sorghum, soya, millet, cassava, plantain, cotton.); thus, win back some friends in the third world, and develop 'protected sources' of food trade for when the going gets tough (and it will get tough.).
*Re-forest as much of the UK non-agricultural landmass as possible, as fast as possible. Plant and harvest on the Bradford-Hutt system.
* Impound as high a percentage of UK rainfall as is feasible. Fully establish a UK water transfer grid.
* Integrate food production/processing/waste systems with food pelleting for a massive expansion of fishfarming etc.(fishmeal from the sea will gradually disappear).
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You see where I am going - UK Inc. needs to be rapidly re-engineered for sustainability and survival in a world where the UK becomes a very small commodity trading cog in a very big wheel.
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RandomArbiter wrote @ 52:
“GeoffWard, tell me how China is asset stripping Brazil when there is TRADE going on. Give and take. Asset stripping is when one country takes and does not give. I suppose by your definition we (the West) are responsible for asset stripping the Middle East of oil and gas every day? ….”
……………………..
Asset stripping is, I agree, a pejorative term when applied to bilateral trade between nations. It becomes so when the balance of economic power is uneven and deals are struck by ‘leaders’ to further their own agenda rather than for the developmental benefit of the country in question.
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[Think of eg. a copper mine in Montana: strip-mined, acid-leeched, poorly impounded, regional very long-term water contamination – cost for treatment over the contamination lifespan? – say 4$b, - too high for the company to pay clean-up. Result: declaration of bankruptcy by the (small) extraction company of the multi-national; costs revert to the State taxpayer.
Think of the US and Chinese mining & extracting in Ecuadorian upper Amazonian World Biosphere Reserve: extract the oil etc and walk away without cleanup.
Think NON-RENEWABLE/WEAKLY RENEWABLE. The asset, once removed is, of course, gone; stripped. Poor small countries may have only one product in small reserve (eg. Lithium in the Andes: sequestered to the Chinese)(eg. Guano; once the asset has been stripped by industrial overfishing and mining only bare rock remains).
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National socialist countries like Nicaragua and, increasingly, Brazil are trading off short-term their NR/WR resource-base and conspicuously failing to translate income from trade into national infrastructure and development.]
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Asset Stripping is not just inter-national; where I live in Brazil, it is intra-national, and the mass of the population is so economically and socially unsophisticated that they let their leaders get away with it.
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#54 mivadar
Ok, but. The typical scientific company is fighting with its hands tied behind its back. Until recently the DTI was providing grant money for people to transfer technology to developing countries. Is this really what we pay taxes for?
Additionally UK universities were paid to get involved in skill transfer.
Result: Private companies, that know what they are doing, avoid universities like the plague.
I am not talking about blue sky research here. Plain vanilla commercial development.
And then there are the banks. Their activities make UK products more expensive in the short term. Manufacturers have them on their back for the ride.
Manufacturers can innovate until the cows come home but it is all for nought.
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How about 'weaning off' the investor? Look further back into history and it seems that the workers were often not also the shareholders and perhaps this contributed to the present position?
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#40 porky996t
Thatcher ensured the demise of Coal Steel Shipbuilding etc by virtue of "The property owning democracy" and the City "Big bang".
Once the banks were given the opportunity to lend money to people taken in by the need to buy their homes then the Pound rose in value to such an extent that UK goods were no longer competitive.
The Big Bang also allowed banks to expand with little control.
We are still witnessing the expansion of the City and the high value of the pound.
Cheap imports might well be seen as a good thing.
But we don't export any more.
And what will happen when the Chinese develop their own market so that they do not need to export?
Will the City, the bankers that Thatcher spawned, be able to create wealth enough for the UK to survive? I think not.
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So during the good years when the government was completely reliant on debt it couldn't afford, it was kind enough to share that debt with others to the point that they too built their own economies on that same debt, which they had become dependent on. Sounds a bit like a drug there.
Now, much like the banking crisis, the bubble has burst and those reliant on the funding from such debt find out that relying on debt is not the best way to drive an economy. So here we have the withdrawal symptoms of suddenly taking away a drug that you have become addicted to.
Suddenly makes me wonder if we should be classifying Debt as an 'A' Class Drug.....
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