It’s being blamed on the Brexit jitters. But the that the latest figures reveal is actually a symptom of a much deeper malaise. Britain has never properly recovered from the [2008 crisis]….
At the root of this inability to stage a real recovery is the serious imbalance that has developed in the past few decades – namely, the over-development of the UK financial sector and the atrophy of manufacturing.…
This is remarkable, given that the value of sterling has fallen by around 30% since the crisis. In any other country a currency devaluation of this magnitude would have generated an export boom in manufactured goods, leading to an expansion of the sector.…
The weakness of manufacturing is at the heart of the UK’s economic problems. Reversing three and a half decades of neglect will not be easy but, unless the country provides its industrial sector with more capital, stronger public support for R&D and better-trained workers, it will not be able to build the balanced and sustainable economy that it so desperately needs.Real-World Economics Review Blog
Making things matters. This is what Britain forgot
Ha-Joon Chang
7 comments:
left out the part where they have to make their ordinary people work for 3 rations of dog brain soup per day....
Yes, doesn't seem like "trade" if all you have to offer is your money.
Unless your in the top end of finance then it's Mcjobs and low pay for everyone else. The engineers in the service industry may get better wages but bosses work them hard, and wages and conditions have got worse there too.
The contract engineers at my old company said our wages were too low, but they had no over time rate, no sick pay, no holiday pay, and no pension. Those guys could end up traveling for hours each day depending on where the work was. We even had engineers sleeping in their vans at night because the distance was too far. At the weekends we would have engineers come halfway across England to work and they would get bed and breakfast. They said that there was no overtime in their own company.
Subsidising or protecting the industry works to adjust the domestic economy. For the world as a whole, we've probably already have significant over capacity and everyone is already trying to boost exports at once.
The service economy is rooted in inequality. The poor perform services for the rich, not the other way around.
If we could wave a magic wand that transferred money from the rich to the lower classes, the lower classes would buy more stuff, creating more demand for manufactured products, and growing the manufacturing sector.
I would also point out that it's questionable if many of these "services" add any real value to society. I.e., if the rich cleaned their own toilets, instead of hiring some poor person to clean toilets, would society be worse off? If the middle class cooked their own burgers, instead of paying someone minimum wage to cook burgers, would society be worse off?
@Ryan, it's true that we have overcapacity -- relative to demand. Maybe we need more demand.
Do you have have all the consumer goodies you would like to have? I don't.
Everything I could buy from Costco and Walmart has been bought.
Maybe more medical services or construction services, prices are too high there though, and probably won't improve in my life, so until the supply meets my cheap demand curve, we don't have a happy equilibrium.
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