
Why doesn't Britain make things any more? (2011) - wallflower
https://www.theguardian.com/business/2011/nov/16/why-britain-doesnt-make-things-manufacturing
======
blululu
Just 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)

~~~
achamayou
If only there was some sort of regional currency, less susceptible to a single
country’s economic changes, that one could use...

~~~
jason0597
The ECB is not unbiased in the slightest, they always favour the northern
states.

~~~
JanSt
QE is made for Southern Europe, the North has argued against it for years
(especially Jens Weidmann). Draghi is Italian.

~~~
chewz
QE transfered money to Southern countries with a caveat to use them to pay
bondholders - large banks of the North.

So in essence it was taking money from Northern taxpayers to give to Northern
banks to save them from illiquidity.

People in the South and their country budgets haven't seen a cent of these
money.

~~~
JanSt
That's not a correct description, but it's true in some way.

1) QE did not transfer money with any caveat to pay bondholders. QE is not
like giving cash to a country. The ECB buys up bonds on the open market (thus
mostly from banks, which supports your point).

2) The buying up of bonds drastically reduces interest rates, because
artifical demand is created.

3) The South can now borrow money for pretty low interest rates on high debt-
loads. Italy wouldn't be able to afford high interest rates very long.

4) Northern banks holding higher paying bonds in their portfolio profited
because the high-coupon bonds values increase.

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pjc50
> 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.

~~~
lazyjones
> _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
I 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.)

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sleavey
All 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
That’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?

~~~
lostdog
All together, UK billionaires have 156 billion pounds [1]. Put a 4% wealth tax
on that, and you'll get 6.25 billion pounds. You won't even be making their
fortunes smaller, so you could take that amount for forever.

The NHS spent 140 billion pounds in 2017 [2], so you would cover 4.5% of the
NHS budget just with this wealth tax. That's not insignificant, and we're just
looking at billionaires here.

UK millionaires own 6.5 trillion pounds [3]. With just a 3% wealth tax, we
raise 195 billion pounds, which is a lot more than the NHS budget.

So yes, since Richard Branson is not the only rich person, you can tax the
rich, let their fortunes still increase by 1% per year, and fund the entire
NHS and more.

[1]
[https://en.wikipedia.org/wiki/List_of_British_billionaires_b...](https://en.wikipedia.org/wiki/List_of_British_billionaires_by_net_worth)
[2]
[https://www.bbc.com/news/health-42572110](https://www.bbc.com/news/health-42572110)
[3] [https://www.coutts.com/insight-articles/news/2017/how-
many-m...](https://www.coutts.com/insight-articles/news/2017/how-many-
millionaires-are-there-in-the-uk.html)

~~~
icu
Yes but you're ignoring capital flight.

Billionaires and multi-millionaires can just up and leave to more tax friendly
destinations.

There are actually tax advantaged schemes (EIS and VCT) in the UK to try and
funnel money into emerging tech and new businesses. However you would only
invest in them if you were extremely wealthy do too the risks involved.

~~~
hakfoo
Capital flight is easily challenged if you have the cojones.

Paper assets require a supportive legal framework to transfer them usefully.
Imagine creating a blacklist of tax evaders with the sort of teeth we see
with, say, the sanctions on Iran/Venezuela/the DPRK. Shut down their economic
life until they'll yield a useful cut.

Physical assets can't easily be schlepped across national borders without
anyone noticing.

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viburnum
Britain 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.

~~~
CapricornNoble
>>>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
He'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.

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phendrenad2
This 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.

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Aloha
A 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
This 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
What's the unit on that Y axis?

~~~
_iyig
I 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-o...](https://www.washingtonpost.com/business/economy/economists-
offer-more-pessimistic-view-on-manufacturing-in-upcoming-
report/2012/03/19/gIQAKSpZNS_story.html)

"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."

~~~
blululu
Another source to this thesis:
[http://www.upjohn.org/MEG/papers/Measuring%20Mfg_Houseman_Ba...](http://www.upjohn.org/MEG/papers/Measuring%20Mfg_Houseman_Bartik_Sturgeon.pdf)

~~~
Gibbon1
> The extraordinary real GDP growth in these sub-industries, in turn, is a
> result of the adjustment of price indexes used to deflate computers and
> semiconductors for improvements in quality.

Gag

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blackflame7000
The United States should study how the lost of manufacturing impacted Britain
globally when dealing with China

~~~
H8crilA
It'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)

~~~
IllogicalLogic
The 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
The 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.

~~~
IllogicalLogic
The 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.

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fmajid
The 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
I'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.

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repolfx
The 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.

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mikhailfranco
Socialism - but The Guardian would never admit that.

~~~
thundergolfer
Are you actually suggesting Socialism is the cause of this? Do you think
Britain has been a socialist country in the last 50 years?

~~~
mikhailfranco
When 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...](https://www.economicshelp.org/blog/5326/economics/government-
spending/)

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-g...](https://tradingeconomics.com/france/government-spending-to-gdp)

~~~
mikhailfranco
TL;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-
britis...](https://mises.org/wire/malthusian-trap-keynesian-trap-british-
economy-1810-2019)

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otikik
I misread the title as "Why doesn't Britain make things any _worse_ ",
expecting another Brexit article.

