Collapse of Industry: Britain

We will start with the quote:

Why doesn't Britain make things any more?
Aditya Chakrabortty, The Guardian (U.K.), 16 November 2011 (hat tip: NC)

You still find industrial [areas], of course, and they look the part: overalled men milling about, passing lorries. Only up close does it become clear that there's not much actual industry going on.

The biggest unit on one [industirial area] is a dry cleaner; on another, a warehouse for loft insulation dwarfs all else. At a rare actual manufacturing firm, the director, Tom Clark, takes me out to the edge of the Tyne, centre of the industrial excitement remembered by Kennedy. "Get past us and there's nothing actually being made for miles," he says, and points down the still waterfront....

What's driven the de-industrial revolution? In significant part, it's a tale about where Britain is going, one that's been told by Conservative and Labour alike over the past 30 years. It's a simple message that comes in three parts. One, the old days of heavy industry are gone for good. The future lies in working with our brains, not our hands. Two, the job of government in economic policy is simply to get out of the way. Oh, and finally, we need to fling open our markets to trade with other countries because, despite the evidence of countless Wimbledons and World Cups, the Westminster elite believe that the British can always take on the competition and win.

Yet there's ample evidence that the promised rewards of this post-industrial future haven't materialised. What was sold as economic modernisation has led to industrial decay, with too often nothing to replace it.

The author goes on to discuss that part of the problem is that manufacturing needs less people to perform the same amount of work.  Even the Chinese have been having a hard time keeping their factories open.

British Productivity, with some lags in the 1970s was similar in its growth trend.

Source

And he notes that much of of the new economy, that was promised to replace the old manufacturing economy has been sweetened with plentiful promises - false promises as it turns out.

Richard Florida hasbeen one of the pied pipers of the new economy.  His idea was all about growth through a “creative class.” The urban areas that could turn themselves into the playground of the new hip, smart urban set would attract the best minds and capture the most advantage from the new It-based, thought-economy.

With a lot of today’s research and development in the United States coming out of public universities that have set up a apprentice-serfdom system of graduate students to work in public-private partnerships, I think Mr. Florida is missing at least some of the dynamics involved.

The Guardian article states that promise of the new knowledge economy was more propaganda than substance. To the extent that highly interconnected world systems tend to lead to winner-take-all results, it is not particularly clear that even a successful knowledge-based system is what people would want. If everyone in greater area of Raleigh, NC (1.7 million) took a 10% pay cut, and Bill Gates moves to town, the average, and total yearly income of the City would go up – a lot. But it is not clear that that would make the now poorer people of Raleigh happy.

In 2005 the British auto manufacturer MG Rover laid off 6,300 people. As these were considered the elite of the manufacturing workers, it was thought that they would be retrained soon and recover well. As the piece notes, 90% of the workers did find new employment, but they are now making Ł5,640 ($8,794) less a year. Recall that these were thought of to be the elite of the industrial workers.

Its final concern is that Britain no longer pays its way through the world. As manufacturing went away, the consumer economy took over. They note that Britain in 2010 brought in Ł97 billion ($151 billion) more goods into the country than were sold in return.

So it is that you get a giant shopping centre such as Liverpool One describing itself as the largest urban regeneration project in Europe without any apparent irony.

But what happens when the foreigners are no longer interested in lending Britain (or the United States) money so that they (we) can keep consuming their products. In the case of the United States our enormous amount of well watered arable land allows us to trade food, but that only takes about 3% of our population currently. In the case of Britain, they are a net importer of food.