EL GACETILLERO LAZARILLO

A post from my friend Tom has spurred me from my blogging torpor.

He notes that there is much heat and little light in the debate over what the world’s economy will look like on the other side of this recession, an observation I agree with wholeheartedly. There has been much standing on soapboxes in recent months, as commentators indulge both in the catharthis of putting the boot into bankers and in the base self-aggrandisement of claiming to have all the solutions under their hat. Most of such commentary has not been worth the time it took to write it.

He identifies a number of half-baked ideas that presently dominate thinking on the left:

- expecting a gold-standard welfare state provision, far better than anyone, anywhere has ever known

- ignoring the nationalism and social solidarity that built up the welfare state

- closing down the country’s most productive economic sectors

- building up our manufacturing base to compete with low-cost Asian countries

- calling for massive transfers of wealth overseas

But while I concur that many of the proposals put forward by the British left leave much to be desired, I think he overstates his case in two instances - regarding the role of the public sector and of manufacturing.

The public sector can - and should - play an important role in supporting the development of a more sustainable economic model for the country. I agree that the idea of the perfect welfare state is not the answer - we can barely afford the welfare state that we have now. Clearly some greater efficiencies can be found in the health service (so long as we stop squandering money on grandiose and unattainable IT projects), but that’s just tinkering at the margin. Where a major difference could be made is in education.

For as long as I can remember, the British education system has been a production line: students go in one end, and come out at the other side with qualifications. A blinkered focus on grades and university enrolment rates - born of a desire for quantifiable data - has resulted in a massive gaming of the system, whereby students are taught not so much to think, to enquire, or to understand, as to ingest and regurgitate in the manner most appropriate to their examination board. The result has been massive grade inflation with little improvement in actual capabilities, and a dearth of new entrants to the job market with hard analytical or technical skills. It has also favoured academic courses over vocational courses, thanks to the very bourgeois prejudices of the present ‘Labour’ government - which thought it better to turn ill-regarded polytechnics into universities than to make polytechnics respected centres of a different kind of learning.

A rethink of our teaching priorities and substantial investment in ones more appropriate to our needs could help reverse that trend. It would also provide the kind of people who could staff an economy more based on productive enterprise than on rent-seeking and consumerism.

Which brings me to the question of manufacturing. Clearly Japan and Germany are hurting at present, given that demand for their manufactures has slumped. And of course both rely too heavily on vehicle manufacturing - like housing and retail, an industry too reliant on consumerism and cheap credit to support demand.

But even so, the manufacturing bases of those two countries remain strong.

Of course, neither can compete with the likes of China when it comes to labour costs. But while labour-intensive, capital-extensive industries in those countries both collapsed following the industrialisation of the third world, their high-tech manufacturing industries remain. Quite simply, they know how to do things that India and China do not yet know how to do. It is worth noting that one of Japan’s major exports is silicon - in the form of chips, to be assembled into products in China. Germany is a leading exporter of machine tools to capital-extensive industries in the third world. And if you do a quick scan of major high-tech engineering projects - power stations and the like - the winning bidders are often German, Japanese, or American.

I’m not saying that we should ape these countries mindlessly - although British firms like Rolls Royce clearly compete with the likes of Mitsubishi and Siemens.

But I am saying that the UK can maintain a competitive advantage by investing in knowledge and the application thereof, adapted for its existing strengths.