Monday, May 25, 2009
Where will growth come from?
Telegraph: What's the commercial driver of the economy going to be if it's not financial services?
If financial services are no longer going to rule the roost as the economy is "rebalanced" and we are all going to live in a Gordon Brown's new world order of capitalism exactly what commercial activity is going to drive the economy out of recession and back to long term trend growth rates?
Posted by devo @ 11:25 PM (1288 views) Add Comment
29 Comments
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1. devo said...
Where WILL growth come from?
I am struggling to think of ANY industry!
2. This comment has been removed as it was found to be in breach of our Blog Policies.
3. gone-to-colombia said...
Ah, this is the question, the UK has never recovered from its colonial economic model of turning raw materials from the colonies into finished goods that were sold back to those same colonies.
We lost our way after WWII, and have never found a way or purpose again.
As a nation we have to learn the hard lesson that there is no short cut to producing 'things' that the world wants.
4. devo said...
@2. general congreve said... A f4cking big war,
OK.
And what then? Will it ever be thus?
5. quiet guy said...
"the Government has to decide which industries it will support by the end of this year at the latest."
Madness. Pure madness. Governments do not create wealth - instead they consume wealth. The UK badly needs less government, not more.
6. devo said...
Where will the growth come from quiet guy?
7. drewster said...
There's always the media - some UK films and musicians have proved popular abroad. We also do a roaring trade in exporting reality TV formats, e.g. Pop Idol has been sold pretty much across the globe. It's hardly going to save the country, but every little helps.
8. devo said...
@7. drewster
Thanks. So we've got music and tv going for us.
I'll sleep a little easier tonight.
9. wiltshire said...
Films, tv and music don't employ many. Pop Idol will employ very few whilst generating a huge amount of wealth for a handful of people who own the production company and each territory licensing the product will in turn employ very few in their territory. Similarly with musicians, very few people involved, 90% of income with a handful and most product manufactured outside the UK.
I can't see much hope to be honest. We'll just spend the next decade or so squabbling about who's to blame and what to do about it whilst another huge swathe of countries overtake us in terms of productivity, standard of living etc. Maybe we need to hit rock bottom to really start making some progress in terms of expectations and ability and desire to achieve something as a nation. Cos all this country gives a sh*t about these days is how cheap all the stuff made in China is in Tesco. Oh yeah and Jordan's love life of course.........
10. devo said...
Wiltshire:
When we reach rock bottom, we will realise that all we 'need' is food, clothing and shelter.
From there, the only way is up.
11. gone-to-colombia said...
The argument that governments don't make wealth is, on the surface, attractive but it does not stand up to scrutiny.
The post war Japanese government chose which areas of industry to support, they had a plan, one that worked.
We need a similar type of support, we need a government that believes in and helps business to prosper, not in the short term but for long term.
We need a culture which honours industry, gives cedit to those make something. For example, what happened to engineering apprentiships? What happened to British engineering?
Our class system gives credit to a multitude of interior designers, media types, pundits and so called experts. We ignore those who really create the wealth in our country, and in doing so we close off our future and what always was our destiny, a manufacturing and trading nation to the world.
12. crunchy said...
My only wish is that we did not have this growth.
Growth is the problem, because in it's current form it is forced not organic.
To acheive organic growth one first has to shrink greed.
Greed growth is shrinking growth.
13. crunchy said...
FORCED GLOBAL TAXATION.
14. hpwatcher said...
I think hair transplants will be the big growth industry of the future. We should aim to put the UK at the cutting edge.
15. matt_the_hat said...
I've got one - we made up this big lie about global warming - lets create a load of green jobs - that's one way to continue the mal-investment of peoples time! - job done GB
16. uncle tom said...
We have no green shoots, because there are no seeds waiting to germinate..
My recipe for recovery would be based on two principles:
1) Roll back the state, and actually do it - not just 'aspire' to it. Put the health and safety culture into clear reverse, and have the courage to break with Brussels when their diktats get in the way. Pass a Sovereignty Act to make it clear that the buck stops at Westminster.
2) Keep people working. Find gainful work or relevant training for everyone out of work. Get people building houses.
Require every borough, town and parish council that has a population density of less than 5,000 per square mile, to identify suitable land not previously allocated to residential development, that would increase their living space by at least 3%.
Fine those that fail to deliver, and share the fines amongst those who exceed their quota.
Compulsory purchase the identified land at agricultural prices, and then auction the plots, one by one; allowing the local community to keep the profit to offset council tax; and pay for infrastructure.
- Importantly, these things need to be done quickly. No long reports, no lengthy consultation processes. Action this day..
17. nomad said...
Where do USA's profits come from? Movies, TV, Computer Industry, Cars, Oil, Food (the world's breadbasket), etc.
In the last decade a peak of 41% of national profits was achieved by . . . Banking!!!
Anyway, is exporting the answer? Look at brilliant exporting countries like Japan and Germany - as deep in the doo doo as we are, and Japan have been trying to get out of it for more than 10 years . . . with a booming world economy and a strong savings culture.
Come in JU.
Forget globalisation - a good start has already been made. We are growing more food.
18. refusetobuy said...
Wart removal is a growth industry.
19. Marvin said...
Gone to Columbia @ 11.
Japan had a goal...... Yea and they were semi occupied, directed, supported by the US. The Marshall plan in Europe did the same for Germany, but the clincher is a collective (hard )work ethic and patience. These were the principle factors in their subsequent resurgence, both qualities totally absent in our Jordon and etc obsessed country. The truth of the matter is Britain has a Talent vacuum!!!.
We produce waste, which could probably put to better use than burying it, are surrounded by tidal forces to supply us with adequate power, land and water to grow food etc all of which require effort to realise we do not NEED to be a net importer but we are lazy, our attitude to houses and house prices is equally lazy as are our politicians. Real guidance takes real leadership, I fear this is missing at all levels of our society....
Life don't talk to me about life!
20. matt_the_hat said...
16. uncle tom - there are a million homes empty and more if you include 2nd homes, building new ones without using old ones is just wasting a valuable resource - not money but peoples time.
BTW - everyone always suggests maximizing employment should we not working toward maximizing GDP
21. letthemfall said...
Every productive activity creates wealth. We hardly need to be led by a particular industry, especially after the example of the so-called wealth creation of finance, which turned out to be a myth. Govts and public services are all part of a stable and ordered society, which is a better measure of wealth in my view than how many possessions one owns. Perhaps the true mark of a prosperous society is one in which all useful activity is valued, not the posturings and hubris of one overblown sector.
22. uncle tom said...
Matt,
There will always be some empty homes, although I am firmly in favour of imposing double council tax on them to encourage owners to put more of them to good use.
We are not generally over-supplied with housing, although the 'shortage' argument was greatly overstated. A heavy burst of construction should be the vanguard of a recovery plan, as it can be put into effect very quickly.
23. matt_the_hat said...
21. uncle tom - do you know anyone that is homeless because there isn't enough housing? The supply and demand argument is dead, house prices have been a function of the increase in money supply, i.e. debt. The poles are going home and the baby boomers are retiring, i.e. nearing the end of their lives, there is no housing shortage!
24. uncle tom said...
Matt,
I know quite a few people who are living with their parents who would like a place of their own, and people with young families that badly need somewhere larger.
Whilst widespread abandonment due to excess supply is not desirable, that is not where we are today.
25. mark wadsworth said...
The Telegraph asks a dumb question - nobody can predict from where 'growth' will come or whether it is even desirable.
The best thing the government can do is to do as little as possible vis a vis they ought to reduce taxes on production and employment (and subsidies to favoured businesses); reduce regulations and quotes and tarrifs etc etc, and we will find, as has been happening for millenia, people will find the most productive or profitable or enjoyable uses of their own time and expertise and resources and it will all sort itself out. Some people may find that working less and growing their own food is more satisfying (although how growing your own food doesn't count as 'work' escapes me).
PS, finance does not create wealth - at best, it oils the wheels of it all by matching people with excess savings and people and businesses who can invest profitably (once you block off speculation in land via Land Value Tax), that's all. At worst, it is a huge great scam that leads to credit bubbles.
LVT would also address Matt The Hat's point that we have enough (physical) housing for the time being - it would encourage owners to use their housing efficiently (by renovating empty properties and letting them out or selling them, by trading down or by sub-letting rooms, by discouraging second-home ownership, MPs take note).
26. Gordiji said...
Bang on MW @ 24.Fred Harrison and Michael Hudson should be listened to and their findings acted on. It seems the only way (Land Value Tax)to fundamentally end boom and bust and the relentless transfer of wealth up the pyramid.LVT taxes that that nature gives.
Wages and production tax could be vastly reduced or even eliminated. This would go a long way to increasing productivity . It has an inherent fairness built in.It would benefit developing countries massively and help weed out the false compassion displayed by our
corrupt leaders.
27. mander said...
Nanotechnology, Fashion, Tourism, Robotics, AI, IT and many more depends really on the smart people involved.
The hardest think is to accept for the rich from the last 10 years that they are still rich but in real money not buble money. It is very simple they still have same houses.
28. nomad said...
Please, please, please can we have a new government.
29. crunchy said...
26. nomad We have!