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Britain Poised For Third Phase Of Industrial Revolution

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A contrarian view for you:

http://www.bsr-russia.com/en/economy/item/1097-britain-poised-for-third-phase-of-industrial-revolution.html

Such has been the success of computer technology that whole swathes of industry (such as book printing, but there are many others) no longer need any workers at all. Everything is computer-controlled, computer-driven. Suddenly there are NO labour costs, so the former advantages of the Third World are being rapidly wiped out once again.

The latest rewards are now going to the countries with the cleverest labour force, no longer to the countries with the cheapest labour force. Can the factory workers of the 21st century workers solve problems for themselves on the computerised shopfloor, or must they wait for a manager to tell them exactly what they have to do? In short, are they capable of being their own managers or do they still need to be told everything?

Plenty of holes in the argument, but this article made me think.

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The 'knowledge economy' argument has been around for a long time (I should know I wrote a book about it in 2001) but how it plays out depends on a number of things, not least the decisions taken by those who own capital and by extension set the strategy for those companies which employ those knowledge workers, as well as the quality of education systems that produce those very knowledge workers.

China is not just churning out PhDs (some of them gaining their qualifications here and elsewhere in the old rich world but taking their skills home afterwards) but increasingly able to ensure not just low cost manufacturing by R&D facilities are built in China (India is doing the same).

America in particular but the rich countries in general are still home to the world's top universities, but many rich countries (including ourselves) are not investing in higher education the the way our new competitors are, while general education goes to rot.

So while some of the premises around knowledge work being 'the future' are undoubtedly well-founded, it doesn't automatically follow that Britain (or America, or Germany, or France etc) are necessarily well-placed.

Cutting education (40% cut to university teaching budgets for example) is about the most short-sighted thing the Con-Dems have yet done, quite shameful in fact and will hurt our country seriously going forward.

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yes all this stuff about over population that is being pushed about has far more to do with un-necessary workforce than actual shortage of sustenance. I bet the rich dream of trench warfare.

We should all be making more money for doing less hours while the machines generate our wealth but somehow that promise of technology enabling the average man to enjoy the leisure that the machines would afford us hasn't come about. Instead of shorter weeks shared between us the working few do more hours than ever, the rich keep 90% of the profits while the salaried workers, as the only tax payers, are expected to pay for the increasing unemployed.

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Cutting education (40% cut to university teaching budgets for example) is about the most short-sighted thing the Con-Dems have yet done, quite shameful in fact and will hurt our country seriously going forward.

Depends which bits they cut.

There really are a lot of over-funded sections of academia. I've studied in one (Modern History at Oxford - should have been made to do Law instead), and in one under-funded one - Computer Science. There's a severe shortage of decent computer science graduates and we have to recruit from abroad.

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The 'knowledge economy' argument has been around for a long time (I should know I wrote a book about it in 2001) but how it plays out depends on a number of things, not least the decisions taken by those who own capital and by extension set the strategy for those companies which employ those knowledge workers, as well as the quality of education systems that produce those very knowledge workers.

China is not just churning out PhDs (some of them gaining their qualifications here and elsewhere in the old rich world but taking their skills home afterwards) but increasingly able to ensure not just low cost manufacturing by R&D facilities are built in China (India is doing the same).

America in particular but the rich countries in general are still home to the world's top universities, but many rich countries (including ourselves) are not investing in higher education the the way our new competitors are, while general education goes to rot.

So while some of the premises around knowledge work being 'the future' are undoubtedly well-founded, it doesn't automatically follow that Britain (or America, or Germany, or France etc) are necessarily well-placed.

Cutting education (40% cut to university teaching budgets for example) is about the most short-sighted thing the Con-Dems have yet done, quite shameful in fact and will hurt our country seriously going forward.

Knowledge economy = fairy story without a manufacturing base of any substance.

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For fifty years, the Third World has been in the economic ascendant with its cheap labour costs.

Fifty years AND ascendant AND Third World (back to the 1960s) is a bit of an exaggeration. 10 or so years becoming ascendent maybe.

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Knowledge economy = fairy story without a manufacturing base of any substance.

Indeed. The big floor in this uber capitalist model is that without work there are no customers.  The only solution then is socialism/communism and then Marx was right.

Brown got close, paying chavs to do nothing.

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China is not just churning out PhDs (some of them gaining their qualifications here and elsewhere in the old rich world but taking their skills home afterwards) but increasingly able to ensure not just low cost manufacturing by R&D facilities are built in China (India is doing the same).

Churning is the correct word - plagiarism, nepotism and favouritism is endemic in China. Despite Chinese govt efforts to make them 'innovative' (being commies they actually think you can do that by fiat :blink:) they have a long, long way to go.

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Churning is the correct word - plagiarism, nepotism and favouritism is endemic in China.  Despite Chinese govt efforts to make them 'innovative' (being commies they actually think you can do that by fiat  :blink:) they have a long, long way to go.

So they are on about the same intellectual level as Gordon Brown then.

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This is a fascinating subject and is the source of endless debate in the Snow birds household. Truly, if we could solve this conundrum we would be very well set to making a fortune.

The article is good but I do think the writer makes a mistake in assuming the Chinese and Indians are not totally capable, and better situated, to make and operate the computer controlled machines that will produce everything the world needs at a very low price. The conundrum develops because these super-machines need a market but if the super-machines can make everything then there is nothing they want in exchange for their products. The excess population is both useless and necessary at the same time.

In the three past revolutions, agricultural, industrial and computer the surplus population moved their activity to the new field. If there was a new field the answer would be obvious and it would be this field that we should all embrace. If there is a new field the first ones to figure it out will get rich but it is hard to imagine what succeeds the production of everything.

The only clue we have is that a new field, if it exists, is not material (because the super-machines can make everything). It is not cultural, because super-machine owners don't need very much entertainment or enlightenment. The only solution we have come up with is a totally new social order where the producers get status, honour and privilege in return for everything we need. Money becomes obsolete.

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This is a fascinating subject and is the source of endless debate in the Snow birds household.  Truly, if we could solve this conundrum we would be very well set to making a fortune.  

The article is good but I do think the writer makes a mistake in assuming the Chinese and Indians are not totally capable, and better situated, to make and operate the computer controlled machines that will produce everything the world needs at a very low price.  The conundrum develops because these super-machines need a market but if the super-machines can make everything then there is nothing they want in exchange for their products.  The excess population is both useless and necessary at the same time.

In the three past revolutions, agricultural, industrial and computer the surplus population moved their activity to the new field.  If there was a new field the answer would be obvious and it would be this field that we should all embrace.  If there is a new field the first ones to figure it out will get rich but it is hard to imagine what succeeds the production of everything.  

The only clue we have is that a new field, if it exists, is not material (because the super-machines can make everything).  It is not cultural, because super-machine owners don't need very much entertainment or enlightenment.  The only solution we have come up with is a totally new social order where the producers get status, honour and privilege in return for everything we need.  Money becomes obsolete.

Yes, often the new field was also a new place, so it looks like we are stuck unless Branson gets us into space.

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Because of all this, Britain in particular is witnessing a renaissance in manufacturing. Once again, just as in the 19th century, the world is re-discovering what a ‘highly skilled labour force’ actually involves. That is why David Cameron’s Tories are hoping this modern industrial growth will give the British economy a speedy exit from the massive package of public spending cuts which were put to Parliament just a couple of weeks ago. David Cameron’s coalition government, joining as it does the Conservative Party with the Liberal Democratic Party, is gambling on the fruits of our highly-skilled labour force to mitigate a cuts-fuelled recession much faster than ever before.

It's a picture unrecognisable in the UK - "witnessing a renaissance" "highly skilled labour force". It makes the UK sound a model of economic vigour. It's certainly different and apparently from a Russian perspective or for the Russian reader but it seems a bit removed from reality. Maybe they've even taken to believing the propaganda. Who knows it's just possible that in time it might turn out to be true.

But by saying in time that's not going to be 6 months after a general election but more like in 15, 20 + years down the road - given a chance and no return to the Prudent Road :rolleyes:

The Think Tanks and Economic Wizards :rolleyes: have been going on about the UK's 3rd industrial rvolution for decades now but look where the UK is now - Public Sector Valley and Housing Pauper Valley, it's laughable if that's the revolution they were talking about all those years back when they were "thinking like tanks".

Edited by billybong

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It's a picture unrecognisable in the UK - "witnessing a renaissance" "highly skilled labour force".  It makes the UK sound a model of economic vigour.  It's certainly different and apparently from a Russian perspective but it seems a bit removed from reality.  Maybe they've even taken to believing the propaganda.  Who knows it's just possible that in time it might turn out to be true.

But by saying  in time that's not going to be 6 months after a general election but more like in 15, 20 + years down the road - given a chance.

The Think Tanks and Economic Wizards  :rolleyes: have been going on about the UK's 3rd industrial rvolution for decades now but look where the UK is now - Public Sector Valley and Housing Pauper Valley, it's laughable if that's the revolution they were talking about all those years back when they were "thinking like tanks".

I don't entirely disagree with the article.  I think one thing about us Brits is that we have been forced to work in smaller teams and without resources for so long that we can sometime magic stuff out of thin air.  

The Indians by contrast are over manned, incpable of working in small teams as they are unwilling to make decisions at an individual level and as a result often take long to achieve things.  Hell, they couldn't even organise the Commonwealth games without faeces being found in inappropriate places - not sure why but this did conjour up images of the diving pool in my mind. 

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Depends which bits they cut.

There really are a lot of over-funded sections of academia. I've studied in one (Modern History at Oxford - should have been made to do Law instead), and in one under-funded one - Computer Science. There's a severe shortage of decent computer science graduates and we have to recruit from abroad.

Quite. Our education system is educating people for the sake of it. More education is assumed better. It is time we educated people the right way. Then we will have employers getting the people they want and we will minimise the number of graduates who suddenly discover the half truths told by their educators.

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I don't entirely disagree with the article.  I think one thing about us Brits is that we have been forced to work in smaller teams and without resources for so long that we can sometime magic stuff out of thin air.  

The Indians by contrast are over manned, incpable of working in small teams as they are unwilling to make decisions at an individual level and as a result often take long to achieve things.  Hell, they couldn't even organise the Commonwealth games without faeces being found in inappropriate places - not sure why but this did conjour up images of the diving pool in my mind. 

I think the error in the article was translating a possible opportunity for the UK into reporting something already seen to be in progress. I can't see that not by a long stretch.

I'm not saying everything is wrong for sure there will be glimpses of inventiveness as it's almost impossible to extinguish everything but for example the level of bureaucracy, waste and over employment of jobsworths now in the UK is beyond gargantuan and the UK construction industry isn't that famous for completing on time or for quality of work, in fact it's notorious for delays. It has been for decades.

In UK teams there's for sure a great deal of decision making but at the public interface decision making is usually not far short of nil and you're lucky if you get a first name out of the interface for any business sector never mind any significant or useful help. And if there is an attempt at help it's usually incompetent and incorrect if not plain misleading and even bordering on fraudulent isn't unknown - competence and help is well well down from pre 1997 levels and that's a fact not a political point. Way to go to say the least.

Edited by billybong

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I think the error in the article was translating a possible opportunity for the UK into reporting something already seen to be in progress.  I can't see that not by a long stretch.  

I'm not saying everything is wrong for sure there will be glimpses of inventiveness as it's almost impossible to extinguish everything but for example the level of bureaucracy, waste and over employment of jobsworths now in the UK is beyond gargantuan and the UK construction industry isn't that famous for completing on time or for quality of work, in fact it's notorious for delays.   It has been for decades.  

In UK teams there's for sure a great deal of decision making but at the public interface decision making is usually not far short of nil and you're lucky if you get a first name out of the interface for any business sector never mind any significant or useful help.  And if there is an attempt at help it's usually incompetent and incorrect if not plain misleading and even bordering on fraudulent isn't unknown - competence and help is well well down from pre 1997 levels and that's a fact not a political point.  Way to go to say the least.

A lot of the issues in the UK are down to accounts running business rather than engineers.  There was a risk in the past with build and they will come, as firms would often go tits up,  But now people just sit round counting beans and being unproductive.

The Victorians didn't building the Tube and Railways by sitting in offices counting their beans, they got out and did stuff.  Time to slit the throats of the accountancy profession and UK CEOs and put people of action back in charge.

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A lot of the issues in the UK are down to accounts running business rather than engineers. There was a risk in the past with build and they will come, as firms would often go tits up, But now people just sit round counting beans and being unproductive.

The Victorians didn't building the Tube and Railways by sitting in offices counting their beans, they got out and did stuff. Time to slit the throats of the accountancy profession and UK CEOs and put people of action back in charge.

I agree but as a point to ponder: if all the tube service in London were to disappear in a puff of pink smoke do you think they could get built again? They would face greenies, nimbies, legal action, elf and safety, European regulations, government regulations, planning permission and political opposition from whoever was not in power. It would at least take decades and billions and might never get finished.

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A contrarian view for you:

http://www.bsr-russia.com/en/economy/item/1097-britain-poised-for-third-phase-of-industrial-revolution.html

Plenty of holes in the argument, but this article made me think.

Goodness me, the marvel of capitalist efficiency writ large eh?

Pray tell, who exactly is going to be earning a salary in order to have any money to go out and buy all of these wonderful products of the "third-phase of the industrial revolution" if all production is automated?

Just wondering...

Edited by tallguy

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I tend to agree with a couple of very different writers who definitely downplay the impact of formal education on rising productivity.

First is JH Kunstler who believes that even secondary education is a waste of time for most people. Basically it is a socialisation tool that habituates young people to sitting in one place all the time in anticipation of doing the same in the workforce.

Second is Naseem Taleb, who doesn't specifically mention education, but implies its worthlessness by stating that productivity comes from having an environment where many people can "tinker" with different ideas and successful ones are selected as in evolution. What matters here are curious free-thinking types coming up with something and then venture capitalists, or even the odd corporation, bankrolling the idea.

One prediction I've seen is that the costs of medical equipment used in genetic research will soon drop low enough that people will be able to set up labs in their garages and then we will see an explosion of new medicines or products that will enable us to transform our bodies. This mirrors what happened with software and hardware technologies in the 80s. The minimum level of knowledge to get started will be available on the internet.

So whether we are well poised or not depends on how open we are to fostering entrepreneurship.

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Indeed. The big floor in this uber capitalist model is that without work there are no customers.  The only solution then is socialism/communism and then Marx was right.

Brown got close, paying chavs to do nothing.

Marx did not have a very robust view of technology. He called machines "dead labour" and like all economists he had to fudge his "big idea" to make the observed phenomenon fit the theory. Marx studied capitalism in its infancy and understood that it is an unfair system that benefits the rich at the expense of the poor. He measured this and calculated "the rate of exploitation" or the amount of dosh the mill owners (like his drinking buddy Engels) made by the wholesale mistreatment of the working class that they employed. The machines - the "spinning jennies" did not fit this model quite so neatly. Its also important to remember that Marx lived at a time when the economy was by and large peasantic rather than industrial.

I doubt poor old Karl ever envisaged a situation where the problem of capitalism was enough consumers to buy stuff, rather than enough downtrodden masses to make it. But that is (as you correctly observe) precisely where we are now. The yanks, rich arrogant, ignorant and full of themselves have been the only show in town since the war, driven by the Texas oil wealth. Japan and latterly China have become rich selling to the US and gradually replacing American workers. Such is the metamorphosis that the US economy now is 70% consumer spending. Sadly for the Brits they have followed the yank model. Both the UK and the US are bust.

The welfare state has always paid for people to do nothing - this is nothing new nor attributable to former PM Brown. Furthermore the biggest beneficiary of the welfare spending has always been the middle earners, the better off working class, or as they are now (wrongly) called the "middle classes" (if we are to stick with Marx's definitions) Since capitalism needs consumers not workers there is nothing intrinsically wrong with this. The welfare state serves capitalism, as it always has.

The premise of the OP is that we are now entering the third phase of capitalism where technology has displaced workers altogether. Even the made-up industries that neither make nor do anything - banking, insurance, marketing, advertising, IT, research and development - all the things that now form the bulk of employment can now be automated or relocated to a cheaper economy. A very tiny percentage of "super workers" are left - the IT gurus who understand the crappy software that doesn't seem to work for the rest of us, the engineers who service and make Marx's "dead labour" and the people who perform services that cannot be avoided - healthcare and food production. Their labour costs are too small a percentage of total costs to be important.

If you accept this premise (which I do more or less) the future is dependent on consumption which is unsustainable and for which there is no funding source. Thatcher funded consumerism from the north sea oil revenues and from the massive privatisations of the era. It was short sighted and foolish. Blair funded it from the house price boom and the credit boom that began and then bust it. It was short sighted and foolish. Neither Camoron nor Obama have a clue how to continue to fund the ponzi scheme that they inherited. Increasing the money supply and creating inflation may help but it is limited in its scope and is frowned upon by the people that control capitalism. Quantitative Easing is put forward as increasing the money supply but in fact debt is being written off far faster than QE is creating it. QE is simply the ongoing process of transferring taxpayer money to the rich.

Furthermore buying foreign tat needs foreign money. Britain's balance of payments deficit will cripple it for the foreseeable future. Devaluing the pound to make exports cheaper is a foolish policy if one exports nothing. Devaluing one's currency when a country is an importer increases consumer costs - a process now happening in the UK, mistaken for the effects of QE by the religious zealots of monetarism and devotees of Thatcher's smoke and mirrors economic "miracle". (Yes AEP and the Torygraph - that's you) The result is less spending and so a contraction in GDP (70% consumer spending remember) More recession.

I think we are poised for the third phase of capitalism, the industrial revolution if you prefer. I think it will be grim. Soon more people will be retired, unemployed or underemployed than are working. Of those that work few will pay tax (if one takes the view that the public sector do not effectively "pay" tax) or at least tax in any volume. Businesses will continue the relocation to low tax zones and blackmail governments (HSBC are doing it now) into ever smaller tax take. Without the tax how will we pay for the rest? More borrowing is impossible. The system is at breaking point. It will break. Then what? I really cannot imagine.

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Marx did not have a very robust view of technology. He called machines "dead labour" and like all economists he had to fudge his "big idea" to make the observed phenomenon fit the theory. Marx studied capitalism in its infancy and understood that it is an unfair system that benefits the rich at the expense of the poor. He measured this and calculated "the rate of exploitation" or the amount of dosh the mill owners (like his drinking buddy Engels) made by the wholesale mistreatment of the working class that they employed. The machines - the "spinning jennies" did not fit this model quite so neatly. Its also important to remember that Marx lived at a time when the economy was by and large peasantic rather than industrial.

I doubt poor old Karl ever envisaged a situation where the problem of capitalism was enough consumers to buy stuff, rather than enough downtrodden masses to make it. But that is (as you correctly observe) precisely where we are now. The yanks, rich arrogant, ignorant and full of themselves have been the only show in town since the war, driven by the Texas oil wealth. Japan and latterly China have become rich selling to the US and gradually replacing American workers. Such is the metamorphosis that the US economy now is 70% consumer spending. Sadly for the Brits they have followed the yank model. Both the UK and the US are bust.

The welfare state has always paid for people to do nothing - this is nothing new nor attributable to former PM Brown. Furthermore the biggest beneficiary of the welfare spending has always been the middle earners, the better off working class, or as they are now (wrongly) called the "middle classes" (if we are to stick with Marx's definitions) Since capitalism needs consumers not workers there is nothing intrinsically wrong with this. The welfare state serves capitalism, as it always has.

The premise of the OP is that we are now entering the third phase of capitalism where technology has displaced workers altogether. Even the made-up industries that neither make nor do anything - banking, insurance, marketing, advertising, IT, research and development - all the things that now form the bulk of employment can now be automated or relocated to a cheaper economy. A very tiny percentage of "super workers" are left - the IT gurus who understand the crappy software that doesn't seem to work for the rest of us, the engineers who service and make Marx's "dead labour" and the people who perform services that cannot be avoided - healthcare and food production. Their labour costs are too small a percentage of total costs to be important.

If you accept this premise (which I do more or less) the future is dependent on consumption which is unsustainable and for which there is no funding source. Thatcher funded consumerism from the north sea oil revenues and from the massive privatisations of the era. It was short sighted and foolish. Blair funded it from the house price boom and the credit boom that began and then bust it. It was short sighted and foolish. Neither Camoron nor Obama have a clue how to continue to fund the ponzi scheme that they inherited. Increasing the money supply and creating inflation may help but it is limited in its scope and is frowned upon by the people that control capitalism. Quantitative Easing is put forward as increasing the money supply but in fact debt is being written off far faster than QE is creating it. QE is simply the ongoing process of transferring taxpayer money to the rich.

Furthermore buying foreign tat needs foreign money. Britain's balance of payments deficit will cripple it for the foreseeable future. Devaluing the pound to make exports cheaper is a foolish policy if one exports nothing. Devaluing one's currency when a country is an importer increases consumer costs - a process now happening in the UK, mistaken for the effects of QE by the religious zealots of monetarism and devotees of Thatcher's smoke and mirrors economic "miracle". (Yes AEP and the Torygraph - that's you) The result is less spending and so a contraction in GDP (70% consumer spending remember) More recession.

I think we are poised for the third phase of capitalism, the industrial revolution if you prefer. I think it will be grim. Soon more people will be retired, unemployed or underemployed than are working. Of those that work few will pay tax (if one takes the view that the public sector do not effectively "pay" tax) or at least tax in any volume. Businesses will continue the relocation to low tax zones and blackmail governments (HSBC are doing it now) into ever smaller tax take. Without the tax how will we pay for the rest? More borrowing is impossible. The system is at breaking point. It will break. Then what? I really cannot imagine.

I've just read your post, twice, and I agree with everything you say and you said it well. I find myself in the same confusion as to the outcome of it all. Yet I have this nagging feeling that when tshtf we will look back on it all and say we should have seen it coming. Sure is frustrating!

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One prediction I've seen is that the costs of medical equipment used in genetic research will soon drop low enough that people will be able to set up labs in their garages and then we will see an explosion of new medicines or products that will enable us to transform our bodies.

Not with Elfin Safety, rampant Greenism, Auntie Terror and GM scares, you won't.

Can you seriously imagine the British government not having heart attacks at the thought of ordinary people building genetically modified organisms in their kitchen (since most of them aren't rich enough to afford a garage)? It will be banned the first time something bad happens, if not before.

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Not with Elfin Safety, rampant Greenism, Auntie Terror and GM scares, you won't.

Can you seriously imagine the British government not having heart attacks at the thought of ordinary people building genetically modified organisms in their kitchen (since most of them aren't rich enough to afford a garage)? It will be banned the first time something bad happens, if not before.

Well these sort of advances are sure to happen somewhere. With the tea party creationists ascendant in America, it will likely be somewhere in Asia.

But its not just in biotech that our guild-like labour system has its drawbacks. All the really talented people in most fields are wasting precious (and probably the most precious) years jumping through institutionalised hoops just to get their careers started. And all their creativity is wasted.

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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