Wednesday, 1 October 2014

The Guardian's Confusion About Manufacturing

I just read this lament in The Guardian about how the UK and the Eurozone are 'suffering' from a steady manufacturing slowdown. Basically, they think it's really bad that our manufacturing industry is declining because it means we must be suffering economically. Alas, their confusion is in failing to see the changing landscape of our economy - we do not manufacture as much in terms of raw materials - what we 'manufacture' more of nowadays is services (anything from litigation to TV programmes) - and they are what contribute greatly to our economic prosperity.

If the weight of economic prosperity really was measured in terms of weight of manufactured goods produced then Newcastle or Leeds would be wealthier than London's city centre, and Detroit would be wealthier than Manhattan. You would also see investors being keener to invest in companies that manufacture goods than in services, but we find that's also not that case.