Tuesday, 22 December 2015

Have The Pauperised North Been Architects Of Their Own Downfall?

I saw an article today that claimed that nine of the poorest regions in northern Europe are in the UK. Ignoring a bit of dodgy geography attached to the claim, it is certainly true that many of the northern parts of England that used to rely so richly on industrial manufacturing have failed to keep up with pace of the service industry-based economic growth seen in London and much of the South East.

This article piqued my interest because it has to be said that, if the truth be told, some of the people in the north are in no small way architects of their own downfall. Not wholly, of course, but certainly in part, particularly given that the fundamentalism of the hard economic left is so often so strident and anti-progress. I mean, this current crop of Corbynites are the ones who thought that the socialist Ed Miliband was too right wing, which speaks volumes really.

For those of you who don't know, in terms of left and right economics the UK is a pretty divided place. Since the war, and the Clement Atlee socialist government, Britain had been awash with economic hardship and putrid nationalisation projects that were being choked by overly-powerful unions. This went on until the 1979 Thatcher years, when she and her party upset a lot of people by transforming an economically impotent Britain into one of the world's economic superpowers again. It's true that a lot of this comes from, and remains in, London - but power law distributions make this unsurprising - the whole point is that much of Britain is an economic powerhouse once again, and it's largely thanks to Thatcher's terms in office in allowing the free market to bear the fruits it couldn't under a stultified socialistic system.

The economic left have a different picture, but despite the myths, Thatcher didn't destroy our industry. Manufacturing output was actually higher when she left than when she began - and what the left is missing is that although the industries they are constantly talking about (like coal and steel) declined as a proportion of the aggregate economy, other sectors (like service industries) expanded. To capture the point, next time you’re in London – the country’s economic epicentre – have a walk around and see how many sectors are providing manufactured goods compared with service-based goods.

You might also like to note that the exact same thing happened in all the other prosperous economies too - it's just the way the world was changing, and sadly, too many Brits couldn't bring themselves to change with the economic tide - instead foolishly assenting to callow ideas that placed a premium on Britishness - "British jobs for British workers" and all that xenophobic guff.

When steel and coal industries declined across Europe and America, that declension was offset by huge expansion in service industries, all making those countries richer. The UK miners, led by Arthur Scargill (their megalomaniacal, economically illiterate leader) were perhaps most symptomatic of the prudence of the economic right vs. the foolishness of the economic left. The Thatcher government had a strategy to discontinue unprofitable industries - as it should with its responsibility to its taxpayers - because despite emotional attachments up north, this unprofitability couldn't carry on under the pretext of it being British unprofitability (replace 'British' with 'white men' and see how it sounds a lot like racism)

The reality is that due to the changing landscape, Britain's coal industry had been declining long before Thatcher. In fact, it's quite famously known that more coal pits were closed under Wilson's Labour governments than under the Tory Thatcher's ones. The reason is obvious - but also widespread across other advanced economies - we saw not only the rise of cheaper coal abroad, but also the rise of first oil and then gas and later nuclear as less ecologically unfriendly sources of power. With that comes a decline in industries that relied on coal, in favour of industries that relied on oil and gas.

A few misjudged trade unionists would have preferred to have kept subsidising inefficient and less profitable coal mines (and have the taxpayer pay to prop them up), all in name of Britishness, but as well as sounding a lot like racism to me, it certainly sounds illogical and economically parochial.

Alas, I came to the conclusion that many in the north of England - where the majority of these industrial disputes took place - had been orchestrators of their own plight. Many have spent the last 30 years on unemployment benefits, whinging that 'Thatcher has ruined our industry', and they've never got over it. I don't dispute that it was a hard pill for them to swallow, as jobs were lost, families broken up, communities clubs shattered, and so forth - but equally what holds us together is going to have to be much more than industrial nationalism.

In global economies, climates change all the time - and we humans have to adapt to those changes. So when I hear the north of England say they have been left behind, forgotten and marginalised by the much more prosperous south, I feel compelled to say that, actually, their failure to respond to the changing economic climate, and their preference for wallowing in self-pity is surely a significant factor in the bringing about of their own marginalisation.

That was a bit of hard cop, now for a bit of soft cop. The fact is, economic changes are really hard on societies that are set up to not adjust to a changing climate that easily. But what it emphasises most critically is that having poor adjustability and an over-reliance on one speciality is a problem that can go on to bite the society on the bum. Communities that are not well-equipped to enjoin themselves to diversity are going to get caught out eventually in a global economy that dynamically shifts and changes all the time.

It may surprise you to know that it was once forecasted that economic progress in Manhattan was coming to a close because the island had nearly reached its capacity regarding the horses it could contain. If you’re only focusing on quantitative change your narrow vision only has you looking to see where you can fit more horses; whereas if you’re focusing on qualitative change you look to advance beyond horses to industrial machinery, and eventually from industrial machinery to computers. Here's another example; the Great Irish Famine wasn’t just due to unfortunate infestations in potatoes – it was over-reliance on one single crop that severely added to the plight. Whether it is potatoes for food or horses for transportation, it is important to diversify, because diversity leads to increased qualitative change. That's another reason why you can be sure that our technology will continue to progress - we diversify our skills and our imagination by not having an over-reliance on too narrow a range.

What the UK has seen is that from the earliest periods of the Industrial Revolution talented people and money have been gradually gravitating towards the ever-more prosperous south (in fact, the whole process began in Scotland, where the incipient stages of the England-Scotland union, when passed in an act, was really England giving de facto permission to the wealthy elite of Scotland to move south with their money and join London's political establishment).

So although the north created a great proportion of Britain's wealth during the Industrial Revolution, the steadily increased London investment was soon going to make it the financial epicentre of the UK. I don't have any research to hand, nor am I sure if any exists, but if you measured the number of people in England moving from the north to south versus the number moving south to north, I'll bet the former figure is more than double the latter figure.

Not only are power law distributions concentrating a lot of wealth and growth in regional areas of England that are service industry-rich, it's also bound to be the case that an awful lot of talented people from the north are moving south, making it harder for the north to compete with the success of the south.

Alongside that, the other thing that disadvantages communities built on past manufacturing glories is that large-scale manufacturing countries like China, America, Germany, Japan and the ever-emerging nations like South Korea have much more of the global market share of consumable goods than our own industrial regions, which adds to the weight of the proposition that while it has been a tough culture shock for many of England's northern regions, at the heart of their stasis is a failure to keep up with the market changes in a highly evolving and competitive global economy.