Monday, 14 May 2018

The Strange Yearning For UK Manufacturing

One of the peculiar things about the current political and economic landscape is politicians' preoccupation with the UK manufacturing industry, and how important it apparently is to reconstitute some of our past manufacturing glories. It's true we once had past dominance in the manufacturing industries (along with about a dozen other leading countries), but just because people of past generations have been accustomed to something doesn't mean things should always stay the same.

When making things was the primary way to earn a living, and physical labour and extracting raw materials provided the substrate for big business, it was understandable that people were emotionally wedded to Britain's place in the global manufacturing industry. For most, their living depended on it. But the world has changed a lot.
Nowadays other nations have both the absolute and comparative advantage in manufacturing goods, and we have both the absolute and comparative advantage in providing services. IT, design, marketing, consultation, financial, legal, real estate, health care and advertising are huge industrial job creators, as are restaurants, hotels, bars and holiday services. These are based more on technical and financial assistance, leisure, entertainment, health and well-being than on physical labour and making things with raw materials.

Manufacturing things simply isn’t the source of high value, high wages or big profits like it was in the past. In fact, the UK is made better off when we have a manufacturing trade deficit with countries than can produce goods cheaper and more efficiently than we can.
Not only is it an oddity how politicians hanker for manufacturing, and galvanise people into believing that that is what they should be shouting for; it is equally odd how so many people don't understand that when other countries have the manufacturing advantage over us in terms of cheapness, quality and efficiency, it is a good thing that we buy our stuff from them, and not produce it ourselves.