Made in Britain by Evan Davis. (Little, Brown, 2011) [ED is an economics reporter.)
A thought provoking read about how all economies change over time, but does not consider ethics or fairness, nor availability of raw materials to sustain our lifestyle in other countries.
ED uses Sunderland as an illustration of how the UK economy has changed over time. At one time, Sunderland was a great manufacturing centre, the biggest ship building city in the world. Then ship-building went off-shore for lower labour costs and by the 1980's it had gone. And the local glass industry and coal mines, both around for hundreds of years, shrank and then closed. Then the very painful transition between old industries dying, followed by a gap before new industries arrive.
The result was a chain reaction of economic and social decline. Crime rose, housing estates fell into disrepair and decent people tried to escape. family life often broke down. The city lost its sense of identity and civic pride, and local morale came to depend on the performance of the local football team.
Then in 1986, Nissan opened a new car factory at nearby Washington, the biggest in Britain. New service industries also started up: call/contact centres (email as well as phones). City developers built a business park. City centre rejuvenated, university a huge presence. Attached to university is the National Glass Centre (though this struggles to get visitor numbers it needs). New football stadium 1997. But things are still a struggle. People don't feel city can survive on services alone. Service sector jobs lower wages than previous mining and manufacturing jobs.
Countries buy and sell manufactured goods, intellectual property and services, and need all three to flourish. Not everyone is suited to service work, nor able to work very productively in knowledge sectors. An efficient manufacturing sector could employ about 20% of the working population. Good manufacturing is built on intellectual property foundations, which usually requires some physical aspect. A strong service economy needs flourishing companies trading internationally.
UK has 1% of world's population (or 5% of developed world's population) but has 2 out of top 10 largest pharmaceutical companies, 9% share of global defence market, 17% share of global aerospace market and renowned banking and insurance industries.
Strikes (1970s) and banking crises and recession (2000) had long term effects. In 2011, still a need to re-balance economy away from dependence on financial services and to export more. There is a link between business activity and national identity; a focus for trade fairs.
Treasury and Bank of England fiscal and monetary policies can have enormous effect on employment levels and incomes, but they can only really entice us to save more and borrow less if spending is too high. The short term story seems more newsworthy but the long term view shows enduring trends.
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