Nationalist economics bulletin, week of November 21, 2005

1. Gordon Brown continues to draw criticism for his mishandling of
our economy into recession. Even the Governor of the Bank of England
has gotten into the act, something that would simply not have been
done, only a few years ago:

http://news.scotsman.com/index.cfm?id=2253192005

2. The Bank of England, however, has itself come under astonishingly
caustic attack from a major economics consulting firm. Might this be
payback by allies of Mr. Brown? The establishment is dissolving into
squabbles over the blame as our economy slides.

http://www.thebusinessonline.com/Stories.aspx?Astonishing%20attack%
20on%20Bank%20of%20England%20:%20%E2%80%98Incompetent,%20sloppy%20and%
20suffering%20from%20mental%20paralysis%E2%80%99&StoryID=299CBA47-
6F39-4904-828C-E965ADD4A571&SectionID=F3B76EF0-7991-4389-B72E-
D07EB5AA1CEE

3. One worrying sign of economic trouble is that insolvencies are at
record levels:

http://www.bloomberg.com/apps/news?
pid=10000102&sid=aWY.NqHjwgpw&refer=uk

4. The brazenness of the establishment, in demanding more cheap
foreign labour, at any cost to British workers, beggars the
imagination. The latest waves of idiocy comes from a commission set
up by the Royal Society for the encouragement of Arts, Manufactures
and Commerce (RSA). Despite the fact that Britain is suffering a
record influx of foreign labour, it feels the key problem is that we
need more! But the choiciest non-sequitur of the report has to be
this idea (in the words of the article):

`Low-skilled workers are key to the high skills UK economy'
So we're somehow going to get a high skills economy by importing
people with low skills!

http://www.epolitix.com/EN/News/200511/53d866ed-6dd6-46d0-862c-
ce15971c048f.htm

5. The Blair regime continues to believe in free trade, despite
Britain's record trade deficit, which kills jobs, hollows out our
industrial base, and puts us into debt to foreigners. Unfortunately
for free traders, the world is growing increasingly skeptical of new
trade agreements, as shown by the difficulties encountered at
international trade talks:

http://today.reuters.co.uk/news/newsArticle.aspx?
type=worldNews&storyID=2005-11-07T120827Z_01_WRI684261_RTRUKOC_0_UK-
TRADE-TALKS.xml&archived=False

6. One of the sad features of New Labour is that it has given up on
one of the things that was actually worth something in Old Labour:
the realization that excessive economic inequality is a bad thing –
even if Old Labour did attack the problem with socialist methods that
were doomed to fail. As these articles observe, Britain continues to
be afflicted with excessive inequality. Given that many nations, like
Germany, that have less inequality than we do, are often more
prosperous than we are, it is hard to credit the Tory argument that
inequality is the price of prosperity.

http://www.abcmoney.co.uk/news/0420051269.htm

http://www.taipeitimes.com/News/editorials/archives/2005/11/05/2003278
874

7. One big reason Germany has less inequality than we do, is that
Germany has a more solid industrial economy, and thus a better-paid
working class. One of the biggest myths holding the British economy
back is that we can – even must – forget about manufacturing, and
stake our future prosperity on service industries. But the empirical
evidence from other nations is fairly clear that not only is
manufacturing not a dying part of the economy in the developed world,
it is in fact one of the best economic sectors for a nation to have a
strong presence in, because of its ability to produce sustainable
well-paid jobs for ordinary workers, in which it significantly
surpasses the service economy.

This isn't true for all manufacturing. It's true for advanced, that
is high-tech, manufacturing. Most of what you've heard about the
obsolescence of manufacturing is indeed true, if you're talking about
primitive forms of it. If you're talking about the stamping out of
plastic toys and similar items, it is indeed true that this is,
today, an intrinsically low-paying industry, because it can be
performed by illiterate peasants in Shanghai, and therefore anyone
else performing it is in competition with such low-paid workers.
But it is an entirely different story for the manufacture of things
like computer chips, aeroplane parts, and medical devices. Companies
can't do this with illiterate peasant labour. This is why it tends to
get done, even today, with highly-skilled and well-paid labour, in
places likes Bavaria, California, and Kyushu (Japan).

Below is a partial list of advanced manufacturing industries, to make
clear how vast the opportunities are:

1. Flat-panel displays for laptops, TVs and other devices.

2. Steel-alloy pipes for transporting oil, which sound primitive but
are in fact very sophisticated due to the subtle corrosion-resistant
alloys involved and the difficulty of making them in the large sizes
that require the least final assembly.

3. Synthetic fibers. Although sewing clothes is low-tech, turning a
barrel of crude oil into convincing synthetic silk is not.

4. Photolithographic steppers, the machines used to turn the designs
of silicon chips into actual chips.

5. Bearings, ball and otherwise, are a classic seemingly old and dull
product that has quietly adapted with the times to become frequently
very high-tech.

6. Electric power generators, which are unseen but expensive and
ubiquitous.

7. Capacitors, and other obscure but important electronic components.

8. Textile-making machinery like ultra-fast modern looms.

9. Laser diodes, which make CD players work.

10. Nickel hydride batteries, the tiny high-quality ones that are
vital for cell phones, camcorders, etc.

11. Robotics, an industry that is not only valuable in itself, but
buttresses other manufacturing industries by making readily available
the know-how to automate production of other things.

12. Cameras, both conventional and digital, still and motion.

13. Machine tools, which are, of course, the ultimate key to making
other manufactured goods.

14. Avionics and aeroplane parts.

15. Watch movements.

16. Ship engines. How do you think all those imports get here?

17. Photocopiers, especially their key electro-optical components.

18. Carbon fiber, an emerging material that is replacing metals in
key applications.

19. Construction equipment, which is often a lot more sophisticated
than it looks.

21. Medical devices.

22. Equipment for nuclear power plants.

23. High-tech weaponry, including counter-terrorist equipment like
bomb sniffers.

24. Green power devices, like fuel cells and the generators, control
units, towers and blades of windmills.

25. Pollution control equipment, like sulfur dioxide scrubbers, and
pollution detection devices.

Note that much advanced manufacturing involves products – fibers,
pipes, bulldozers – that one would not think of as advanced, but are
in fact more subtly made than one imagines. Advanced manufacturing
often centers on the key components of products rather than the
products themselves. Many consumer products, for example, consist of
technically-advanced components surrounded by a commonplace plastic
package that is easy to make. The outside of a fax machine, for
example, will say `made in China', simply because final assembly was
done there, with unskilled labour. But the bit that really matters –
and accounts for most of the cost, and wages paid – is the electro-
optical read-write head. This is a sophisticated piece of equipment,
made by highly-trained and well-paid labour in some developed
country, like Japan.

Enthusiasts of the post-industrial economy are simply not honest
about its drawbacks:

1. Jobs in computer software, finance, management consulting, and
similar fields may be highly paid, but it usually takes a college
degree to get one. Most of the British work force lacks a college
degree; a large percentage of college-age Britons are not ever going
to get one. Without alternatives to the information economy, many of
these people are doomed to a low standard of living for their entire
lives. By comparison, advanced manufacturing reliably creates a wide
spectrum of jobs at all skill levels, and is particularly rich in the
crucial category of the skilled blue-collar jobs that ordinary
working-class people have a plausible chance of holding.

2. The information economy is intrinsically limited in terms of how
many good jobs it can create, because it is limited in how large a
portion of our economy it can be, for the simple reason that
information is only a limited part of the value chain that makes up
any product. The value of a programmer who creates a website to sell
DVD players is necessarily limited to some fraction of the value-
added of retailing the product, which is only a small part of its
overall value. This value is made up of researching, designing,
manufacturing, distributing, marketing, wholesaling, retailing and
servicing it. If we cede the manufacturing link of the value chain to
foreigners, this means ceding a large piece of potential economic
activity and the jobs and wealth that flow to whomever performs that
activity. And Britain is limited in what share of the world market
for internationally-traded services we can win.

3. Jobs in the information economy are more vulnerable to foreign
competition than people realize. For example, the current strength of
the City of London is vulnerable to the growth in sophistication of
the financial sectors of other nations. It is also vulnerable, even
if the top jobs stay in London, to `hollowing out' as the `back
office' jobs get relocated to India and other places where clerical
workers are cheaper.

There is an emerging hierarchy in the world economy in which the best-
paid jobs are clustered in certain nations. If Britain wants to be a
sustainably prosperous nation with well-paid workers, we must
explicitly compete for these jobs. This cannot possibly be a matter
of laissez-faire indifference in any sane society. It cannot be
repeated often enough that the free market has no loyalty to this
country, and does not care if we thrive or starve. One must respect
the genuine insights of free-market thinking, and the value of
productive entrepreneurs, but always remember the market is a game
the nation must play to win, not a revealed truth to be passively
submitted to in the naοve expectation that all is for the best.

(The list of industries above is derived from Eamonn Fingleton's In
Praise of Hard Industries, an outstanding, and very readable, book on
this topic).

----------------------------------------------------------------------

Copyright 2005 British National Party. http://www.bnp.org.uk

A summary of the BNP's main economic policies may be found here:

http://www.bnp.org.uk/candidates2005/manifesto/manf9.htm

Past BNP Nationalist Economics Bulletins may be found here:

http://www.bnp.org.uk/bulletins/econmaster.php