arthur
Very well known Exeweb poster
- Joined
- Aug 18, 2004
- Messages
- 11,819
An interesting explanation here of the roots and causes of the UK's poor economic performance and the low investment/low productivity spiral that still endures. Somehow we never got to grips with modern capitalism because we didn't need to, as cheap imports from the Empire were all we needed to maintain a competitive edge. Mediocrity was maintained via a pact between mediocre managers and mediocre trades unions which ensured nothing much changed. "I'm alright Jack" was indeed a documentary rather than a work of fiction... As the rotten system was crumbling, Thatcher pushed it over and finished off. Neither she, nor anyone since, has replaced it with anything remotely sustainable.
Alistair will,no doubt, dismiss this as meaningless waffle, while at the same time promising to respond with alternative proposals and analysis. A promise, given his track record, he will be in no hurry to keep
Labour leader Ramsay MacDonald and his chancellor, Philip Snowden, in power in the summer of 1931, had no doubts. The party’s mission was to return capitalism to its 19th-century glories by following the tried and tested policies of laissez-faire, only this time determined to ensure that, when recovery was established, the working class gradually got a much fairer share of the spoils. There was to be no fundamental reshaping of the economy.
At the Ottawa Imperial Economic Conference in 1932, an imperial preference system was launched. Britain set an average import tariff of 14.7% on all manufactured goods, with concessions for imports from the empire, which limited imports dramatically and lifted profits spectacularly. The system lasted until we joined the Common Market in the early 1970s, with the late, distinguished economic historian Prof Nicholas Crafts calculating the average tariff on manufacturing imports was still 14.5% in 1960, and only fell slightly over the next decade. Baby boomers grew up in the long shadow of empire.
Add to this tariff wall the adoption of Keynesian economics, with the government stimulating demand, and great prosperity ensued: unemployment averaged 2% in the 1950s. Sales of cars, TVs and white goods flourished. Profits were more than twice those in Germany, according to Crafts. But that led to a cluster of problems. British firms, accustomed to few overseas competitors penetrating the tariff wall, had gone on a rampage of price-fixing agreements to keep profits high. Overseas producers found they could undercut these rigged prices and still be very profitable; imports steadily rose.
Britain’s more than 1,000 trade unions could organise closed shops, abandon wage agreements at will and protect outmoded working practices without challenge: firms were so profitable they could live with the results. Shareholders were disengaged and greedy for high dividends, which firms could easily afford to pay. Banks did not have to lend to business: it could finance itself. Empire had conferred an easy option, but a rotten economic structure that generated low investment, inflation and low productivity.
www.theguardian.com
Alistair will,no doubt, dismiss this as meaningless waffle, while at the same time promising to respond with alternative proposals and analysis. A promise, given his track record, he will be in no hurry to keep
Labour leader Ramsay MacDonald and his chancellor, Philip Snowden, in power in the summer of 1931, had no doubts. The party’s mission was to return capitalism to its 19th-century glories by following the tried and tested policies of laissez-faire, only this time determined to ensure that, when recovery was established, the working class gradually got a much fairer share of the spoils. There was to be no fundamental reshaping of the economy.
At the Ottawa Imperial Economic Conference in 1932, an imperial preference system was launched. Britain set an average import tariff of 14.7% on all manufactured goods, with concessions for imports from the empire, which limited imports dramatically and lifted profits spectacularly. The system lasted until we joined the Common Market in the early 1970s, with the late, distinguished economic historian Prof Nicholas Crafts calculating the average tariff on manufacturing imports was still 14.5% in 1960, and only fell slightly over the next decade. Baby boomers grew up in the long shadow of empire.
Add to this tariff wall the adoption of Keynesian economics, with the government stimulating demand, and great prosperity ensued: unemployment averaged 2% in the 1950s. Sales of cars, TVs and white goods flourished. Profits were more than twice those in Germany, according to Crafts. But that led to a cluster of problems. British firms, accustomed to few overseas competitors penetrating the tariff wall, had gone on a rampage of price-fixing agreements to keep profits high. Overseas producers found they could undercut these rigged prices and still be very profitable; imports steadily rose.
Britain’s more than 1,000 trade unions could organise closed shops, abandon wage agreements at will and protect outmoded working practices without challenge: firms were so profitable they could live with the results. Shareholders were disengaged and greedy for high dividends, which firms could easily afford to pay. Banks did not have to lend to business: it could finance itself. Empire had conferred an easy option, but a rotten economic structure that generated low investment, inflation and low productivity.
Britain was wise to cleave to Europe as the empire began to disintegrate. It’s time to do it again | Will Hutton
Ideas of exceptionalism and ‘laissez-faire’ policies are still driving economic myths that should be stone dead
www.theguardian.com
