Wednesday, 4 November 2009

Fall of an Empire

Although its about Formula 1, this report shows in no uncertain terms what a tough time Japan and other established manufacturing economies are having against the emerging world.

India and China is where all the money is going at the moment, which begs the question, why the hell are we still giving foreign aid to India? Its a nation that has its own space programme FFS!

At some point in time, our economic model, based on financial transactions will go the same way. In this digital age financial transactions can be done anywhere and if manufacturing with all its associated infrastructure can be relocated, so can virtual industries. Just what does the UK have to replace it? Is there a plan B? The more I think about the detail of this global financial realignment, the more I'm convinced there won't be a happy outcome.

I'm glad that the blogosphere's condemnation of Gordon Brown's "The UK is best placed to weather the financial storm" remarks have so shown to be accurate. I'm sure that the other prognostications such as hyperinflation, massive job losses and a double-dip recession will come to pass as well. After all, the next government has an tricky task ahead, attempting to reverse the huge government overspend while keeping the economy from plummeting. Good luck to them, because I can't see a way of walking that tightrope successfully.

4 comments:

  1. I blogged with similar thoughts a while ago. I'm really worried about where on earth the jobs the economy (and the people) needs.

    After the last recession, it was the financial services sector that provided most of the new jobs. That's clearly not an option this time, so which new sector is going to come to our rescue now?

    And the first person to say "green jobs" gets a punch in the face!

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  2. I agree. In the 80s and 90s we had I.T. and the financial sectors to drive the economy, then I.T. started to get outsourced to India and rates crashed, so that employment golden child went south. Now we've had financials take a tumble, as you say, there isn't anything around that can remotely generate the wealth required to keep the country solvent.

    Green Jobs? I doubt we could run an economy on them. Look at the government's lack of interest when the Vestas Wind Turbine factory on the Isle of Wight closed. It seems green jobs aren't a priority then.

    Nor will they be, as every forward-thinking country has already stolen a march on us.

    The more I think about it, the more my head hurts. The future seems dark and drastic.

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  3. I can't understand why this issue isn't discussed more often. We can't have an economy based mainly of services - there has to be some real production, some value added to private sector business.

    I'd forgotten about IT outsourcing. IT was part of my background, and I've yet to see a case where outsourcing genuinely brought benefits. It usually means more restricted levels of service at a high price.

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  4. I've said for a long time that having a completely service-based economy is a mistake.
    Financials can move abroad overnight and its only the lack of regulation (the thing that has screwed the globe up) that keeps the finance houses here. The same goes for all the call centres and retail parks that make up the service economy too. They are non-jobs that can't exist long-term without some sound foundation like manufacturing.

    Without anything new and wonderful to drag us out of the mire, we have to rely on financial piracy to generate revenue as usual, which is why we're pouring billions into banking.

    My concern about that is no longer are just bank shareholders exposed, the whole country is now exposed to any problems in the financial markets, to an extraordinary degree.

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