May’s Industrial Strategy

Sadly it is true that the outlines of thoughts, rather than a fully fledged plan, underpin a change of attitude from the May government towards a more interventionist approach to business. But there is nothing concrete and no evidence that more than small change will be on offer to kick start any programme to re-industrialize what was once the greatest industrial power on earth..

What is needed is this. Our problem is more to do with imports than exports. We have created a consumer economy based on acquisition and renewal of a range of items connected to lifestyle, information technology, entertainment and transport. We also spend a lot on services, including eating out. Our problem is all the hardware is imported. Even with cars, where we make a lot and export most of them, the success is offset by importing over 70% of the cars we actually buy for our own use.

So any industrial strategy has to repatriate the capacity to home produce a much higher percentage of the products consumers buy. This will involve gearing up the skills base of a workforce well behind our competitors and the building and tooling of factories initially to manufacture under licence and later to once again home grow our own ideas. Foreign manufacturers will have to be temped to open production facilities here and home start ups must have access to investment (not borrowing) to get them going. Huge infrastructure renewal has to be put in place now, as well as housing for rent and buy at a price ratio no higher than 3x a single income and 2.5 x joint incomes.

Probably the government would agree with most of this but will shrink from coming up with meaningful cash. However you try to configure the project, it cannot happen without printing at least as much money as has already been printed for the City, £425 billion thus far, to be  pumped into the base of the economy as direct investment without involving loans. You can play around with all the maths you want, argue all the economic theories in modern circulation, pour all the professional scorn you can muster onto an amateur, but believe you me, this is the only route out of an economy driven by house price inflation, shopping and record personal borrowing, yet still, after seven years, fettered by crippling austerity and a chronic inability to balance the books. That is where economic orthodoxy has got us.

Time for something new.