June 27, 2016
Britain Pays the Price for Decades of Economic Failure



To listen to the British Prime Minister and the leaders of the now-failed campaign to keep Britain within the European Union, the British economy is a shining success story. Employment is high, the government budget deficit is low and the growth rate is the strongest of the major economies. To listen to the leaders of the campaign for Britain to leave the EU, the so-called Brexit movement, Britain's multiple woes have all been caused by Britain's membership of the EU: cheap immigrant labour has entered the island under the protection of the EU's free movement laws and has taken jobs away from British nationals, restrictive EU legislation has straitjacketed British society and British industry has somehow been prevented from doing business with the rest of the world, whilst the rest of the EU runs a huge trade surplus with Britain.

Where does the truth lie between these diametrically opposed viewpoints that have so dramatically culminated in the British vote to leave the European Union and the resulting political crisis within Britain. As usual in such polarized arguments, the truth lies somewhere in the middle, but in this case the middle ground may be considerably more unpalatable for all Britons than either extreme.

In tiny Sierra Leone and the rest of West Africa, British industrial presence is more or less non-existent. German and Japanese cars dominate the streets, with a rising presence of China. Japanese and Asian electronics are pervasive. America is strong in computers. Toyota, Nissan, Mercedes, BMW, Sony, Sharp, Samsung are household names. France has the odd Renault and Peugeot, Italy the odd Fiat, Sweden the odd Volvo and Saab. Hewlett-Packard of America dominates printers. Microsoft Windows is a household name. One can not think of a single serious British brand. The problem stretches back decades to the colonial era. Britain dominated the markets of its colonies in Africa, Asia and the Pacific in part perhaps through genuine technical prowess but mainly one suspects because it was the ruling power. Now-obscure names like Austin, Morris, Humber, Garrard, Pye ruled their respective markets. As Britain lost her colonies in the fifties and sixties, one by one these brands fell by the wayside, replaced by stronger non-British competitors. The problem was exacerbated during the Thatcher years of the eighties and nineties. Margaret Thatcher determined to crush combative British labor unions that supported the British opposition Labor party, even if crushing them meant eliminating the heavy industries within which they worked. Thatcher, a right-wing conservative, daughter of a shopkeeper, had little sympathy for government intervention in the marketplace or government support for industrial production. The British were told that manufacturing was passť, superfluous to a developed economy, that low-skilled industrial jobs were the province of the third world and that the future of developed countries was in the service sector. Hundreds of thousands of British industrial jobs were eliminated. Instead of upgrading technical skills and increasing capital equipment investment, as their competitors were doing, the British withdrew from huge manufacturing sectors like steel, vehicles, electronics and electrical appliances. For decades, instead of insisting upon rigorous study of the critical STEM subjects at secondary school, as their counterparts in Asia - Singapore, Japan, South Korea, China - were doing, British educational authorities encouraged alternative ("modern") curricula and soft subjects like gender studies and photography. British exports of hard goods dwindled to insignificance.




The jobs were lost, but the people remained, as did the class structure. Today Britain still has a large working class, but not much of a manufacturing base to employ them. The much-vaunted service sector has proved unequal to the task. The referendum revealed that large swathes of British society, formerly industrial, have become disaffected with the status quo. Prosperous areas like London voted to remain within the EU, whilst poorer, formerly industrial areas outside London voted to leave. Sharp divisions in voting patterns have been revealed between rich and poor, well educated and not-so-well educated, young and old. The fracture threatens to split Britain apart, with Scotland, which voted in favour of remaining within the EU, now exploring possibilities for remaining in the union when the rest of Britain leaves.

Ultimately, the middle ground between the Brexit and Remain campaigns finds serious flaws in both arguments. Yes, Britain has performed poorly compared to its competitors and runs a large trade deficit with the rest of the EU, but this has nothing to do with its EU membership and everything to do with failed leadership and poor economic policies, something the British establishment would be loathe to admit. The "fifth largest economy in the world" with its dominant financial services sector, is a paper tiger, waiting to be blown away by angry EU legislators protecting their single market. It's much easier to put together banks and insurance companies than Mercedes and Toyotas.


There are strong lessons in this for Africa, thousands of miles away. Decades of failed economic policies will eventually threaten the survival of even strong states like Britain. Fledglings in Africa are even more vulnerable. And former colonies need to scrutinize extremely carefully the practices, policies and products of colonial masters (never reluctant to offer them) who may themselves have lost their way.
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