After 25 years of globalisation it should be self-evident to all that rapid technical advances and global competition creates winners and losers in society. I’m very proud to belong to a party committed to speaking up for those who are not benefiting from this brave new world, but even more exciting is the chance we have to be the party which best articulates how Britain can compete and win.
There have been some excellent posts on Lib Dem Voice recently about how the Liberal values of an open multi-cultural society, devolution of power and being pro small enterprise are exactly those that help give the UK a competitive advantage. I would like to hear even more however about the practical things the country is already doing brilliantly in the fields of science, engineering and research & development and how our policies would help press down on the accelerator even faster.
For example:
- How the UK leads the world in developing satellite technologies which underpin the whole infrastructure of the global economy
- How our home grown nano-scale ‘lab-on-a-chip’ devices are simultaneously making huge saving for the NHS and earning billions in exports
- How a UK renaissance in hi-tech manufacturing is made possible by 3D printing technology being developed in UK universities.
Through Liberal Democrat actions in government, protecting science budgets and setting up the catapult centres which are now at the centre of UK industrial policy, I think the party proved that it ‘gets’ the role of the state in the new globalised world, and that’s why I joined the party two years ago.
I hope that we push even further in this direction, supporting policy that seeks to move us from being one of the lowest state investors in science to one of the highest.
I also hope the party can help raise the level of debate generally on this topic. Too often it seems stuck in an attitude of ‘Britain doesn’t make anything anymore’ which is out-dated and simply not reflective of modern Britain. Or otherwise there seems to be an assumption that capitalism means the state should not be involved at all, because governments cannot ‘pick winners’. This is a common Conservative philosophy and shows a terrible lack of imagination on what modern industrial policy is about, enabling and incentivising investment, setting the regulatory framework and actively working to ensure all parts of the economy are serving the needs of the people. Those to me are great liberal values in action.
* Tobie Abel is a software designer and PPC for Richmond Yorks. He joined the party in 2013
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21 Comments
There’s a lot more to globalisation than developing hi-tech. There’s also the issue of inequality and the unaccountable power of the 1% over the other 99%…….
One of the problems, I think, is that there is a strong supposition in this country that being a successful “entrepreneur” means having a pushy, forceful character, the gift of the gab, a willingness to stamp on other to reach the top, and to be driven by greed, so that (as the Tories put it), the main thing you think about when being entrepreneurial is “how much tax would I have to pay when I start making a big profit from this?”.
A consequence of this is the “attitude problem” I find employers often complain to me about – young people in this country often seem to be so stuck-up and narcissistic, unwilling to do what they are told and work patiently through what is really needed to progress, because it has got into their heads that only “losers” are like that. The sort of personality pushed as being essential to being successful these days is close to the opposite of what is actually needed to be successful in many areas, including much of science and engineering.
Just to complete, or more fully state, the argument as I see it:
The bigger the marketplace you are selling into, the more worthwhile it is to invest in R&D and capital infrastructure, and the better the products you can make. So the UK is better than little England or little Scotland; the EU is better still and the global marketplace the best of all to aim for.
Our competitors do this too and we all enjoy the progress that results.
Opposition comes from inefficient industries hoping to keep hold of captive domestic markets. This can be advocates for capital or labour. But it is better for both capital and labour not to resist the inevitable but to try to get ahead of the game and embrace the opportunities.
Thank goodness for Joe Otten telling it like it is. I thought TTIP and the benefits it offers would have got a mention Joe.
I believe the UK’s true investment approach to Manufacturing and Engineering is shown by the significant reduction in investment ratios across the world over many years. I retired after being made redundant in 98 after seeing a career of under investment in manufacturing. The politician’s answer to the demise of major industry has been generally entrepreneurs as new start ups or self employed. A very large number of new start up’s of even 20 people are needed to replace just one major industrial employer of hundreds. Quick profit, short term investment and hedge funds are an anathema to industrial growth over the long term .
See recent comments in the Guardian of pressure on Rolls Royce
http://www.theguardian.com/business/2015/jul/31/rolls-royce-break-up-valueact-capital-stake
and the MTTA statistics on machine tool usage etc
http://www.mta.org.uk/sites/default/files/MTA_BasicFacts_2015.pdf
Regarding 3d printing , I was shown the early attempts by the Universities in the early 90’s. IIf we had been Japan or Germany we would have made major investments to develop these technologies into amajor industtry at the time, not still discussing the University’s contributions today.
I’m fully supportive of the science budget, but I have become concerned in the past when people have wanted science and international aid spending to meet GDP targets, but not the defence one. Now we are meeting the Nato defence target I am happier with the others.
In some areas globalisation is going backwards. There are language revivalism movements across the world with people trying to promote their own local language more rather than learning one that will connect millions more people. I think some of this is inherently protectionist and not the way for smaller communities to go.
Regards
Globalisation is inevitable and I welcome TTIP and TISA if they are going to smash tariffs, allow public services to be globally traded privately, and regulatory harmonisation is generally a good thing.
I would hope though that TTIP is on an equal footing. I do not like the idea of nationalism full stop, and I would hope that TTIP will see the end of “Buy America”, just as much as NHS procurement can be done globally now. Protectionism is unacceptable in the global marketplace, and we should not give socialists and nationalists any time over this.
David Raw
In Kampuchea the rich were slaughtered. Today Cambodia has taken a different path.Vietnam adopted Doi Moi and the Burmese no longer travel the road to socialism . A road that took them to absolute poverty.
Eddie
So bad one lah?
The official language of the Asean Economic Community is English I am pleased to inform you. In China English is the second language with millions learning it.
Trans-Pacific free trade deal agreed
http://www.bbc.com/news/business-34444799
“I think the party proved that it ‘gets’ the role of the state in the new globalised world” …
I support the thrust of this article but the above quote is downright wrong. Much of the party doesn’t get it although Vince Cable (not the same thing) largely did and hence did some good work at BISS.
For instance Joe Otten (speaking, I think, for a vocal minority) makes the case that globalisation is all about economies of scale and that bigger firms can invest more in R&D. He also dismisses opposition as coming from industries trying to protect captive domestic markets.
Globalisation is indeed partly about economies of scale but a lot of other things besides – for example regulatory arbitrage.
As far as the advantages he cites go, in theory what he says could be true. In practice real life is far more complex than Econ 101 textbooks and they never operate in isolation from other factors. For Joe to sustain his case he would have to demonstrate that they are necessarily true, that companies enjoying economies of scale invariably choose to invest their profits in Good Things like R&D and never in Bad Things like excessive pay for directors, a fleet of executive jets, or buying political influence to capture their markets and secure them against competitive pressure.
The end point for companies exploiting economies of scale is that a handful of winners eventually dominates the global scene. They can then play one country off against another until regulatory and legislative capture is complete and they serve the interests of a tiny elite at the expense of the many.
So, if Joe can’t demonstrate all those things (and the daily news flow says he can’t) then he makes himself an apologist for unaccountable corporate power and the captured markets that result. Is that really what he intends?
I remember a reading some sobering academic work done in the early 1990s. The researchers were interested in how Thatcherism has impacted the efficiency of British industry with an initial assumption that it must have improved, partly because of the many ‘supply side’ reforms made by Thatcher and partly because so many less efficient firms has folded. (Younger readers might not know that a huge amount of UK manufacturing – 25% from memory – had collapsed in the first two years of so of the Thatcher government because of her monetary policy.)
They found productivity had indeed improved but with a big dispersion. When they looked closer they found a bimodal distribution – a sub-population of very efficient firms and another of unimproved firms. The difference was ownership. British owned firms were unimproved. all the statistical gain in productivity was from foreign-owned ones even when they employed British managers to the very top suggesting it wasn’t about people.
The authors didn’t suggest a reason but I will. I think it’s because the UK ‘system’ – laws, institutions, culture, etc. – has for many years been to treat companies primarily as gaming chips for the City to make money out of. I’m sure everyone in the City would deny this but the Rolls Royce story linked by ChrisJSmart above suggests it remains the case.
If this is right we need a sea change in our approach, tinkering around the edges will never work. After all, it hasn’t so far so why would anyone think that would change?
Gordon
you’re quoting British companies as they existed 30 years ago, and a report written 20 years ago. Most companies currently operating and generating the jobs and knowledge we want in this country are owned by venture capital from around the globe, and are never quoted on an exchange in the city or elsewhere.
Gordon, thanks for your comments.
I was trying to make a broader point than economies of scale. Some products wouldn’t exist at all without there being a big enough market to sell into, or might, say, only exist in the USA. Niche products and services might exist on small volumes but be traded all over the world. A lot of medical technology is very niche, and the choice is between saving lives all over the world, or not at all.
And it isn’t just about capital. The return on skills is also enhanced in the same way.
The point you go on to make is misplaced. Clearly some global companies invest heavily in R&D – Toyota, Samsung, Apple,… but this is not really central to the point you are making. You are demanding I prove that globalisation forces better behaviour from companies than the behaviour they would exhibit if left within protected domestic markets. I have made no such claim yet. The point I made stands good irrespective of whether they are any more inclined to invest rather than cream off profits for exec perks.
But I do now make the claim you are demanding of me. Those companies that don’t invest lose market to those that do. American car producers for example have been falling behind Asian manufacturers (and Volkswagen, ha ha) for years. In protected markets they can muddle along being content with bad products and inefficient processes.
You talk about a handful of winners eventually dominating. The power of globalisation of course is that it has broken the dominance of the handfuls of local winners that were giving us all bad service for so long. Might it end up as bad as it was before? Possibly – but I suggest a bigger world creates better opportunities for upstarts.
Unaccountable corporate power? That’s the side you are taking, not me.
And no doubt full of laundered IP maximalist policist, such as SOPA (which the US content lobby couldn’t get through Congress, so turned to sneaking it into a trade deal), software patents, rigid anti-circumvention laws for DRM, disproportionate “damages” for infringement… this is not “free trade”, it’s protectionism for large corporations.
Alex
Only yesterday did I try to use a computer with some fake software on it.In the UK you are unaware of the problems caused. Would you drive a car with fake brakepads on it?
Manfarang: I said nothing about fake software, and I am well aware of the potential dangers (I work in IT), so kindly don’t patronise me. What I did mention was software patents, which is a completely separate issue from counterfeiting and you do yourself no favours when you conflate them.
In case you are unaware, software patents are patents on trivial coding techniques or computer-based business methods, and they are chiefly used by large IT companies and non-producing entities (there is another term for these) to shake down smaller IT businesses or even businesses that merely use IT (which in practice means most businesses these days). In the EU, software patents are officially banned, although the situation in practice is less clear. We must not allow software and business method patents to be smuggled in through the back door of a secretly-negotiated trade deal. (New Zealand recently outlawed software patents, but if it agrees to TPP then it would probably have to legalise them.)
The other things I mentioned (SOPA, DRM, enforcement) have little or nothing to do with counterfeiting either. Without going off on a tangent on any, I shall just mention that the enforcement issue is about proposals for disproportionate penalties for even non-commercial inadvertent infringement.
The European Parliament (including Lib Dem MEPs) previously rejected the so-called Anti-Counterfeiting Trade Agreement (ACTA), not because we approve of counterfeiting, but because ACTA was actually an attempt to launder these sort of extreme IP protection measures which do not benefit the public and do not encourage creativity. The danger with TTIP and other general trade agreements is that some liberals see the words “Free Trade” in big bright letters and this seems to short-circuit their reasoning, so they do not look ‘under the bonnet’ to see if it is genuine. It is, perhaps, easier to launder extreme, protectionist IP law through a general trade agreement than through an “anti-counterfeiting” agreement for this reason.
I’m not saying oppose trade agreements. I am saying look carefully at the details and be prepared to reject the agreement if it is counterfeit.
Joe Otten – Thanks for responding and sorry not to have replied sooner – my Internet has been down all day until just recently.
I think you mistake my meaning. I understand very well the advantages of global scale and the creative destruction that awaits those that don’t invest in R&D. I also agree that there is no place for inefficient firms exploiting captive domestic markets.
My point was that that globalisation for all its advantages as a bigger pool of toothier sharks, that might indeed sort out captive domestic markets in the short run, also sets up a different problem, that the newly dominant global firms can then themselves switch to ‘exploiting captive markets’ mode. Of course they would face challenges but any notion of a captive market must include the idea that artificial barriers to entry are created with political connivance – i.e. crony capitalism rules.
But, if eliminating domestic cronies is tough (and the record is poor), what price sorting out global ones? Once established they are much further from democratic controls, removed from scrutiny by sheer distance, protected by vast wealth, cossetted by international treaties etc. See Alex MacFie’s comment above.
So my concern was that you seemed to be espousing the idea that markets ultimately correct themselves. In fact they don’t. Instead, like my garden, they grow weeds abundantly instead of the flowers I wanted. In a garden the remedy is weeding, in commerce it’s vigilance to ensure the beneficiaries are people, not out-of-control capital.
If I read you wrongly I apologise, but this is fundamental and needs to be clear.
Tobie Abel – Yes, that report was done long ago but I mentioned it because strikes me as remaining hugely relevant. It wasn’t about being quoted on any stock exchange but all forms of ownership including private.
So when you say, “companies currently operating and generating the jobs and knowledge we want in this country are owned by venture capital from around the globe … [added emphasis], that was exactly their point. There are many great ideas coming out of British labs but when it comes to scaling up to global winners there are far too few that remain owned here.
“There are language revivalism movements across the world with people trying to promote their own local language more rather than learning one that will connect millions more people. I think some of this is inherently protectionist and not the way for smaller communities to go.” (Eddie Sammon 5th Oct ’15 – 7:08pm)
“The official language of the Asean Economic Community is English I am pleased to inform you. In China English is the second language with millions learning it.” (Manfarang 6th Oct ’15 – 8:18am)
There is nothing inherently wrong with promoting one language over another and the protection of interests it may represent. In some respects we should be applauding George Osborne’s seemingly successful visit to China and the Anglo-Chinese finance and trade arrangements also being made. Now we only need to ensure that we build strong education links between our countries to promote their use of UK-English over US-English… 🙂