By Michael Kitson, Cambridge University Senior Lecturer in global macroeconomics, Assistant Director of the Centre for Business Research.
The manufacturing sector has suffered benign neglect from governments of all persuasions from the 1960s and particularly from the 1980s onwards. The manufacturing sector has been allowed to decline based on the argument that markets know best and that the economy can be built on services. Manufacturing has been left to decline, whereas in the USA and Germany it has been supported. For some, the “invisible hand” of the market, will solve all economic problems – a phrase used only once by Adam Smith in “The Wealth of Nations”. Markets rely on help from government to help them work more efficiently and become more effective – the role of the State is to support markets. If we just rely on ‘market forces’, the result is an unbalanced and weak economy.
In the UK, there are sectoral imbalances: we have seen a focus on the financial services and the relative decline of manufacturing.
Look, manufacturing as a percentage of the UK economy is almost dead on manufacturing as a percentage of OECD economies. It\’s actually higher than the portion in France.
Manufacturing is falling, has been falling for decades, as a portion of the global economy. Manufacturing has been falling as a percentage of the German and US economies for decades too.
This whingeing is about as useful as complaining that agriculture has gone from 80% to 2% of most modern economies. It\’s just being gargantuanly ignorant of the fact that there\’s only so many things we want that we can drop on our feet before we would prefer to have services to consume rather than more things.
ASnd if the people at Cambridge are teaching this tossery then it\’s no wonder we\’re fucked, is it?