Mr Chakrabortty the historian on economics

Well, first, any semblance of a strong local economy must be killed. Blame whoever you like for the demise of manufacturing – dopey bosses not checking their rearviews for the foreign competition, the three recessions of Thatcher and Major, New Labour writing off industry to chase the mirage of a “knowledge economy” – the outcome has been a manmade disaster.

But the thing is we’ve not actually had a demise of manufacturing.

manufacturing_graph_550p

What we have had is a demise of manufacturing employment: which is a terribly different thing. It’s also something that has happened globally. Yes, even with China, there are now fewer manufacturing workers than there used to be. Because productivity in manufacturing has risen, is rising and is going to keep doing so. Automation doncha’no’.

The Guardian’s senior economics commentator

It’s a fairly large problem for the paper that its senior economic commentator is simply ignorant of recent economic history, isn’t it?

Especially what with him actually being an historian.

45 comments on “Mr Chakrabortty the historian on economics

  1. Hmm, strange that there’s no mention of the trades unions and British Leyland Monday morning and Friday afternoon cars (and, I suppose, the ones built in between as well) that fell apart because of their appalling build quality.

    Or the miners who made coal so expensive, it was cheaper to buy it from abroad.

    If they could, thses people would bring back the serfs, the horse and plough and the forelock tuggers.

  2. You’re far too kind, John.

    “If they could, thses people would bring back the serfs, the horse and plough and the forelock tuggers.”

    They want to bring back the camps, the showers, and the ovens.

  3. And the more they scream about and raise National Minimum Wages and and look for even higher Living Wages* the faster the transfer of work from human to robot.

    *As Tim says NMW but without paying taxes but they still don’t get that one.

  4. I think the disconnect comes from the concept of ‘value’ vs ‘physical size’. If I produce large metal industrial looking thingummies, of fairly low value, with a large workforce, in Lefty Land thats far superior to producing small high tech pieces of engineering worth ten times as much with a couple of highly skilled engineers. The whole value in the process (in their eyes) is the amount of labour involved, not the value to the end customer. Ergo because the mass employment manufacturing industries have gone, manufacturing itself has gone, despite the remainder being pretty successful on a global scale.

  5. “Well, first, any semblance of a strong local economy must be killed.”

    Many a true word taken as jest.

  6. “It’s a fairly large problem for the paper that its senior economic commentator is simply ignorant of recent economic history, isn’t it?”

    No.
    For the Guardian it isn’t a bug its a feature,

    If their writers knew anything how could they say what their owner wants?

  7. Jim>

    Chakraborty and the rest of the Guardian mob aren’t stupid, they’re malevolent. They do indeed remember their history, which teaches them that the kind of murderous dictatorship they’d like to bring into being is only possible to create on the back of terrible economic hardship. All their policies are aimed in that direction, hence the repeated attempts to destroy the economy and impoverish the poor even further.

  8. Wow has n’t the post Thatcher liberated private sector delivered with its high house prices/low wage economy?

  9. Um, he spent 5 years as economic producer for the BBC, but is utterly ignorant of the UK manufacturing industry.
    Yep, I can quite easily believe that.

  10. The idea of bullying firms into hiring local contractors to do local would be fine – *except* that it is illegal under EU legislation.
    @Tim – why haven’t you picked that up?
    Mr Chakrabortty’s ignorance goes beyond economic history: he celebrates the alleged inventor of the “infrared fire bar” which I suspect would have been pretty dangerous as no-one could see it; claims “Enfield designed and made the Lee rifle and Bren gun” – no it did not design the Bren gun: it just reduced the manufacturing quality of the Czech Brno gun; and states Eastern Enfield is also handicapped by “some of the worst public transport links anywhere in north London, with no tube and only two trains from some stations into the city every hour” – reality check: Edmonton Green has EIGHT trains per hour in rush hour – “Graduate Antony Blacker can tell you what that’s cost him: he was rejected from a post in the borough next door, Barnet, because it wasn’t practical for him to commute by bus.” Firstly there are more than a dozen bus routes serving Enfield, at least two of which go to Barnet Church and High Barnet Station – difficult to see how commuting to Barnet was impractical unless *changing buses* was too difficult for a graduate. Secondly has Mr Chakrabortty heard of the bicycle? At a pinch I could walk it and one continually sees guys running further than that into work every day.

  11. The idea of bullying firms into hiring local contractors to do local work would be fine – *except* that it is illegal under EU legislation.
    @Tim – why haven’t you picked that up?
    Mr Chakrabortty’s ignorance goes beyond economic history: he celebrates the alleged inventor of the “infrared fire bar” which I suspect would have been pretty dangerous as no-one could see it; claims “Enfield designed and made the Lee rifle and Bren gun” – no it did not design the Bren gun: it just reduced the manufacturing quality of the Czech Brno gun; and states Eastern Enfield is also handicapped by “some of the worst public transport links anywhere in north London, with no tube and only two trains from some stations into the city every hour” – reality check: Edmonton Green has EIGHT trains per hour in rush hour – “Graduate Antony Blacker can tell you what that’s cost him: he was rejected from a post in the borough next door, Barnet, because it wasn’t practical for him to commute by bus.” Firstly there are more than a dozen bus routes serving Enfield, at least two of which go to Barnet Church and High Barnet Station – difficult to see how commuting to Barnet was impractical unless *changing buses* was too difficult for a graduate. Secondly has Mr Chakrabortty heard of the bicycle? At a pinch I could walk it and one continually sees guys running further than that into work every day.

  12. @ DBC Reed
    Sure it’s post-Thatcher.
    Under Thatcher median real wages rose faster than under any Labour government in the past forty years and houses were affordable as demonstrated by the quantum leap in the number of home-owners during her premiership.
    However under New Labour in the post-Thatcher era manufacturing employment dropped by one-third in 13 years and house prices more-than-doubled.
    The Iraq War was post-Thatcher and Edward Snowden and Putin’s attack on gays, and the floods caused by a change in Environment agency policy in 2005 and …

  13. @john77
    I’ll give him the difficult to commute from Edmonton Green to Barnet by public transport. I always used a car. But it’s always been difficult to commute from Edmonton Green to Barnet. There’s any number of point pairs in Outer London it’s difficult to commute between. How much railway track would need to be built so it wasn’t?

  14. You have to remember that lefty intellectuals aren’t happy unless all the proles are turning wrenches in places like The People’s Grand and Glorious Tractor Factory #7. They don’t care about the output, they care about the input.

    Anything else is simply a cramp in their worldview.

  15. So we can all agree that there has been a catastrophic fall in industrial employment numbers jolly good. What we cannot seem to fathom is how to replace these jobs, or even rejoice in the fact they are not, to judge by some of the more frothy mouthed comments.

    So Tim you advocate an economy based on consumption without anyone being able to afford to consume. You’re an even bigger nutter than that prize poltroon

  16. @ bis
    Yes, difficult (or, probably, depending on where in Barnet he wanted to go): there’s a myriad of examples of neighbouring towns between which it is *difficult* to commute by bus. That’s not quite the same as *impractical*. A few years ago the garage which had sold me a car and was supposed to service it closed down and I was allocated to another in a fair-sized town ten miles away: I looked up bus times and concluded that the quickest and surest way to get home after leaving the car and back there to collect the car was on foot – which I did. However no 2 son has more persistence and/or patience than I so when he was doing a one-year course at a Higher Education College there he commuted by bus taking well over an hour each way even when the bus ran on time.

  17. @ bill40
    “how to replace these jobs”
    Abolish NMW and reduce marginal tax rates on those eligible for tax credits. [Alternatively copy Kuwait and Alaska with a citizens’ income and have a flat lowish tax rate on all income below £1m pa].
    Fathomed in one second – typing takes longer than thinking.

  18. bill40: so when 80% of the population stopped being peasants that was a disaster was it? You see, it sort of becomes difficult to produce if no one can afford to consume which is then reflected in prices on the market. no need for intervention

  19. Jim has it right.

    This fallacy is a cousin of the “postgrowth” folk (“growth must be abolished as we do not have enough raw materials to sustain it”). The distinction between quantity of physical stuff and value is lost.

    The idea that only physical production is somehow economically “real”, that services are somehow not (“we can’t all just be window cleaners and estate agents”), underlies this fear about reduced industrial employment. But it’s actually a similarly flawed logic to the old économistes or physiocrats who lauded agriculture over industry – without food we’d starve, manufactured goods are a mere frippery in comparison. And yet we eat very well with only a tiny fraction of the workforce engaged in agriculture.

  20. @john77
    He’s really complaining, London’s transport system is preferentially radial, outside the Circle Line. For rather obvious reasons. I’m now trying think of a city I’ve lived in that isn’t. For the same reasons. The majority of people wish to commute in & out of the core. Best I can come up with is Paris. Maybe his friend should learn French.

  21. @ bis
    “He’s really complaining, London’s transport system is preferentially radial, outside the Circle Line”
    OK – can’t dispute that. Bus routes were aligned to where enough people wanted to travel to justify the costs of a bus driver and hay for the horse (bureaucracy has limited any change in bus routes since the invention of the motor).
    “Maybe his friend should learn French.” Or patience, which my son possesses but I lack.
    It isn’t just London’s transport system that is radial – look at the British national rail network. On another occasion when some “person” damaged my wife’s car I had to travel 8+ miles in the opposite direction to collect a substitute vehicle, which was also quicker on foot because the rail connections were lousy. I don’t remember the details – I don’t need to because the mere fact that a 60+-year-old can jog there quicker than public transport can take him demonstrates there is a yawning hole in the “public service” claim.

  22. @ DBC

    “Wow has n’t the post Thatcher liberated private sector delivered with its high house prices/low wage economy?”

    Is there a tautology there? Are wages low? Or are they low relative to house prices and fine relative to everything else? Apart from houses and energy (both victims of scarcity, and both coming from highly regulated sources) is anything else more expensive that it was when Thatcher arrived?

    Can we blame the private sector for high house prices? The financial sector is part of the problem, for sure, but they’re ably partnered by government (especially the last two).

    If Average Joe struggles to consume what he’d like to consume with his average wage, just how much of that is Thatcher’s fault?

  23. John77 wins the thread by a mile.

    DBC Reed demonstrates once again that his brain was baked by the fire onto which his family used to throw their bills.

    Bill40 – whatever you do for a living, stop doing it and take up something else highly labour intensive. If you are retired, how come?

  24. @ Interested
    “John77 wins the thread by a mile.”
    In my dreams!: yesterday, one of the really nice guys who puts up with me obstructing the course beat me by *two* miles..
    [No, I didn’t come last]

  25. @ john77

    Quite agree, low labour taxes, a Job Guarantee financed by Land Value Tax. I would suggest our esteemed host believes in none of these.

    @ Emil The first part of your comment is irrelevant and the 2nd chilling, You want a collapse of productivity too? How does that fix unemployment?

    @Interested,

    I live and work in China which I think you’ll agree is rather labour intensive.

  26. “So we can all agree that there has been a catastrophic fall in industrial employment numbers jolly good. What we cannot seem to fathom is how to replace these jobs, or even rejoice in the fact they are not, to judge by some of the more frothy mouthed comments.

    So Tim you advocate an economy based on consumption without anyone being able to afford to consume. You’re an even bigger nutter than that prize poltroon.”

    Where to start with this frothy mouthed piffle?

    Is the drop in industrial employment “catastrophic”? Not really. It does not seem to be caused by under-utilization of manufacturing assets due to lack of demand, but rather by an increase in manufacturing productivity/efficiency. Last time I checked, increased productivity/efficiency was, in toto, a good thing. It’s one of the reason we’re not still swapping sea shells for animal pelts with the village next door.

    Just because you cannot fathom how to replace these jobs (after all, you’d have to be an entrepreneur to do that) doesn’t mean that they will not be replaced. If you’re really serious about replacing those jobs, just step aside and let those with a measure of ambition and talent do their thing.

    You can criticize them for something or other once they’ve finished…

  27. bill40 ” Quite agree, low labour taxes, a Job Guarantee financed by Land Value Tax. I would suggest our esteemed host believes in none of these.”

    I think you might be new in these parts then? (I know Tim advocates an income guarantee rather than a jobs guarantee, but those policies are at least cousins, and there are some pretty cogent arguments for.the former. And while he cites the advantages of LVT quite regularly I don’t think he sees it as funding one particular pot of expenditure. But I’d suggest you’re closer than you realise.)

    I can’t grok why you think that productivity is a bad thing when it’s clearly essential for growth. If the argument is that we should combine increased productivity with maintained industrial employment levels then the implication is we’d end up producing masses of physical stuff. What would we do with it all? Exports only make sense if there’s comparative advantage, otherwise there’s no gains of trade to be made. Nowt wrong with service jobs replacing industrial jobs just as they replaced agricultural ones before. Services can be traded for goods, just as goods could be traded for food.

    If your argument is that there are only so many jobs to go round, and raised productivity cuts jobs, so there can be no “replacement” jobs in services or elsewhere, then that’s just the Lump of Labour Fallacy.

  28. @MBE
    It is rather you and the rest of the desperately confused on here
    that are not sufficiently aware of the scope of LVT and the income guarantee that TW professes to believe in, occasionally ,while the rest of the time spouting Thatcherite bullshit to keep the mob happy.
    Bill 40 is entirely correct to point out to point out that for mass consumerism you have to have demand, which is impossible, as Henry George amongst all the rest of the land taxers pointed out most eloquently.
    It’s in his title Progress and Poverty= commercial progress leads to more money around which leads to land/ prices going up ,people can’t buy stuff in the shops=Poverty again.
    Precisely the Thatcherite trajectory and now our work experience Chancellor is trying to phoney up another house price boom.Meanwhile places like Enfield,prosperous in living memory go down the tubes.

  29. @DBC Reed

    I will deny ignorance of the claimed virtues, I am well aware of its theoretical advantages and that some LVTers propose replacing all other taxation with it, so taken are they with its virtues.

    I retain a healthy skepticism about any single Big Idea being promoted as a cure-all, because historically even very clever Big Ideas with unimpeachable theoretical credentials turn out to be wrong, or at least have undesirable, often unexpected, unintended consequences. I think it’s sensible for the public finances to have multiple streams of revenue – an argument for the introduction of LVT perhaps, but not for dependency on it.

    I am yet to be convinced that the “unimproved value” of land would be accurately assessed. Moreover the lack of deadweight costs applies only if unimproved value is used, but I think political pressures are likely to cause “valuation creep”. To the extent any significant chunk of the electorate supports property taxes, they’re thinking of Mansion Taxes. Moreover if a system of property taxes is established, it would be convenient for politicians if the cost of publicly funded improvements could be recouped
    from higher property values nearby. I find it hard to believe a “pure” LVT would survive exposure to political tinkering – I suspect it would soon develop many of the barmy features that eg Income Tax has.

    Incidentally if you think that Enfield 1974 offered a higher standard of living than Enfield 2014 then be my guest and move back in time. On the whole Britain is much better off (richer, healthier, more open and connected) than it was decades ago. Narratives of our economic or industrial decline are a mixture of scaremongering, Golden Age fallacy, or failure to distinguish absolute from relative change (us being “relatively less better off” than the likes of India and China is just the flip side of the poor getting richer, which is hardly a Bad Thing). There are places in Britain that have been left behind, especially isolated communities overly dependent on a single declining industry. But the idea that Enfield is falling apart because the gunpowder trade has moved on seems pretty fanciful.

  30. Must say, Enfield as an example of decline’s a strange choice. Borough or the town? The borough’s got some of the most affluent areas in North London. Edmonton’s a shithole. But being a colony of Somalia doesn’t help. Industry? Whole east of the borough’s a patchwork of industrial estates. Don’t see many empty units either.
    The Gunpowder Factory. That’s worth a good laugh. Got taken over by the greenery fanatics. People advocating marginal peasant agriculture in the outer suburbs. Once spent a wet & windy afternoon there trying to show them how to build a fire you could cook over. Unsuccessfully. (Didn’t even get to first base with the blonde. Point of the exercise) Thought the bloke who’d sell you plans how to make a wind powered generator out of scavenged car parts was a bit optimistic. At a £150 for half a dozen sheets of A4 & a day’s “course” anyway. But plenty of Kum-by-yah’ing never loses its appeal, does it?

  31. @MBE
    AFAIK the Royal Small Arms Factory went private and went through the usual spiral of decline beloved of right-wingers becoming, guess what? , Enfield Island Village, a property development supporting zero jobs and providing zero demand therefore. The mythical risk-based productive (of goods) enterprise it aint. And there was me thinking all those rich bastards abroad were anxious to invest in London (yeah in rent seeking landed property in Bishop’s Avenue also ,strangely, supporting no jobs).Seems to be a bit of a pattern .

    BTW I do not believe that LVT should be a Single Tax or a universal panacea, just a from-here-on tax of land price inflation to accompany big demand stimulus measures, stabilising house prices. I admit most other land taxers have bigger ambitions .

  32. “AFAIK the Royal Small Arms Factory went private and went through the usual spiral of decline beloved of right-wingers…”

    You don’t think the virtual outlawing of its products in its domestic markets mightn’t have had a slight effect? There’s not much future in a private company, only allowed to sell to its government.
    Now, right wingers would have enabled it to do a roaring trade. I could be doing with a musket & couple of swords, next time I go shopping in Wood Green High Road.

  33. “yeah in rent seeking landed property in Bishop’s Avenue also ,strangely, supporting no jobs”

    My pals still got the maintenance contracts for the three pools he put in, in Bishops Avenue. And on half a dozen others. i did a couple bathrooms, a kitchen & handled at least three outside painting contracts & relaying of a patio. And there’s been innumerable service calls.
    These aren’t jobs?

  34. @DBC
    You seem to be making the mistake that “jobs” only happen at defined places with a name on the building. Bishops Avenue’s a good example why that’s not true. if you know the road as well as I do & i’ve probably spent a year or so there, it’s an enormous fount of productive activity. There’s hardly a property doesn’t have some work done in it in any 12 month. Most changes of ownership involve extensive re-modelling. Possibly the most prolific road in London for that. None of the incoming owners are content with what they’ve bought, as is. Any day you’re there there’s probably half a dozen major projects underway & a couple dozen other houses with vans outside. The earnings it produces must be colossal. The kitchen i did went past £40K (not all my money, unfortunately) The bathrooms were £20K+. I can’t think of anywhere else in the country people spend that sort of money. And that’s not counting the domestic staff employed. Most houses in the road employ at least 2-3 live-in. One I know must have a dozen on site every day. Allowing for all the owners must be engaged in some sort of economic activity to fund all this, a mile of London street must be responsible for wealth creation in the billions. Name me a more productive mile?

  35. @BIS, if DBC reed was thinking, I think we would know.

    As a Frenchman visiting the UK for language training in the 1980, we all thought the UK was the 3rd world compared to France. We were always hungry, and I will never forget the way people would only heat 1 room (usually the lounge) in the house with all the doors closed.

    Having moved here in 1986, the amount of change since then (£99 for a phone line and a 3 months wait, remember that? I did not notice that privatisation made things worse, but maybe I have been asleep) has been gigantic.

    So DBC Reed, I will be blunt but you are a cretin of the highest order.

  36. á M monoi
    Living in an appartement in the 16e arrondissement, around that time, i was under the impression I’d visited the 3e monde. Trouble is, your plumbing doesn’t seem to have improved.

  37. “So DBC Reed, I will be blunt but you are a cretin of the highest order.”

    An absolute truth: He who uses the term “Thatcherite” is an absolute moron.

    Another absolute truth: He who cites Henry George without laughing is an absolute moron.

  38. “Not full-time jobs commensurate with the amount of capital invested .”

    Interesting concept, DBC
    Much the same capital as employed in the Broadwater Farm Estate, about 5 miles east. And what jobs come out of that? Other than armed response units?

  39. Hey DBC, you being the smart one and all, could you please tell us just how many full time jobs are commensurate with any given level of capital invested?

    Personally, I’m dying to know.

  40. @ DBC Reed
    Demand for the products of Royal Small Arms declined after 1945 (surprise!) and half the site was closed in 1963. The decline continued up to the point where it was privatised as part of Royal Ordnance in 1984 and three years later it was taken over by BAe, the remaining production transferred to other sites and the factory site redeveloped.
    In reality it “went through the usual spiral of decline” and *then* got privatised. Meanwhile the private sector Birmingham Small Arms had diversified and become a world-class maker of motorcycles (until it was destroyed by Tony Benn’s meddling on top of Japanese competition).
    “the Thatcherite trajectory” was a faster increase in real incomes for the working class (as shown by the data on median incomes adjusted for inflation) than under any Labour government since 1950 (Attlee could hardly fail starting from May 1945 just before the end of WWII) combined with a reduction in inequality of wealth and a massive increase in the number of home-owners because houses were affordable. Under New Labour inequality of wealth increased massively* while growth in median real incomes was negligible and by 2005 houses were priced out of the reach of young graduates (unless they worked for Goldman Sachs or someone like that) let alone ordinary working men.
    * their own data showed that the bottom 50%’s share of national wealth reduced by two-thirds.

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