Oh dear, oh dear

The Observer manages to get things rather the wrong way around here:

Setting aside the reasons why countries all over the world mostly export to their neighbours (it’s cheaper, and there are shared histories and cultures) and try to do so within free-trade blocs (profits are higher when tariffs are low and regulations are harmonised). let’s consider the question of how fat and lazy business has become. Is it ready to accept Fox’s challenge?

One way of making an assessment is to examine the health of exporting hubs around the UK, and the readiness of employers and their workers for the task ahead.

OK, let’s do that:

As an economy, the West Midlands should be revving its engines quietly in readiness for Brexit. But the ONS figures show the region has fundamental weaknesses that few would expect, especially when it lays claim to have the UK’s second city at its heart, with hi-tech manufacturing to rival the German Ruhr.

One basic measure of economic readiness is the percentage of people in employment. The national average is 73.9%. Of all the combined authorities, the West Midlands has the lowest at 65.1%. It also comes at the bottom of the pile on the ONS measure of labour productivity, with output per hour lower than in Manchester, Liverpool and the rest.

One explanation for the low productivity figures might be found in the education sector, where the West Midlands achieves another low. According to the ONS, it has more than three times the average share of population with no qualifications, and a relatively low proportion of residents with a degree-level qualification.

The West Midlands, a centre for traditional engineering and manufacturing industries, also has the worst female employment rate of the six authorities. Whatever the reasons, the lack of female participation in the workforce has a significant knock-on effect on average household disposable incomes, which are also the lowest of the six combined authorities.

Low female labour participation, low productivity, low labour force participation generally and low productivity.

Excellent! Not, as The Observer concludes, oh dear, this means it can never work.

We have unused and underused resources. This means we can employ them and ramp up production. We can use the usual Keynesian macro thinking if we like. The whole point of which is that when we’ve un or under used resources then we can stimulate the economy to use them. That Brexit depreciation is such a stimulus, Hoorah!

We can also analyse using micro principles. We can get economic growth from more inputs or from having better inputs and thus more productivity. We’ve that unused labour so we can use more of it, we can train it too, meaning we can make it a better input.

Precisely the things the Observer are using as reasons why it won’t work are the reasons why it’s easier than if we had entirely full employment of highly trained people already.

And this is just absurd:

But that says much about the failures of policymakers. It says that Birmingham, as the region’s driving force, wasted the Millennium money thrown at it by Gordon Brown in the 10 years before the financial crash in a way that Leeds, Newcastle, Manchester and Liverpool didn’t. Sadly, Birmingham’s leaders were unable to construct a living city with a public transport system that knitted the region together.

And it shows that the mayor will need more money than is currently on offer, especially when another 10 years of austerity was the main course on Philip Hammond’s budget menu.

You mean the people proven to be spendthrift wastrels should therefore get more money?

9 comments on “Oh dear, oh dear

  1. I know I am a little monomaniacal about this topic, but this assumes the Midlands are full of under-ultilised resources. It assumes the population is the same as elsewhere and so can be as useful.

    This is obviously not true. Large parts of the Midlands are wonderfully diverse. Vibrant even.

    Basically, if you import a bunch of illiterate inbred goat shaggers and supplement them with another bunch of people who are determined to exercise their cultural right to kill whatever brain cells their genes gave them with marijuana, you do not end up with a particularly motivated or useful work force.

    Female participation in particular may be a problem.

  2. Hmm, I think the high rate of unemployment with low or zero qualifications and the highest female underemployment rate rings a couple of vibrant bells. You ain’t gonna be building a car factory with these people. You can be in the EU or out, makes no difference.

  3. The Observer manages to get things rather the wrong way around

    Have they every got any economic principle the right way around?

  4. Anyway, isn’t this what happened in China? A country that had a very large uneducated and idle population 40 years ago has seen massive growth with 100 of millions lifted out of abject poverty through free(ish) markets and international trade.

  5. Off topic, but speaking of stupid, El Salvador may outlaw mining:

    http://www.goodnewsnetwork.org/el-salvador-becomes-first-country-ban-toxic-metals-mining/

    “Mining is not an appropriate way to reduce poverty and inequality in this country,” said Ivan Morales, country director for the charity Oxfam in El Salvador, according to DW. “It would only exacerbate the social conflict and level of water contamination we already have.”

    The Philippines is well down the same path. I think my assumption that the planet’s future is the Iron Age was a little over-optimistic.

  6. Matt Wardman: no idea either, but I’d hazard a guess: your money, spunked up against the wall on Labour client groups.

  7. “Another factor depressing the region’s figures can probably be found in the number of skilled workers with productive jobs who would boost the ONS figures if only they lived inside the authority’s boundaries, rather than in leafy Warwickshire and Shropshire villages.”

    Yes, and the effect of that is huge. There’s a few nice bits in WM, like Hampton-in-Arden, Solihull,Sutton Coldfield and Balsall Common, but there’s a huge effect around Coventry. You don’t even get the nicer villages around, let alone Warwick and Leamington.

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