As the Senior Lecturer points out, capitalism is efficient

This isn’t what he thinks he’s saying, isn’t what he means to say and isn’t something he understands. But it is so:

The consequence is real. As a matter of fact I think Brexit will lay waste to large numbers of British businesses. Most are marginally capitalised at best, meaning that they have access to relatively limited resources to deal with a period of significant disruption on their supply chains.

That is also the statement that British business is economical with capital, is efficient in its use of it.

Neoliberal capitalism is efficient – your lesson for the day from the Senior Lecturer.

9 thoughts on “As the Senior Lecturer points out, capitalism is efficient”

  1. this is mostly bollocks and constantly stated by remoaners because of a few businesses that have been pushed to the front by remoaners because they have JIT supply chains.

    These dildos and their friends have no idea what manufacturing looks like. Few of them have ever worked in a factory, or last did so when they were full of people like Red Robbo.

    Most manufacturers in this country don’t use the sort of intensive JIT of car makers because most manufacturing isn’t at large scale. We outsourced the manufacture of computer memory, vacuum cleaners, toys, shoes, soap and TVs to the far east. Cars will be next, Brexit or no.

    Manufacturing in this country is high end, custom or specialist. Volume is small. And when volume is small, it isn’t worth doing JIT. JIT has overheads. You need people planning and monitoring it. People to make sure that the stock is going to flow. If you’re only making small numbers of items, it isn’t worth it.

  2. Bloke in North Dorset

    As I understand JIT you add up all the time in a process from order to delivery and then place the orders such that whatever it is arrives just in time to be used. I appreciate that this is extremely complex when there’s 1000’s of parts all with different flash to bang times, but that’s what computers are for.

    So if Brexit adds a bit of friction at the border and it takes a bit longer for some parts you alter the order date so it still arrives just in time. I accept that there will be some disruption and cost while systems settle down but it won’t be massive or the end of the world.

    There might also be a slight increase in working capital if stuff takes a bit longer to turn up or suppliers might have to wait a couple of extra days for payment, but that’s going to be rounding errors in the accounts of supplier and manufacturer.

    Any new tariffs that are applied should be classed as self inflicted wounds and nothing to do with Brexit.

    BoM’s right, car manufacturing will move closer to key markets, its already happening, for political as well as economic reasons. Of course the usual suspects will blame Brexit, no matter what the company says.

  3. If after three years any business has not located alternative supply from Non-EU, and has no contingency plans for ‘no deal’, they deserve to go bust.

    But I wonder what these business do during the Summer when suppliers close for vacation, or at Christmas when that holiday period affects supplies? What you say? They plan ahead and increase inventory. And what do they do in Winter when bad weather shuts airports, affects traffic or suppliers have strikes?

    But why/how will ‘no deal’ disrupt supplies? This is never explained.

  4. Bloke In Westerville

    As a matter of fact I think Brexit will lay waste to large numbers of British businesses.

    Translation: I’m hoping Brexit will lay waste to large numbers of British businesses.

  5. John B,

    “But why/how will ‘no deal’ disrupt supplies? This is never explained.”

    There’s a risk that there would be increased drag on customs. It’s why Honda added an extra day’s stock for Brexit. But even that’s more of a precaution than anything, that maybe there would be some disruption.

    And the whole thing is about a few pet businesses for remoaners. You’ll notice it’s always car makers and farmers. Are the whisky distillers who export more than the farmers complaining? What about the software and chip making firms? The coach makers and the shoemakers?

    Patrick Minford got this stuff bang on. There’s going to be casualties, just like Tesco put butchers and bakers out of business, or Amazon destroyed Comet.

  6. @Bloke on M4

    Yep, farmers of sheep and farmers in RoI

    Listen up BBC & C4:
    UK sheep farmers can’t meat UK demand and we import it from New Zealand
    RoI is a foreign country, why should we structure Brexit to help a terrorist harbouring sh1t hole

  7. Love Johnson’s EU strategy: EU strategy:

    They can come and talk to me

    Unlike May: 3am ring ring “Hello”; “Juncker wants to see you now”; “Yes sir, I’m on my way”

    .
    May’s Withdrawal Treaty – John Redwood July 25, 2019

    Martin Howe, Richard Aikens and T Grant have written an excellent guide to the draft Withdrawal Treaty, published by Politeia.

    They remind us that the whole Withdrawal Treaty, not just the Irish backstop, contains problems for the UK were we to sign it.

    In particular they cite

    – It reaffirms the supremacy of EU law in specified areas, requiring UK courts to strike down any UK legislation which contradicts EU law.

    – It gives the European Court of Justice an important role in settling disputes by referring them to the ECJ, a court of one of the two parties to the dispute. International Treaties usually go to third party independent appeal

    – It imposes stringent penalty payments on the UK for non compliance and allows the EU to suspend its own Treaty obligations if they argue the UK has failed to comply

    – There is no exit clause for the UK without the permission of the EU

    I wrote a letter to the Attorney General about various problems with the draft Treaty including the long tail financial liabilities it would commit us to….

    http://johnredwoodsdiary.com/2019/07/25/the-draft-withdrawal-treaty/
    http://www.politeia.co.uk/avoiding-the-trap-howe-aikens-grant/

    As I keep saying, the NI Backstop is a red herring distraction ploy.

  8. Businesses will stock up with some stuff, source additional supply points for others.
    Either one costs money. And they’ve done it once already – now they get to do it again. And maybe again. And again.
    And dare not let lease on storage premises lapse because someone else will snap it up.

    I use a local company for certain supplies, often buying certain things every month or 6 weeks. Since before last Christmas he has had boom and bust – literally tons of sales in few months before last Brexit day then very low sales for months since. Now he’s getting a lot more sales again for October but may again get very low sales for rest of the year.
    Stockpiles impact supply chains – not all suppliers can cope with the boom and bust, does not help when planning workloads and staffing.

    JIT is easy these days, saves quite a bit on excess inventory and storage. It is however a pain if delays are longer than expected.

  9. Some struggling/inflexible businesses will be hit by Brexit – but their challenges are much more to do with longer term trends – the car industry post Dieselgate being a good example. Strong businesses react to events and seize any opportunities as they arise.

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