[A-List] UK economy: Browned off

["Michael Keaney" <michael.keaney@xxxxxx>]

We have met Harvie before, and not in the best of circumstances:

http://archives.econ.utah.edu/archives/a-list/2003w17/msg00059.htm

However, this is a good riposte to the sort of drivel that regularly
emanates from Gordon Brown, whose cheerleading for the "dynamic
entrepreneurialism" of the US economy has been among the most egregious acts
in his repertoire during the last decade.

-----

Could Brown's miracle prove to be a mirage?

Chris Harvie
Thursday May 27, 2004
The Guardian

"Castleblair to close!" says the Dunfermline burgh website. It would,
wouldn't it, this being Gordon Brown's seat. But the reference is to Fife's
largest clothing company, which is transferring production to Turkey.
Alongside Dunfermline's unopened Hyundai chip factory, it offers a microcosm
of an ailing Scots economy. Gordon Brown's seven years have been seen (by
him) as proof that everything "old Europe" was doing was wrong. To go from
Baden-Württemberg, with its hi-tech innovation (the A-Class, the Smart, new
trains and buses, environmental engineering and bright students), to Britain
has always been hallucinatory. Brown's miracle-working has made the feeling
more extreme. His claims are grounded on growth (about three times greater
than Germany's) and unemployment (about half).

Growth: think about cars. Despite New Labour's commitment to sustainable
development, Scots road traffic rose by 18% between 1993 and 2002. BaWü
makes many of those extra vehicles, but our thrifty ethic means our
car-buying, like our house-prices, has flat-lined. Britain's rotten public
transport - on Brown's watch - has partly led to this. But the real motor
has been a consumer-led boom caused by the remortgaging of a housing stock
whose prices have been driven by growth in household numbers four times that
of Germany, and wholesale speculation. Edinburgh's prices alone are up 200%
in three years: spectacular, but doesn't do much for industrial investment
or regional planning.

Or think about mobile phones. Germans certainly buy them but, as with their
cars, don't use them like us. The COI's Britain 2001 survey suggested that
between early 1999 and the summer of 2000, 24.7 million people bought
phones, paid connection charges and ran up bills. Assume £500 per phone per
year and you get £12.35bn. Set this against total GDP for 2000 of £891bn,
and this gives 1.4%, in a year which saw 2.9% growth. Knock off the 0.4% to
trim the phone-growth period to a year and you still have a third of
Britain's growth in perhaps Brown's most successful year coming from
something between a narcotic and a toy.

Or consider unemployment: British unemployment was about three points below
Germany's in December 2001. But David Webster of the LSE estimated that
"long-term sickness" could account for 7% out of work, compared with 2.1% in
Germany and 0.3% in France. People moved from unemployment benefit to
incapacity benefit as the terms of the former were made more rigorous.
Allowing for such socio-medical factors as drug addiction, about three times
the German level, teenage pregnancies and their consequences, and the
connection between poverty and ill-health, "real unemployment" is probably
greater than that of Ba-Wü.
Still, the Scottish workforce is a bigger proportion of the population than
that of Ba-Wü. But of Scotland's 2.3 million workers, 26% are part-time,
while in Baden-Württemberg this only reaches 15%. Unsurprising then that the
decrease in actual poverty has been, to put it mildly, gentle. As for
training: 25% of Scottish teenagers leave at 16 without qualifications; in
Germany it is 9.1%.

"What people don't realise," a Brown trusty said, "is how blind Gordon is."
Brown's clouded sight seems to mean that certain types of information come
over, via TV and trusted associates, while the appraisal of environments,
city streets, collective emotions is thin. Walk through a shiny-happy town
mall and notice that: a) there are no local names on the shops; and b) there
are a lot of for-sale signs in the adjoining streets. Lloyd George could do
this sort of thing, backed up by his Liberal manufacturing and journalist
friends; not so with Brown. The figures around the chancellor - Ed Balls,
Douglas Alexander and, at least initially, Geoffrey Robinson - were far from
the Scots planning tradition. The Bank of England, nationalised in 1917 by
the dour Andrew Bonar Law to finance war production on Clydeside and
elsewhere was in 1997 handed over to the City, not best known for its
interest in industry or the regions. "It is through manufacturing that we
will succeed or fail," Brown wrote in 1989. And now?

American "enterprise culture" displaced Brown's European experience, which
in 1979 amounted to a school trip to Sweden. His summers on the north-east
coast absorbed the "intervention-lite" and "welfare into work" ethos of the
Clinton era. Was this a way of balancing Blair's European ambitions and
checking his alliance with Rupert Murdoch? But the result has aided the
galloping detechnologising of British society. The multiplication of "Brown
jobbies" - co-ordinators, enablers, outreachers - and the quick fix of the
call-centre won out over infrastructure and training, with results that we
now see.

Back to low German growth. In the 1970s, redistribution and conservation
mattered more than "crude rises in GDP". Germany has succeeded in recycling,
power conservation, curbing motoring with innovations in public transport.
But these do little for the growth rate, while hi-tech industry means
ingenious machines (to issue all your rail tickets and do all your banking),
eliminating jobs.

Still, long-term European technology seems more manageable than the
prospects before Brown's Britain. As the man said, "Today our roads and
railways are congested, our airports and airways uncomfortably crowded, road
and rail maintenance in disarray and safety now a major issue in the public
mind". Spot on, Gordon, but that was in 1989, and you've now been in charge
for seven years ...

· Chris Harvie co-authored a guide to the 1979 Scottish Assembly with Gordon
Brown. He is professor of British studies at the University of Tübingen