The German stimulus is quoted there as having been increased to Euro 50 billion (USD 67 billion) – which is substantially larger than the fiscal stimulus in Britain (of UKP 28 billion) as announced in the Pre-Budget report on 24 November 2008.

… and here it is: http://krugman.blogs.nytimes.com/2009/08/15/perspective-on-the-eurobounce/

I suppose only a heriditary system of government would think truly long term! (And then only if it decided to be responsible.)

Corporations themselves do think longer term. The oil majors for example have 25- 50 year planning horizons.

Now, how we align politician’s incentives in quite the same way is a difficult question….

Question: Are there any well-recognised ways for getting politicians (running on a 5 year electoral cycle or something similar) and finance or indeed the unions to think longer term?

For example there are approx 100,000 employed in the Grand Prix industry based around Witney and Silverstone. Since 9145 much of the Brain drain has meant craftsmen, scientists and engineers moving largely to the USA which has boosted there industry but not benefitted the UK. I remember lunching with a lady whose British husband was in the biotech industry outside Chicago earning many times more than in the UK.

Many writers have pointed out that in future ideaopolis’s will dominate industry – silicon valley /berkely, calltech and stanford. The universities of Lverpool,Manchester and Leeds were used as spring board , for the M62 corridor, Durham and Newcastle in the NE, Warwick, Aston and Birmingham in the Midland, Bristol and Bath in the SW, Glasgow and Strathclyde in Glasgow, Edinburgh and Heriott Watt in Edinburgh, Cardiff and Swansea in S Wales , Leicester and Nottingham in E Midlands. Manchester U with A Turing and Ferranti could have started the World computer industry in the valleys of Lancashire in the 1940s! pharmaceutical industry is largely based in the home counties and uses it’s contacts with Oxford, Cambridge and Imperial.

In short , finance is not interested in the long term. The Tory party is the is the party of finance . Labour and the unskilled /semi skilled unions will not support the deveopment of technology which reduces employment of the un and semi skilled. Consequently many of our designers go overseas and /or sell their patents to foreigners or have the products made undr licence by foreigners so reducing income to teh UK.

We’ve been trying this division of labour stuff for about 250 years now. Yes, those of us who have been partaking have *all* got richer.

It would take a certain ignorance of the facts to claim that we haven’t.

“As high tech/value manufacturing is not dependent upon proximity to raw materials,”

Ahhh, and there’s the rub. What high tech/high value things to manufacture do you have in mind and, as a supplementary question, if there is good money to be made by making these things, why isn’t someone already?

Grandpa worked on that program as a testing pilot so of course that argument has resonance.

“The UK has been very good at advancing our scientific and technical expertise ( look at the number of Nobel Prizes and patents we obtain) but we have been poor at turning into manufactured goods people wish to buy. The joint masters in car design between Imperial and the RCA produces large numbers of graduates snapped up by foreign companies. One area we lag far behgind is in production engineering; designing constructing and operating the equipment used in factories to make the goods.”

But not that much. For, seriously, who gives a shit who makes the damn stuff? Or designs it, finances it, invents it or carts it away in a handbag when it’s crocked?

What we do care about is that we get the maximal amount of “stuff” from the resources available to us. And if getting that maximal amount means that Hans and Wilhelm build the cars, some yodeller build the machines to make the cars, Gideon finances the car making and John Smith designs them then great, just absolutely great. What we care about is how many cars of what standard we have to drive around on the roads.

Seriously. Who gives a shit about how or through whom they get there?

Just as the local division and specialisation of labour makes us all richer (“more shit to be consumerist about”) so does the international.

What about this point is so difficult for people to understand?

In other libertarian news, Everton beat Arsenal this afternoon as their late goal proved they were in charge all the time.

I have heard that the Great Exhibition of 1851 was partly instigated because Prince Albert was concerned about the poor quality of much of manufacturing and waned to boost the quality. The lack of universal primary education in 1870 meant much our workforce were very poorly educated and unable to use the more advanced technology available in Germany post 1870. There is the argument that the UK started losing the tehcnical/manufacturing race to Germany and the USA from 1870.

The UK financed much of the development of the World post 1870, especially the USA . The inability to create advanced technical education meant professors had to imported to teach industrial chemistry at The Royal College of Science ( Imperial). In 1914 , the UK had to import dye from Germany via Holland for our uniforms. The UK has been very good at advancing our scientific and technical expertise ( look at the number of Nobel Prizes and patents we obtain) but we have been poor at turning into manufactured goods people wish to buy. The joint masters in car design between Imperial and the RCA produces large numbers of graduates snapped up by foreign companies. One area we lag far behgind is in production engineering; designing constructing and operating the equipment used in factories to make the goods.

The book “Spitfire ” by leo mckistry demonstrates all our strengths and weaknesses. Mitchells design of the Spitfire combined with the Rolls Royce Merlin engine, perhaps produced the greatest machine of all time- the almost perfect blend of function and form. The production of the Spitfire was a shambles, apart from Chamberlain who realised the importance of needing an aeropalne to defend the UK from bombers.

If the UK could greatly increase our production engineering /manfuacturing capability, I have confidence we still have a unique design capability. The Japanese marvel at our innovative design skills.

If we could increase our manufacturing from 15 to 25% of the economy by developing manufacturing in the former industrial parts of the UK; we could greatly increase social mobility, balance N and S of the UK, reduce our reliance on finance and property.

Interesting fact. We’ve had two major periods of globalisation….1980s to now, 1870s to 1914.

Both times the UK specialised in finance and Germany in heavy industry.

If it had happened once one way, the other the other, we might think it was about policy choices etc. That it happened the same way both times doesn’t of course mean that it wasn’t about policy choices, could simply be coincidence. But it does strengthen the idea that, if both times we’ve had a surge in the international division of labour and specialisation, that the division and specialisation go the same way, that the UK might actually have some comparative advantage in finance, Germany in heavy industry.

My bet is that it’s the legal system but that’s not really the point. We know that the division of labour and specialisation are what increase wealth in general. So why should we stop doing what we’re good at?

For instance, more housing is built, which expands the building sector. You must ask the opposite question: why in the world shouldn’t you lower interest rates?”

Why? Because lower interest rates mean that savings and the currency rot against inflation meaning everything imported gets more expensive. The reason why we’ve had a credit crunch can be fairly laid at the door of the excessively low interest rates set by Alan Greenspan at the end of the dotcom bust to “stimulate” the US economy (ie keep it from contracting. Arguably, by not allowing the US economy to not go into a smallish downturn, Greenspan actually made the eventual bust a lot worse.

If a Nobel winner in economics can’t understand this, then G-d help us all.

Nick

Congratulations, you have just defined the word ‘borrowing’ – but hey, sprinkle the word ‘Austrian’ atop it and it’ll sound like some kind of wisdom…

Fair enough, although I’m sure you know that I was thinking in longer and rather more Greenspanny terms than that.

Well, I thought I meant collective ownership of the means of production, distribution, and exchange, but that’s because I was unaware that the meaning of the word “socialism” had become broad enough to include Thatcherites and Reaganauts.

Perhaps I need to buy a new dictionary.

Well, some of the people on my side of the aisle (the Austrians for example) are the people who have actually been proved correct. Low interest rates in order to avoid a recession are just going to store up trouble and create a bigger problem later…..