As a source said, “This isn’t public spending, but about promoting growth and jobs.” Apparently Ed Balls does not see industrial policy quite that way.

“Balls was born in Norwich, Norfolk and educated at Bawburgh Primary School near Norwich, Crossdale Drive Primary School in Keyworth, Nottinghamshire, and then the private all-boys Nottingham High School, where he played the violin. Further educated at Oxford University, where he gained a first in Philosophy, Politics and Economics and Harvard where he was a Kennedy Scholar, he specialised in Economics. Balls worked as a leader writer for the Financial Times.”

So what does he know about industry?

Or life?

IMO Balls is concerned to avoid any new policy commitment by Labour which could imply criticism of himself as chief economic adviser to Gordon Brown in the Treasury before he stepped down to become an MP in 2005. Consider the Marconi debacle in 2001 when Britain’s largest manfacturing company went down the shoot into oblivion.

It has to be acknowledged that Britain has a long, sad history of poor industrial policy decisions by successive governments. £3.4 billions of taxpayers’ money was poured into British-Leyland, renamed the Rover Group and privatised in 1988. It is often overlooked that the Thatcher and Major governments sank billions into supporting the nationalised coal industry before the shrunken industry was sold off to the private sector by the Major government in 1994.

As I’ve mentioned several times in other threads, the best counter-example that occurs to me was the decision of a Conservative government to take Rolls Royce into public ownership in 1971 to save the company from collapse and to deliver on its contracts to supply jet engines. The company was subsequently turned around and privatised in 1988, since when it has become one of the few leading global suppliers of jet engines for airliners.

What a stupid post. Denham is on the right of the Party and Ed has taken it off to the left. As one of the very few remaining Labour MP`s obliged to engage with life outside its heartland he can Ed is leading Labour to irrelevance .

This is so dim witted it fails even in its own terms which is to mislead

What position is occupied by a Labour MP in Opposition is of irrelevance to the vast majority of British voters.
I don’t know a single individual who has an once of confidence in a Westminster politician of any persuasion.
Almost without exception they have proved themselves to be worthless, self-serving parasites and liars.
In all honesty, I should thank Blair, Campbell, Mandelson, Falconer et al for opening my eyes.

Regards – An ex-member of the Labour Party and once a Labour voter.

- in fighting and bickering wins general elections. Discuss

Personality bashing is not a productive way forward.

What it paradoxically leads to IMO is a search for some industrial messiah, which is also unhelpful because their decisions come to be treated uncritically as gospel imperatives. There is no special urgency – most likely, there won’t be a general election until 2015.

A low-key, if bureaucratic, way of taking this forward is to commission a “literature review” on industrial policy. But be wary of picking reviewers who are known enthusiasts for free market capitalism or industrial champion promoters. Btw pushing London as a global financial centre counts as an industrial champion policy – as do pressing for tax breaks for film making or producing video games. Thematic policies, such as promoting corporate R&D or credit easing for SMEs or attracting inward investment, will likely be more fruitful downstream.

It seems extraordinary to me that we are more willing to engage in military intervention in the internal affairs of other countries than to spend equivalent sums of public money on expediting business development at home for fear of making some decisions which turn out to have been wrong in hindsight. The sad fact is that start-up SMEs have high failure rates within 5 years and lenders need to be be suspicious about business plans.

You and I could put up a plan. All we need to borrow is £250,000. We’ll even put up £200,000 of our own money. Understandably, the main costs for the next two years will be for your salary and mine as we develop the business. Those salaries will be £100,000 pa each because of our special skills and unique enterprise ideas. Sadly, the business folds at the end of two years and the lender loses £250,000. £100,000 a year in salary for two years is a great deal better than the job-seeker’s allowance.

@2 Bob B

I would have thought that the quality of some British management is more important than the spending decisions of successive governments.

The Marconi debacle was a classic management failure. Similarly the car industry was a basket case mainly due to a lack of investment. Rolls Royce was the opposite, and has obviously had outstanding management since the bailout. We need more companies like them.

“Denham is on the right of the Party”. What nonsense, John Denham is one of the few of the shadow cabinet who didn’t support David Miliband for leader, he resigned over the Iraq war. I think he supported Ed for leader.

@7: “I would have thought that the quality of some British management is more important than the spending decisions of successive governments.”

For good or ill, I believe that goverment spending decisions matter as well as the quality and competence of British management. The sums of public money spent on propping up the car industry and the coal industry were huge. And the promoted inward investment by the Japanese car makers – Nissan, Toyota and Honda – has had a significant impact, not least on supply-chain manufacturers.

A literature review would helpfully illuminate some of the successes and failings of industrial policy in other countries from which we could learn. There was far more industrial policy intervention in the American economy by the federal government there than the free market capitalist flag wavers like to admit to. The early technical and market risks of developing microprocessors were underwritten by DoD and NASA contracts. The design of airliners made in America benefited from those contracts for B-47 and B-52 bombers.

Btw a series of studies through to the 1980s showed that management in Britain was under-qualified as compared with its counterparts in Europe.

Sam Brittan in the FT in July: “The relative decline of the British economy in the century up to the late 1970s has been reversed. Since then, the UK has caught up with and even overtaken its principal trading partners. The previous two sentences are neither a typing mistake nor a daydream. They are the sober conclusions of the country’s leading quantitative historian, Prof Nicholas Crafts”
http://www.samuelbrittan.co.uk/text399_p.html

How did that happen?

A touch of history: Had Labour won the 1992 election as expected until that election rally in Sheffield, Bryan Gould would very likely have become industry minister in the Labour government, bringing with him Keith Cowling (Warwick Uni) as his chief economic adviser.

As I learned from a conference in 1992, Cowling was an enthusiast for emulating the industrial policies of Japan’s MITI (Ministry of International Trade and Industry).

Assessments of the influence and effectiveness of MITI diverge. There is Chalmers Johnson: MITI and the Japanese Miracle (Stanford UP 1982)

OTOH there is: Martin Fransman: The Market and Beyond (Cambridge UP 1993) and Scott Callon: Divided Sun (Stanford UP 1995)

Insight: in the 1950s and 1960s, the hugely competitive car industry in Japan fought off successive attempts by MITI to encompass the industry in its industrial policy. MITI had little to do with the highly rivalrous consumer electronics industry there – or with Fujitsu, one of the largest of Japan’s makers of mainframe computers and robots.