Wednesday, December 23, 2009

The cancer that is strangling our industrial sector

The economists are worried, especially the left wing ones ( which is oddly rather a lot of them ).

The Bank of England's plan to devalue the pound and become competitive again to steal a march on our Eurozone competitors hasn't produced the goods. The minutes of the BoE's Monetary Policy committee show that they are worried about the refusal of our balance of payments to improve.

Its not working.

And worse the economy in general is still in recession as this weeks figures from the ONS show.

People are starting to ask if we relied on the Financial Sector too much and if it doesn't distort our economy. The article in the First post by Neil Clark follows that idea. But the article has the usual left wing bias as of course blaming Thatcher, though it does recognise that manufacturing has dropped fastest of all under Labour since 1997.

I think there's some truth here. Especially in the war for talent. Rewards in the city have so massively outstripped those of industry that many of our brightest minds now wear pin stripe suits rather than hard hats or lab coats.

But the real cancer in our society is the state. The likes of Prof Blanchflower declare loudly that the state sector has saved the economy this recession - seemingly oblivious to who absurd the very idea is.

But the real war for talent has happened in the progressively sovietising Labour heart lands in the North and Celtic fringes where the state is not just the largest employer, but by far the best a highest paying employer in areas of very low costs.

The state sucks up all the talent in these areas, chocking of private industry. And then to compound the issue the state distorts markets in ham fisted ways supposedly to promote growth, but often killing of the very areas they are trying to promote.

In a broader sense the state has changed from a benign tumour to a malignant cancer that is starving the patient to death.

This is why professor Blanchflower is wrong, he is just feeding the monster, when what is needed is the surgeon's knife. Only then will our economy restore the flow of resources to our manufacturing and industrial sectors.

And yes its going to hurt.

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