Made in Britain part deux

Following on from last week's moment for manufacturing, Evan Davis returned to a more usual narrative around the knowledge economy and the movement of the UK towards science based industries in the second part of his series Made In Britain (see the episode on iPlayer here).

Again, kudos to Davis and the BBC for attempting to get people interested in the economy and how it works. There are so many stories to be told about UK companies, foreign investment, the challenges of adaptation, there is almost too much material to use.

Which is why the moments where the traditional interpretation of the economy came back, using very traditional categories and a massive oversimplification of the value chain, were very frustrating. The characterisation of research leading to production and then to marketing doesn't really help people to understand why different activities in different industries will be carried out in different locations. Also talking about the UK as being an ideas economy and having gotten out of production misses the evolutionary path of industries, where early in their gestation the production is as hard as research and offshoring and outsourcing is not a realistic option.

One of the most telling scenes though was Davis realising that Chinese companies are advancing to the point where they can research and develop their own products for the much hyped domestic Chinese market. His face when chatting to the lead designer for the sneaker company was a picture. The strategy of letting our production go so that we can essentially live off selling or licencing intellectual property to foreign companies (a la ARM) may not be the best move to make.

Overall for folks not involved in these issues day to day it was probably a decent introduction. But the narrative and the impression it leaves is out of date and if that is the level of understanding in journalism and policy we're in trouble.

Oh and less of the faux Spooks pieces please Evan, if you'd like to get on the grid give Harry Pierce a call.

Best

Finbarr

Should the US government give a repatriation tax break?

As part of their aptly named series Nobody Pays That, the New York Times has a piece on how US companies are pushing for a tax break to repatriate profits to the US (see the article here). According to the piece

Apple has $12 billion waiting offshore, Google has $17 billion and Microsoft, $29 billion.

If a one off tax break were given, taking the effective tax rate on such repatriation from 35% to just over 5%, the US government would hope to see a large pay day. However the NBER studied the last time such a break happened and companies used the repatriated profits to pay dividends and used other routes greatly reducing the return to the government.

As part of the piece there is a great video entitled Inside the Accountant's Playbook which gives a quick overview on how global companies can greatly reduce their tax liability in the US. All legal just for some very frustrating.

It's unclear whether a small return to the public purse and the hope of investment in R&D and jobs is enough to tilt the argument towards giving the tax break. However, given the state of public finances something may be better than nothing.

F

Realising what is made in Britain

When an economist or journalist, and even better a journalist who was an economist, starts to talk seriously about manufacturing in the UK I should be a happy man. For much of the past 10 years trying to have a decent conversation on this has been almost impossible. So imagine the surprise when Evan Davis, host of the Today programme and previous economics editor for the BBC, publishes a book with a natty TV series attached called Made in Britain.

The first episode aired last night (for UK readers here is the iPlayer link which should be good for seven days or more) with Davis oohing and ahing over bits of military kit that BAE Systems part make, mostly integrate. Sidenote - when you're trying to impress a journalist it's usually a good idea to offer them a ride in a fighter jet. Commenting from the back seat of said jet was slightly comical and it encapsulated my frustrations with the show.

The issues raised are real and desperately important for the UK. To soft soap the economics and not be willing to be more forward looking on how the changing global context will put even more pressure on us was a failure. For the majority of people who don't think we make anything any more the programme may show them the error of their ways, but in terms of moving the debate on I fear it did little.

Let's see what he makes of science and innovation next week.

Best

Finbarr

Preparing future leaders

I was wandering through the blogosphere and I bumped into Steven Schwartz (vice chancellor of Macquarie University) and his blog where he riffs on an article I did for the Times Higher Education a little while ago. The article is a discussion of the emergence of Masters in Public Policy in the UK, specifically at Oxford and Cambridge, asking how they need to prepare public leaders. 


In Steven's blog post he appears to not believe that such vocational training is useful, saying 

As with the study of medicine and most other professional degrees, it's highly likely that these new vocational political skills will be obsolete shortly after graduation. And then where will we be?

Obviously I'm biased - I have an MPP. But here are a few points that I think should be taken on board before we all go mad over this kind of thing. 


1. We want people with diverse backgrounds in public leadership, no one said an MPP or anything like it was a silver bullet or for everyone.
2. This is about more than politicians, many other folks from civil servants, to academics, business managers and on to trade union representatives all are part of public leadership and public change. 
3. Anything that helps future leaders prepare for complexity, speed and massively competing interests helps and if that is time spent in industry or doing an MPP that's fine by me. 


Just out of interest what does Steven's comment say about the many vocationally oriented courses offered at Macquarie? 


Best

Finbarr

Reinventing industrial policy in developed economies

The calls for rebalancing in the UK economy following the credit crisis and the recession opened a window of opportunity to have a realistic conversation about industrial policy again in developed economies. In some senses it is a proxy conversation for the role of the state and whether when the benefits of globalisation go to other countries our rhetoric around openess changes, but that's a longer post.

As a first brick in the wall, I recently had a piece in the Journal of Industry, Competition and Trade which looks at rationales for industrial policy based on industry maturity (click here for the article). The main argument is that industrial policy work has been contained within development economics for the past thirty years which has led to the assumption that industrial policy is all about catch up. However, if you consider an industry to have a lifecycle at the global level and within a country, when you compare the two you can see that a country could be leading or lagging in an industry. And crucially there may be strong reasons to intervene either to preference a transition or to hold on to a lead.

Here's hoping that a realistic conversation on industrial development can continue!

F

The return of making or local will win

I've been threatening to do a piece (hopefully blog and in a bona fide magazine) about how in the long run production cannot remain global. There's a lot of small points and large trends that all add up to that conclusion but I've not had the time to put it all together yet. Damn the world for being busy ...

But in the meantime small things that may be large things keep cropping up. Like this piece in the NY Times recently called the Kitchen Table Industrialists. There is a growing trend for people wanting to make things themselves, captured for example in Matthew Crawford's Shop Class as Soulcraft.The step to thinking of individual makers as industry is a really interesting one though. To see co-operatives coming together to share 3D printers is awesome.

And it makes me a little jealous and wistful for my time in Boston. It would be great to be close to that kind of energy as it doesn't seem to exist in the UK. If there is anyone out there that can prove me wrong do let me know, but my sense is the kinds of groups discussed in Anand just don't thrive in this country.

More than anything else though I need to get the larger article done!

F