“Can Britain stand a chance against the ‘Asian century’?”

None whatsoever. We are just kidding ourselves if we think otherwise.

Yellow Peril! Yellow Peril! Yellow Peril!

Aw come on guys, richer asians are not likely to be any sort of “threat.” They will make us richer because they will provide us with cheaper goods and services. We will trade with them, they will trade with us, we will likely remain significantly better off per person for another 40 years. Catching up is hard to do.

We will find it harder to project our power overseas, but given our track record that may well be a good thing.

I am worried by China’s autocracy, but they are a far smaller threat to our freedom than our own politicians reaction to them. Plus India’s demographics and more flexible political structure will have China whipped by 2050 and they’re lovely chaps (even if they’re crap at cricket).

Indirectly we’ll be wealthier, plus, nobody in Asia is stupid enough to directly fight a land war in Europe. Nobody has perfected the act of bloody slaughter half so well as Europeans.

We have lots of problems but very few of them have or will come from an “Asian Century.”

Personally, I think that China’s opacity masks a lot of problems, but, irrespective of whose century it is, Britain will not do well–such is my prediction.

Ah, so having read the report’s Executive Summary this is just another report on the “British Disease”! It is just your framing this time involves not up-start Americans or dastardly Hun but insidious and ingenious Chinamen.

Even without competition from Asia Britain would have productivity problems. Competition and innovation from America, then the Continent and soon Asia (in the way of mass production, organisation innovations and soon “frugal innovation”) have all subsequently enriched Britain even as they cause(d) relative backsliding.

Freeing firms to innovate organisationally as well as on the production side was important post-war. China and India will have a much larger domestic market than the UK can hope for, so any return to mass-mass-manufacturing will be inevitably there and there is little to do about it. The analogy is with Fordism, which required too large and homogenous a market to take route in Europe even if there technology were ready.

The report has some interesting ideas, but I think the framing is hackneyed and unhelpful.

The future is ours to lose. There has never been a “Swiss century”, a “Swedish century” or a “Norwegian century” but the people of those countries are prosperous. Global power politics is a pissing contest for the elite. All that everyone else needs is vaguely free trade and an uncorrupt government that is capable of defending its borders.

Given that the political agenda for the past 15 years has been dominated by demands for protectionism, I doubt it.

The british haven’t got the arsehole for competition, as the article demonstrates, they simply demand that the state ‘do something’.

The problem here is the word ‘against’. It’s probably fair enough to describe the 21C as the Asian century: at least no more wrong than any other one word description of a hundred years.

But what does it mean for the UK to be ‘against’ that?

Another century of growth is assured…and I’m just going down to the patent office to register my perpetual motion machine.
Whew! Just got back. There’s loads down there with the same idea. Some guy from the IPPR was in front of me, going on and on about being in MENSA and would I like to join a team to go on Only Connect. Apparently The Weakest Link is a great day out as well.
Don’t know what to do with my day now. Oh look. The Graduate’s on. I really like that scene where some old duffer tells Benjamin to get into plastics. I wonder whatever happened to that. I wonder how it’s going…

China and India, one of the high ranking official stated shaking his head, we will always have beggers they are part of society, Give us a pound sir for a burger.

I get this niggling feelin that Britain has a small problem of vast overemployment in financial services, and a resultant vast underdeployment of intellectual resources into industries with long term growth potential. Certain Asian countries don’t have that problem.

‘Yellow Peril! Yellow Peril! Yellow Peril!’

Beat me to it.

The problem with this kind of analysis is that it projects current notions of ethnicity and nationhood into a future in which globalisation and migration might have rendered both concepts meaningless.

I get this niggling feelin that Britain has a small problem of vast overemployment in financial services.

Yes Britain’s biggest problem is definitely the one area in which it is a world market leader. Lets just demolish the City and all our troubles will be over.

“The UK is ranked 33rd out of 139 countries for overall infrastructure quality…”

Not good! But this is a massive indictment of Labour…who preferred in 1997-2010 to ‘invest’ in ‘services’ rather than infra-structure, to bribe the electorate, and their client vote, rather than seriously invest in projects that would help us all prosper in the medium to long-term.

And I fear the Coalition is making much the same mistake…Major investment in infrastructure will help boost the economy, but it needs to be targetted and well planned, often years in advance.

We need, in the short- to medium-term, to cut welfare state spending and increase infrastructure spending – and stimulate the private sector by…?

And as we then prosper, we can then afford welfare…

Our only hope is to be part of a strong united Europe.

Lets look at those points again:

• The UK is bottom of the league in the G7 for investment as a percentage of GDP: behind Canada, Japan, Italy France, Germany and the US.

Hmm, why might that be. Could it be that investment is one use for money, another use of which is taxation? If we want to increase investment, cut taxation – it should go up (this is not a 1:1 equation). Goverments can invest, true, but does anyone really believe that government investment (which will be political, not anything else) is really going to be as effective as private investment. As far as I can see, the current round of government investment is simply resulting in higher energy bills…

• The UK is ranked 33rd out of 139 countries for overall infrastructure quality according to the latest World Economic Forum Global Competitiveness survey, placing it behind most other industrialised economies.

Ah good, an area of potential substantial economic growth then… Not sure what this means, since infrastructure is a broad term – but I do agree that our transport inftrastructure at least is crap. I would also suggest this is because it is controlled almost entirely (as is most infrastructure) by government…

• The UK ranks 17th out of 28 EU member states in terms of the number of businesses classed as ‘innovation active’ with only 46 per cent of UK businesses undertaking some form of innovation activity, compared to 80% of German firms and 50% of French firms.

These figures are potentially misleading. It could be that there are many more businesses in Britain such as hairdressers or corner shops which would not innovative than there are in the German and French figures. More importantly, they do not compare the amount of innovation, just the activity – specialisation of innovation (within reason) will presumably be more effective, and one area the United Kingdom does pull more than its weight is in international patents, which suggests plenty of innovation does go on here.

• Overall productivity levels for the UK are 17% below those of the US, 14% lower than France and 10% lower than Germany. This is despite significant improvements over the last ten years.

Room for improvement then? Anyone care to guess what restricts the productivity levels in relation to these other countries. I’d go with government (again…).

• The UK ranks 17th out of 31 OECD countries in terms of the proportion of adults (aged 25-64) with low or no qualifications, with 30 per cent – twice as many as in Germany (15 per cent) and three times worse than the USA (11 per cent). Indeed we find that one fifth of our productivity gap with France and Germany is due to our skills deficit, despite progress over the last ten years. When compared to other countries, the UK performs below the OECD average for workplace training. The report shows that 1 in 3 UK firms provide no training at all.

Again, what are the firms surveyed (albeit, I would agree all firms should try to upskill). Education is a problem, but the problem is more with the fact that there is large areas with a culture of ignorance (being intelligent is not admired) rather than anything structural. I would again suggest that these areas are protected by government policy rather than anything much else.

Overall then, I would suggest the fact we have such an interventionist government (not even under Mrs Thatcher over 30% of GDP went to government) explains some of those figures (and others may need a bit more context). And if China or India overtakes us in economic terms (with only 100 times more people or whatever you’d kind of hope they would) so what – that just means their economies got better, not ours got worse. These things happen.

Eric Forth,

Our only hope is to be part of a strong united Europe.

That was a joke, right? Or do you just not watch the news (I’m guessing the sovereign debt crisis will be next week’s headline again – it seems to be taking it in turns with Libya…).

Yeah Tim J, I guess you’re right, I should think more short-term. Tell you what, instead of applying my mind to starting a new business, I’m going to go do what every other graduate does. I’ll go make financial models that have already basically been made. Indeed, in ten years time, I’m sure the effort I’ve exerted will be worth more than if I was starting little enterprises like… you know, like Microsoft, and Apple, and Ebay.

Remind me again why the UK has none of those companies?

I’m personally partial to Asia taking over. It doesn’t make sense for a small island to have any major say in the world, unless people still hanker after some lost glory.

Laura,

I suggest you spend a while witnessing at first-hand the economic growth and desire for expansion in China and India – it will answer your question.

The economic development there might not look nice, fair or to much benefit of those at the bottom of the heap – but it’s growing and heading our way. Take cover. We in Europe should look and learn – to mangle Bill Clinton’s phrase: ‘It’s productivity, Stupid”.

@15

Ah good, an area of potential substantial economic growth then… Not sure what this means, since infrastructure is a broad term – but I do agree that our transport inftrastructure at least is crap. I would also suggest this is because it is controlled almost entirely (as is most infrastructure) by government…

Well except for the railways and buses. And as we all know private involvement in those parts of our infrastructure have been a huge success! Most transport infrastructure in Germany, France etc is controlled by the government but is vastly superior to ours. Could it be that those countries understand the value of long term public investment, and dont have the purse strings controlled by beancounter treasury types?

I’ve been looking through the Wikipedia, and there are two islands in the Pacific, one called Sodem and the other Goborrer. In Sodem there are two rich families worth a hudred cowrie shells each, and eight poor ones with twenty each – total wealth 360 shells. In Goborrer there’s one family with 355 shells (almost as much as everyone in Sodem put together) and the other nine have five each – total wealth 400 shells.

Watchman, Tim Worstall and all the other usual suspects would like us all to go live in Goborrer – Sodem, they say, is finished.

Because Kojak is 100% on the money. If your job doesn’t involve touching your client/customer or some other personal contact (cafés are probably going to be OK) it will go East in the next twenty years. Much face-to-face contact, such as GPs, will also go East as video linking becomes the norm.

Only those despised merchant bankers and currency traders in the Square Mile (despised because they don’t make goods or provide a service, they gamble) stand between the British economy and a Greek-type bankruptcy. Everywhere north and west of the Watford Gap receives more in subsidies than it pays in taxes.

And the City is where it is because it’s pretty much the only English-speaking conurbation in the relevant time zone. The only one, that is, until Cape Town wakes up to its potential, cuts loose from the rest of South Africa, installs decent broadband and offers the bankers year-round sun and surf. Then London will just be an obese Reykjavik…

@20

“Only those despised merchant bankers and currency traders in the Square Mile (despised because they don’t make goods or provide a service, they gamble)”

“And the City is where it is because it’s pretty much the only English-speaking conurbation in the relevant time zone”

You obviously need to have another read of Wikipedia

@17. Suitpossum: “Indeed, in ten years time, I’m sure the effort I’ve exerted will be worth more than if I was starting little enterprises like… you know, like Microsoft, and Apple, and Ebay.

Remind me again why the UK has none of those companies?”

The UK is very good at tech businesses that are big in their space and which nobody has heard about — have a look at automotive design, aerospace, materials science, biological science etc. And there is one little company called ARM that earns a spectacular sum per employee, selling technology licences to companies like, err, Microsoft and Apple.

Indeed Charlieman – but it’s punching way below it’s intellectual weight. I was lucky enough to spend time in one of the UK’s world class academic institutions, and yet almost none of the amazing engineers / scientists I met ever end up working for those companies. You know where they ended up working?

Yeah exactly. You do know where they ended up working, and every time that happens that’s pure opportunity cost, one less person working on the next big thing, and one more person working on the same old algorithms.

I agree with the gist of the article about the drivers for growth for an economy with well-paid jobs. Infrastructure in the UK is definitely an area where government could facilitate an improvement. Education and training especially in R&D is crucial to make us more competitive and government has a vital role to play. Moreover, what should not forgotten is being a competitive economy does not mean cheap. An economy where workers earn low wages is by definition an uncompetitive economy and that is why they pay low wages. For example, the most competitive economy in the world is Switzerland, and not surprisingly their pay matches their competitiveness. The more competitive your economy the higher your wages will be and that creates a virtuous cycle.

UK productivity is still below comparable nations. However, it was remiss of you not to mention that the UK has had the fastest growing productivity in the G7 since the early 1990s. Moreover, why did our productivity from being in front of others fall so far behind? Post-WW2 statism that turned our workers from being the highest paid in Western Europe to the lowest paid by the 1970s. Some still cling to the delusion that it was some sort of golden age. As you say, our productivity still has massive room to improve. However, we will not do it by cutting funding to our youths education and training.

I just do not get the fear some people have with the rise of China and India etc. Trade is not zero sum and it will benefit us all as they get richer. Moreover, it is invariably a fatal mistake when people extrapolate present trends into the future. Those two giants alone have massive problems that they need to overcome to be high-income economies. For example, China has a long way to go just to catch up with living standards in places like Mexico. Behind the first world coastal cities in China are 800 million living in abject poverty. Per capita wealth of Albanians is considerably in front of India. Most countries do not make it to high-income and get stuck in the middle-income trap. Although, they are developing I can’t see them having the type of society and civil institutions to do a Japan. Those two will certainly grow and become more important just through their size. However, behind the investment bank PR bollocks lies a lot of possibly intractable problems.

An Asian century? Good luck to them if that is the case. Certainly nothing to worry about and we should see it as opportunity.