The problem with the Regional Growth Fund is not just that it is only a third of previous regional spend. It is also ‘deadweight’ spend, because it has been largely directed at private sector projects that could/should have happened anyway from corporate surpluses/borrowing rather than the public infrastructure projects that Clegg now apparently supports and which create the space for further investment.

The RGF all about quick job outputs-on-paper for political show purposes (the results of round 1 were pushed through at great speed just before the local elections as a vote booster for the libdems, but it would now appear that not a single penny has yet been spent.

Business investment may be desperately needed, but who is going to invest when there is no demand?

Whats happened to Sally? She aint been around for ages?

camerons brown shirts…..

Question: “Business investment may be desperately needed, but who is going to invest when there is no demand?”

Answer: If private institutions won’t invest them by a process of elimination it has to be public institutions, aka the state.

The only other alternative – no investment and rising unemployment – means social disintegration.

We need to create five million jobs to end unemployment and under-employment. This can be done if the state works to rebuild British industry, including (especially) manufacturing industry.

This requires a determination to control markets in the interests of the mass of the population (People Before Profit).

We need a national plan to rebuild the UK economy. To develop and implement this plan, the Government needs to bring together business, the trades unions, the professional societies (IMechE, IChemE,etc.) and universities. The planning of the UK economy cannot be left to the City of London – indeed they should be excluded from it, because they have failed for too long.

The policy mix would include the reintroduction of capital controls and a long-term commitment cheap pound.

The speech had one sensible implication – bringing forward capital projects to a period of economic slump is a good idea that can help stimulate the economy as a whole.

It didn’t have much detail of course, and the detail will hopefully come in November from George Osborne (who’s speech it really was that Nick Clegg gave yesterday).

But at least the government has given some indication that it may have taken on board that its efforts so far have been utterly misdirected (cutting corporate taxes and so on won’t rebalance the economy as it benefits firms with generic needs, and we have plenty of them – nor will it act as much of a stimulus as the money leaks abroad)

So they’ve finally made it to square one. Whether they ever move beyond it remains to be seen.

Also – in case anyone missed it – Clegg killed of HS2 yesterday.

A major speech on infrastructure and he had been banned from mentioning HS2 among many other projects mentioned.

If ever a sign that it is being mothballed (at best) was needed – that was it.

“We need to create five million jobs to end unemployment and under-employment. This can be done if the state works to rebuild British industry, including (especially) manufacturing industry.”

Erm, what are they going to make? Any bright ideas?

There’s millions of companies out there, millions of entrepreneurs who would just love to know what the next big thing is going to be. And they’re all trying to work it out too.

What actually is there that you’d get 5 million people to make?

You are, after all, talking about increasing the size of the manufacturing workforce by 200%…..at a time when the global manufacturing workforce is falling.

What are you going to get people to manufacture?

BAH! As the president of Sally’s fan club, I can assure you that she’s still around and has posted here this week. I just wish she’d pop over to the forum which I co-administer and give our Tory members the benefit of her incisive comments:-
http://cuttingedgeuk.proboards.com/index.cgi

“You are, after all, talking about increasing the size of the manufacturing workforce by 200%…..at a time when the global manufacturing workforce is falling.

What are you going to get people to manufacture?”

In 2009 the UK imported goods worth £309 billion – food, energy, clothing, and the thousand and one bits of hardware we use in our lives. But the UK only exported goods worth £227 billion, giving a deficit of £81 billion.

But things will get much worse as North Sea oil runs out. The UK was an oil exporter from 1980 to 2005. The oil revenues paid for the Thatcher-Blair boom. The oil revenues enabled the Government to create service jobs to replace manufacturing jobs. In 2009, the UK still produced oil and gas to the value of £40 billion. Over the next decade or so, production will fall to zero, leading the deficit in the trade in goods to rise from £81 billion to £120 billion.

If we want goods then we are going to have to learn how to make them ourselves.

This is not a bad thing since it provides proper jobs.

“In 2009 the UK imported goods worth £309 billion – food, energy, clothing, and the thousand and one bits of hardware we use in our lives. But the UK only exported goods worth £227 billion, giving a deficit of £81 billion. ”

So you’re going to employ 5 million people to produce £81 billions’ worth of goods then?

Total output per job of £16,200 a year then? Take off whatever for raw materials, capital etc and they’re going to be pretty shitty paying jobs, aren’t they?

@8 “What are you going to get people to manufacture?”

I wonder how Germany and China came to dominate the green power industries?

@12: Germany? Feed in tariffs which cost $1070 per tonne of CO2 not emitted. That cost being over 10 times the damage done by the emissions.

As a result, a US company called First Solar set up factories in Germany to suck that subsidy out for the benefit of their US owners.

BTW, First Solar is the world’s largest manufacturer of solar panels. They employ all of 6,000 people in total (not just manufacturing in Germany, but globally in total).

So you’ve some 4,994,000 jobs still to find.

China, pretty much the same story except most of the Chinese solar PV companies are going bust.

@8 – Tim, ooh, we might boost our media industries!

Oh wait, the Tories cancelled the games tax break (identical to the highly profitable, for the Treasury, film tax one, and projected to return 5 to 1…) three days into power, and clobbered the central clearing house for film production in the UK, giving us our worst year since 1992 (and the replacement plan actually costs MORE).

Nope, okay, can’t do that, it’s ideologically impermissible…er…

“boost our media industries!”

Media is services not manufacturing. You said you wanted more manufacturing.

So, what are you going to get 5 million people to manufacture?

*I* didn’t say anything of the sort. Jobs are jobs, and the government (and you) are being narrow minded as to what kind of jobs we should have, on an ideological basis.

@16: Apologies, not reading properly, got you confused with George.

“you) are being narrow minded as to what kind of jobs we should have, on an ideological basis.”

I am? I’m delighted for people to do absolutely any type or kind of job where the value produced is greater than the cost of the inputs. That’s all I ask, that the job add to the net wealth of the world.

What that job actually is, from manufacturing whippet flanges to running a nail bar or providing car insurance to foreigners, I really don’t care.

It isn’t me running around saying “we’ve got to expand manufacturing” or anything of the kind, is it?

Case of mistaken identity then!

Basically, I’m poking the government on this, as you might understand, because they’ve taken measures in the media sector which have COST money and hurt the sector.

This doesn’t make any sense, it’s ideological and the government deserve to be poked over this.

(Its not like people making films or games were…oh…. arms manufacturers. … Oh, wait!)

@13. I’ll look out for the German and Chinese economies going tits up then.

“First Solar is the world’s largest manufacturer of solar panels. They employ all of 6,000 people in total.”

I’d sooner pay for that wealth to trickle down than bankers’.

Tim Worstall asked:
“So you’re going to employ 5 million people to produce £81 billions’ worth of goods then?”

No. Read my post.

1. £81 billions’ worth of goods is the MINIMUM we need to get our balance of visible trade in order in the SHORT term.

Things will get much worse as North Sea oil runs out. As I said “In 2009, the UK still produced oil and gas to the value of £40 billion. Over the next decade or so, production will fall to zero, leading the deficit in the trade in goods to rise from £81 billion to £120 billion.”
2. The long-term figure is £120 billion if things are to remain as they are.
But why should things remain as they are?
“In 2009 the UK imported goods worth £309 billion – food, energy, clothing, and the thousand and one bits of hardware we use in our lives.” There is no reason why the UK could not produce some of these goods.

3. I said we needed 5 million jobs. I did not say they all had to be in manufacturing.

I think that anywhere between 2 to 3 million extra manufacturing jobs would be enough.

Currently we have about 2.5 million people in manufacturing. Don’t forget that not so many years ago (when the work force was smaller) it was 7 million.

Doubling the number of manufacturing jobs would not be excessive.

Of course productivity might fall: but so what? I am not talking about diverting people from other productive work. This is about mobilising unused resources. Every new job would mean one less person on benefits and one extra tax payer. This would do wonders for the public finances.

Forget about more jobs. Ain’t gonna happen.

The sooner we accept and learn to love the fact that technology and productivity increases inevitably lead to the leisure society that we were all promised decades ago, the better for everyone.

This work obsession is a puritanical wet-dream.

Get used to the idea of people enjoying themselves with less material rubbish and leave all those who are already happy not plodding off to slave for someone else’s profit, to their pittance.

I love that people ask “what are we going to manufacture” and things like that.

Our job is to enable markets to decide those things. But we are a massively uncompetitve country – our infrastructure is ranked about 27th in the OECD – and that means that firms simply don’t choose to develop here. Small firms that might grow relocate to countries with good infrastructre – and international firms looking for locations don’t choose the UK.

Of course this is unless the company’s needs are generic (office space, desks, chairs and computers) – these service sector companies can be attracted by low taxes. But as the government has pointed out – our economy needs rebalancing so we are less dependent on the financial services and London.

So lets not worry about what sectors develop and instead focus on just being competitive so some sectors can develop.

“Of course productivity might fall: but so what?”

The “what” is that wages equal productivity (in the long term) and productivity equals wages.

So if productivity falls so do wages.

Quite a large “what” actually.

“productivity equals wages.”

since when?

“So if productivity falls so do wages.”

and vice versa?

I am taking about the productivity of some of the marginal workers.

The alternative to employing them is to pay them to be idle.

This is just a waste.

@21 – So…cyanide pills for the poor, then?

oh look – more idiotic miscomprehension of productivity figures.

for once I’d like some one, anyone who professes to know anything about economics, just one of them, to acknowledge the inherrant lie in the nature of productivity figures

The fact is that rising unemployment pushes up productivity because those who lose and stay out of work tend to be less educated, and thus in less productive jobs and careers than those who stay in work.

and because once they are unemployed they no longer impact on productivity figures – the result is that producivity is as much a product of a nation’s unemployment norms as it is a product of advancing technology or working practices. . .

“and because once they are unemployed they no longer impact on productivity figures – the result is that producivity is as much a product of a nation’s unemployment norms as it is a product of advancing technology or working practices”

But I have made this point many a time. French productivity per hour worked is higher than UK (at least it was a few years back) and everyone used that as an argument that we should work more like the French. Shorter work weeks etc.

Yet France also had a higher unemployment rate than the UK, meaning that, as you say, more of their least productive workers were unemployed and tfus not included in the productivity figures.

If we’re going to make this point we should at least make it consistently, yes?

@margin4error

I agree. As with all statistics you have to understand how the data is collected and processed.

To use a cricketing analogy, you can increase the batting average of your players in a match by ”not sending all your team into bat”. This may look good in the record books but in cricket Captains don’t do this because they know that it is the total of run scored that counts.

However it is to the only thing going on in our productivity figures. It is not just the less educated and less productive who are being “left in the pavilion”.

Amongst management consultants it is a well known phenomenon that you can cut the workforce of most organisations by a significant amount, say 10 percent, without seeing any fall in total production, thus increasing productivity. This makes sense since, over time some slack builds up and the surviving workers take it up. What is odd is that this culling exercise can be repeated in a year or two with the same result. And then again in another two years. Surely, more slack didn’t appear so quickly? What is going on?

The answer to this puzzle is a follows. There are two types of work. To avoid prejudice I call them Type ‘A’ and Type ‘B’.

Type A is ‘transparent’ in the sense that its output is highly quantifiable. For example, bricklaying or assembling components. There can be very little doubt about what has been produced. Increasing productivity (output per hour) for type ‘A’ is possible by increasing effort, improving skill or through some more radical reorganisation of the work such as mechanisation.

Type B is far more qualitative and difficult to quantify. It is not ‘transparent’ and therefore there is a great deal of uncertainty about what has been produced. In fact the only solid indication of ‘production’ will be the income of the organisation. Example can be found in many areas, such as management and supervision. Planning, quality control, maintenance and safety are other areas. Some type ‘B’ tasks are a for insurance. They represent spare capacity in the system to cope with contingencies.

In modern organisations type ‘B’ functions form a high proportion of what people do. This explains the apparent miracle of a staff cull.
It should be obvious that there are very few ‘quick fixes’ to improve type ‘A’ productivity and reducing the number of people doing this sort of work will result in a proportionate fall in total output.

Cutting the number of people doing type ‘B’ jobs does not (in the main) improve the output of the remaining workers. All that happens is that things that used to be done are left undone. Because these are qualitative and intangible this is not immediately apparent. So long as the organisations continues to function and sale (income) remains stable then it appears as though productivity has increased.

But only for so long. In the long term there will be consequences for things being left undone.

Not surprisingly, one of the side effects of repeated staff culls is loss of quality, reputation, sales ans ultimately bankruptcy.