Responding to Economic Impacts of Globalisation
It is imperative that the UK economy remains stable and robust, while at the same time becoming increasingly flexible in the face on ongoing – and anticipated – shifts in global patterns of supply and demand. While state direction of, or participation in, the economy has been shown to be unhelpful, only governments have the broad perspective and capacity to ensure that these twin goals are kept in sight. Liberal Democrats argue that UK authorities should recognise and embrace their responsibility in this regard. They also call for the strengthening of regional and local government, in order to help communities to respond to globalisation sustainably, in different ways, appropriate to their circumstances.
Over recent decades, the UK economy has moved away from an emphasis on industry and focused increasingly on the service sector. This has made the most of our areas of comparative advantage and recognised sectors where overseas competition is stronger. In recent years, our traditional competitors in Europe, America and East Asia have been joined by the rapid rise of large emerging economies such as China, and India. This has further increased the need for the UK economy to develop in highly specialised areas, as unskilled production becomes ever less viable and white-collar ‘backroom’ jobs also face competition via outsourcing.
The 2006 Leitch report, commissioned by the government, acknowledged that “our nation’s skills are not world class”, threatening our future prosperity. While greatly improved investment in education and training has always been a Liberal Democrat priority, it is important to remember that people with a well-rounded education are often the most innovative and flexible. To what extent should Liberal Democrats share Leitch’s – and the government’s – emphasis on “economically valuable” and “demand-led” skills, for example, in the light of British success in the creative industries?
The government’s response to economic aspects of globalisation can be characterised as building on existing strengths. This includes, for example, the notion of ‘clustering’ – encouraging firms in particular sectors to concentrate around pools of skilled labour, networks of experts and markets. This can help regions to become globally competitive, but can also create risks, should global demand decline in those sectors. Liberal Democrats need to consider whether this is the right strategy; or whether it would be preferable to encourage greater local diversification.
Issues to consider
- What roles should different levels of government take in responding to economic aspects of globalisation?
- What infrastructural and technological developments are needed to enhance UK competitiveness? What role should government play in delivering them? What are the risks of state intervention in this area?
- What should governments do to help British companies to attract investment and compete in global markets?
- What range of skills should we seek to develop? What should the role of employers be in maximising the skills of their employees?
March 25th, 2008 at 5:49 pm
(8. (no response: don’t know enough about how government currently works to be able to give any reasoned answer)
(9. The UK’s poor quality transport infrastructure is costing us billions of pounds of lost time and business in the form of congestion. The railways are a mess. I don’t know what we can do with the railways, but we need to drastically expand our transport infrastructure in all areas: road, rail, sea and air if we are to maximize our global potential. I am not a transport expert, but here are a few ideas:
- a new central England super-airport to take pressure off the London airports, served by super-fast point-to-point rail links to all major cities within 60 minutes’ bullet-train-travel.
- more point-to-point rail services generally: they are fast and efficient, and easy to run.
- town centre congestion charges and road tolls across the country, with the profits ploughed back into more transport infrastructure improvements. (NOTE: as a liberal I am “anti” any national road pricing scheme. National schemes are unproven, unwieldy, could be abused centrally, etc)
- more mass transit services, locally owned and operated.
Government involvement should be at the lowest level possible, with an eye to creating good-quality markets wherever possible. The shambles of rail privatization should not be repeated.
(10. Abolish Employers’ NI, a tax on hiring people.
Bring in a Citizen’s Basic Income, so that every citizen has a large incentive to work rather than the super-high withdrawal rates benefits claimants are currently subject to.
Unilaterally drop barriers to trade and investment, attempt to join NAFTA, do whatever it takes to put the “free” into “free market”. Clearly we should keep a sharp eye out for international monopolies, cartels, etc, but the fewer charges we levy on business, the more businesses will come here. The easier it is for businesses to set up shop here, the more will do so.
(11. We should allow our children and teachers the ability to figure out for themselves which skills they will need. By putting in place a learning fund for each child that they can access throughout their life, we could put the decisionmaking power into the hands of the individual.
That said, it has been a great shame that we have seen the decline of science and technology as popular subjects at A-Level, degree level and beyond, and if we are to ensure that we maintain our technological advantage then I think that it is imperative that we massively incentivize the teaching and learning of science and technology, and also the basic research necessary to underpin scientific progress.
Teaching quality of sci/tech subjects seems to be being eroded by a government desperate to produce ever-higher exam results. We need to put the curriculum and the school inspection regime beyond politics, and ensure that both are overseen by high-quality individuals and committees that are not appointed by politicians.
Learning sci/tech subjects should be popular - those studying them enjoy intellectual jobs and large salaries later in life. For some reason, children do not want to do them. A learning fund out of which a child will pay for their own education could incentivize them to make the financially smarter decision. The government can help by ensuring funding for sci/tech endeavours (space travel, biochemistry) at all levels, from PhDs and other basic science activities to sponsoring “X-Prizes” for individual project successes.