Policy Focus # 2: Why the BNP’s manufacturing plan would lose 8 million jobs

The BNP wish to return Britain to the fifties and to a strong manufacturing economy. They believe that such an economy will reduce unemployment, inequality and poverty.

The BNP believe that their system of trade barriers will allow the rebirth of manufacturing in Britain. Unfortunately, government policies of ‘picking winners’ have a poor track record of successfully identifying infant industries. Japan’s Ministry of International Trade and Industry originally backed the steel and chemical industries, not cars or electronics. The growth of the Asian Tigers, the BNP’s chosen role models, was more likely due to a combination of their population’s high savings rate and ‘catch up’ growth from starting such a long way behind. Neither case holds in Britain.

While our history of low trade barriers is a crucial part of Britain’s economic success, it is important to understand that free trade isn’t a silver bullet. It is both possible to grow with trade barriers and to destroy an economy without them. The best way to judge a party’s economic party is in the aggregate. Unfortunately, there are serious worries about the rest of the party’s economic platform.

The BNP’s ambition is to massively restructure the economy. Rather than a services economy, we would becoming a manufacturing power, whilst areas like the city were allowed to stagnate. The era of cheap foods and supermarkets would be turned back to an older world of small farms. Newly privatised firms would once again be run by the government. Workers and trade unions would again play a significant part in the economy.

The balance of sectors and industries are based on long running and economic political forces. It depends on the march of technology, on a country’s comparative advantage, the productivity of its workforce and institutions and the constant evolution of consumers’ desires and demands.

While manufacturing productivity continues to improve, consumers desires increasing are dominated by service industries : healthcare, communications and so on. While Britain suffers in manufacturing from a shortage of cheap land, labour and natural resources, in contrast as a highly educated, creative English speaking country with cultural links across the globe the UK has a strong comparative advantage in services, and there is no reason for it not to flourish in the coming century.

Throughout the last hundred years we have seen the economic turmoil that can result when an industry ceases to be economic, and is forced to close. In many cases, long term trends mean change is unavoidable and has to be adapted to as best as possible. The BNP on the other hand seems to wish non forced cutbacks in many of the UK’s key service industries. Even if this is possible, the bill will be enormous : soaring unemployment, increased social tension and rocketing welfare bills.

It is also worth noting that as part of their distributist ethos, the BNP seeks after meaningful work. Services work, whether through its high level of personal interaction or high reliance on creativity and analysis, can often be more varied and interesting than manufacturing work. Mining towns often had a strong community spirit, and it is a shame that this has been lost; it is not so clear that we should be so keen to send people back to the pits.

7.1 Return Britain to a manufacturing economy

The BNP believe that their system of trade barriers will turn Britain back into a manufacturing economy.

In the 1960s 39.4% of employment was in manufacturing, whereas in 2007 this has dropped to only 13%. Let us suppose that the BNP wished to return to this level.

This would require around 25% of the working age population to move industries.  The labour force of the UK is currently around 31 million so in effect this would mean that somewhere in the order of 8 million workers would need to begin jobs in the manufacturing industry.  Unemployment is currently 7.5% and economic inactivity 22 % – unless near everyone currently not in work, including the ill and disabled, began to work in manufacturing this would have to require massive transitional unemployment as people moved between industries.

The BNP want to rebalance the economy away from the what the BNP believes to be the “artificially created” service sector in favour of the “real money” creating manufacturing sector in the vein of the East Asian tigers. They believe that this would provide more meaningful work, a more secure future for the economy, and new jobs for the long term unemployed. The BNP’s trade barrier policy, discussed here, is part of the same plan, imposing a £80bn tax rise on imports.

Here’s why it wouldn’t work :

- To start with, it would require 8 million people to change jobs. In the 1960s 39.4% of employment was in manufacturing, whereas in 2007 this has dropped to only 13%. If the BNP wished to return to this level, this would require around 25% of the working age population to move industries. The labour force of the UK is currently around 31 million so somewhere in the order of 8 million workers changing jobs to the manufacturing industry. The welfare bills and public misery for this transition would be enormous.

- We’re not trained for manufacturing. The workers of today have been overwhelming trained to work in services. Office workers simply have no skills in manufacturing work. Just as the transition from the manufacturing sector to services generated enormous social pain in British society, there’s no reason to believe it wouldn’t be just as hard as going in the opposite direction – except this time we would be fighting economic gravity. You can’t simply take a generation who have been trained to be web designers and care workers and ask them to return to the mine or the factory.

- It misunderstands economic history. Britain was once a great farming country, where the vast majority of the population worked the land. In the industrial revolution, Britain instigated the world’s first modern age of economic growth and in turn became the workshop of the world. These days, Britain’s contribution has changed again : now we are a world leader in business services and aeronautics, computer games and fashion, chemical engineering and (yes) finance. This is a natural process, not some great conspiracy for a capitalist elite.

- Services are the core of Britain’s economy – and the future of the world’s. Britain is an island with little land, a highly expensive workforce and relatively few natural resources. On the other hand, we have historic links with countries across the world, speak the world language and a highly educated, creative workforce. Services are clearly our comparative advantage – to focus us on manufacturing would be crazy. What is more the industries of the future – entertainment, the web, health care – are the industries where we have a strong track record. Countries that have focussed exclusively on manufacturing, such as Japan and Germany are beginning to struggle.

- The East Asian example is misleading. Davey suggested yesterday that Britain should use Japan as an example, and we see the same idea often in official BNP literature. But Britain is not an agricultural country trying to modernise and enjoying catch up growth. Many of the Japanese MITI’s chosen industries were a complete failure – ‘picking winners’ doesn’t work. And in any case, we see now the limits of the Japanese model – a twenty year slump, with the country unable to sustain consumer demand.

- Returning to the age of British Leyland would be a disaster. It is easy to dream of creating a British Sony or Toyota, but in reality we’d end up with another Spectrum or British Leyland. As more recently, the collapse of Metronet have shown us, Britain does not have a glorious record of public/private partnerships. We’d end up with a segregated economy – an unwieldy and inefficient manufacturing sector kept on life support by government money, paid for by a private sector strangled by excessive taxation. Britain has tried industrial planning before, and it didn’t work.

- British workers can’t compete with Asia – let alone robots. British workers on £20,000+ a year are never going to be long term competitive in a global economy where one sixth of the world population subsists on a dollar a day. But that’s only half the story. Manufacturing is in many ways a victim of its own success, with ever increased productivity and use of automation. And short of a neo-luddite revolution, there’s no going back on that.

- It points us in the wrong direction. It is a tragedy that some have been left behind by globalisation and we should do everything we can to provide them with training and new skills. But by propagating nostalgic solutions of returning the whole country to manufacturing the BNP is just avoiding the hard task of figuring out how exactly to do that.