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Economic Crisis
Sunday, 18th December 2011 18:33 PM
I’v e been watching the Robert Peston programs on the state of the Western economy “The Parties Over – How the West Went Bust”. I would recommend it as an explanation for how we got into the pickle we are in and how we may be able to get out of it. You should be able to catch it on Iplayer.
It seems that the profligate west have been living on the savings of the Chinese. Most Chinese save a large proportion of their income whilst we in the west, instead of saving, live on credit. British indebtedness means that on average every person in the country owes £30,000. The reason for this is disparity was partly explained by China’s history of economic deprivation and famine. This makes them determined to maintain a personal safety net against misfortune and old age. Parents also have great ambition for their children so save to provide for education. Compare this with Britain and the west our memory of hard times is getting vague and we have a welfare system that provide a communal safety net. As a wishy washy liberal I find it difficult to say it but I think our welfare state has helped get us into this mess. However I don’t think the guilt is all ours, we have been encouraged in this lifestyle as it consumption is required to keep the sytem going.
Peston also discussed the shrinking of our manufacturing sector, it’s now down to 13%, in favour of the financial sector. Now I don’t want it to sound like I’m saying I told you so, but I can remember when, in the eighties, Thatcher hacked away at our manufacturing sector, thinking that surely the health of an economy depends on making things. It seems that in the last twenty years we have lost sight of this. I don’t understand why more people, especially those that claim to know about the economy, did not query this.At the recent Northern Contemporary Furniture Makers Gathering Nicholas Dyson also spoke about the current crisis. In a wide ranging talk at one point he talked of the financial sector being an abstractive industry “ there is no product, no service, no wealth created, simply wealth abstracted and concentrated in the hands of a few”. See the text of his talk here.
I’d be interested to hear what others think of this.