is it time for another thread - the economy?

[birdseye]

The thread on polling seems to swing back and forth between the virus and voter polls - an odd situation really. But much of the discussion is nice and even tempered and non agressive which after the political threads on the likes of Pistonheads or even the ones that were finally banned on my sailing forum is great

So in the hope that we could have an intelligent discussion on the subject I give you the British economy and its relative decline from the pomp of the late 1800s. No I wasnt there at the time but as a 76 year old I can remember when the $ was 2.8 and the DM was something like 10 to the £. When France by comparison to the UK was a peasant economy not to mention Italy. How things have changed.

But as a life long investor, the things that strike me most are the disappearance of many large British businesses and their non replacement by new one. Go on and try to find a Britsh equivalent of even one of the American tec giants - you wont succeed because its as mythical as a unicorn. But even look at basic manufacturing industries like vehicles, steel, glass , aluminium, chemicals - they exist in wealthier economies like France and Germany not to mention the USA but only in a minor way in the UK.

In the final analysis, the avegae income in the UK relates directly to average productivity as in GDP/head. You cant share out what you havent got.And this relative decline particularly in highly productive manufacturing means there is less to go round.

So lets have a discussion about the economy and maybe a way forward.

[Deleted]

Does this include bringing utilities and transport back into fully publicly owned and controlled ownership?

[Deleted]

There is a separate section for 'Issue Specific' topics.

ukpollingreport2.proboards.com/board/4/issue-specific

That would be the place to start an issue specific thread. I'd also suggest those who still want to refight Brexit start up a thread there to save it clogging up the main discussion thread.

[Deleted]

Lots of rules all of a sudden.

[leftieliberal]

nickp Not rules; more like conventions. Mark set this board up with the freedom for anyone to start a new thread and the majority of members have voted in favour of a polling thread and one or more other threads (voted with their feet by posting in these threads as well as in the poll). Some members have carried on discussing other topics in the polling thread and no-one is stopping them doing that either.

[Deleted]

Looking at the huge influx of members here, it looks like AW basically sabotaged his own site by denying it new blood and choking it to death. Weird

[Danny]

Not so weird perhaps. Lots of interest groups circling to invade and run into the ground political discussion. If you cant move it your way, better to make it unmanageable and close it down.

Birdseye, Covid and Brexit seem to have added another twist to the spiral of decline. Weak pound and more UK companies bought out to be shifted abroad. Brexit making it (more) uncompetitive to manufacture within the UK.

[birdseye]

I do not see a Brexit induced economic hit as a fact as yet Danny. Business development is far more long term and with far more inertia in it. Thats not to say that it wont be a significant issue after say 10 years outside the EU - just that its far too early and too clouded by Covid to say that its a major issue now. Yes Covid has hit us as it has hit every western economy but thats an unfinished event.A weak pound is the normal state of affairs and ought really to be irrelevant - its just an adjustment required to keep a weak economy aligned with stronger economies.

For me the real question is that weakness. Why is it? In Victorian days we were economically dominant. Now we are economically dependant. In the old days we were innovators, nowadays we are not or as you say we happily sell off what little innovation we create. NickP's idea of state control simply doesnt fly - you saw what that approach did for the USSR and indeed for China until recent years.

The question is two fold IMO. The first is why arent we more innovative? The second is why dont we build big companies on the back of our innovations and instead sell them off? Or if you want to put it another way, why are there no British Apple, Google, Amazon , Microsoft etc? As a side issue you might ask yourself why there are no EU equivalents either

[js]

Spotify?

[guymonde]

Dec 11, 2021 9:18:57 GMT birdseye said:

I do not see a Brexit induced economic hit as a fact as yet Danny. Business development is far more long term and with far more inertia in it. Thats not to say that it wont be a significant issue after say 10 years outside the EU - just that its far too early and too clouded by Covid to say that its a major issue now. Yes Covid has hit us as it has hit every western economy but thats an unfinished event.A weak pound is the normal state of affairs and ought really to be irrelevant - its just an adjustment required to keep a weak economy aligned with stronger economies.

For me the real question is that weakness. Why is it? In Victorian days we were economically dominant. Now we are economically dependant. In the old days we were innovators, nowadays we are not or as you say we happily sell off what little innovation we create. NickP's idea of state control simply doesnt fly - you saw what that approach did for the USSR and indeed for China until recent years.

The question is two fold IMO. The first is why arent we more innovative? The second is why dont we build big companies on the back of our innovations and instead sell them off? Or if you want to put it another way, why are there no British Apple, Google, Amazon , Microsoft etc? As a side issue you might ask yourself why there are no EU equivalents either

I always thought I would get around to researching this when I retire but as I don't seem to be in any danger of retiring and I'm not much good at research beyond the superficial and probably prejudiced I might as well share some theories. This is a long post, very uncharacteristic of me, so apologies, but I hope it provides some food for thought, or ridicule
1)British consumers are anti-patriotic, egged on by the anti-patriotic press. Example: I worked for Renault in the 1970s. Their cars were crappy unreliable rust buckets with a bit of innovation. At the time British Leyland were also producing crappy unreliable rust buckets with a bit of innovation. The great British public thought Renaults were exotic and wonderful, and BL cars were boring crap. On another thread here it's pointed out that the dominant F1 car of the last decade is engineered in the UK - the chassis/body/concept in Brackley, the engine in Northampton. It is owned by a German company and the German national anthem plays when it wins. At the same time a shampoo gloop is being advertised as 'German engineering for your hair'
2) see above: BL had the following brands - Austin, Morris, Riley, Wolseley, MG, Austin-Healey, Vanden Plas, Jaguar, Rover, Triumph, Land Rover, Daimler. Renault had the following Brands: Renault. Management was too conservative/weak to kill brands, mainly because they thought it would upset the dealer network.
3) Financial markets (and probably regulation). The UK is subject to rapacious asset stripping. When I was a lad butterscotch meant Callard and Bowser. I turn to Wikipedia: The company was founded by two Scottish brothers, Richard Callard and John Bowser, in 1779 in Maryhill, Glasgow during the Scottish Enlightenment period.[citation needed]
Callard and Bowser was owned by Arthur Guinness & Sons from 1953 to 1982 when it was acquired by the American conglomerate Beatrice Foods. In 1988 it was purchased by United Biscuits. In 1993 the company was sold to Kraft Foods who operated it until its 2004 acquisition by Wrigley.
If you want butterscotch now you need to look further than C&B and buy Werther's 'Original'
Wikipedia: The sweet brand is named after the town of Werther in Westphalia, where the company was founded in 1903. In 1969, the sweet began marketing under the brand name Werthers Echte. The brand name Werther's Original was adopted in the 1990s for the international market.[2][dead link] They are now manufactured nearby, in Halle (Westfalen).
The manufacturer is August Storck (which also owns the quintessentially English brand Bendicks of Mayfair (made in Germany)) This is a 4th generation family company owned by Axel Oberwelland (they changed their name at some point from Storck as nobody could tell them apart from butter) .
Wikipedia: Axel Oberwelland (born 1 August 1966) is a German billionaire heir and businessman, the owner of the confectionery manufacturer August Storck, founded by his eponymous great-grandfather in 1903.[1] The company is best known for its brands Werther's Original, Riesen and Toffifee.
4) Industrial relations. When I was a business student in prehistoric times I became aware of the German concept of supervisory boards.
Wikipedia: German corporation law, the Aktiengesetz, requires all public companies (Aktiengesellschaften) to have two boards: a management board called a Vorstand and a supervisory board called an Aufsichtsrat.[2] The supervisory board oversees and appoints the members of the management board and must approve major business decisions.[3]
For German companies with more than 2,000 employees, half of the members of the supervisory board are elected by the employees. [4] When a German company has between 500-2,000 employees, the workers select one-third of the supervisory board.[5]
It seems to me that, had the UK adopted such a structure in the 1960s we may have had a more productive relationship between management and workers

[c-a-r-f-r-e-w]

Dec 11, 2021 19:51:35 GMT js said:

Spotify?

dunno how it matches up to the likes of Apple in terms of size, but on the other hand, there are other streaming companies in Europe - The French have Deezer and Qobuz for example, so taken as a whole, Europe does quite well at it?

[birdseye]

Dec 13, 2021 0:54:13 GMT guymonde said:

I always thought I would get around to researching this when I retire but as I don't seem to be in any danger of retiring and I'm not much good at research beyond the superficial and probably prejudiced I might as well share some theories. This is a long post, very uncharacteristic of me, so apologies, but I hope it provides some food for thought, or ridicule
1)British consumers are anti-patriotic, egged on by the anti-patriotic press. Example: I worked for Renault in the 1970s. Their cars were crappy unreliable rust buckets with a bit of innovation. At the time British Leyland were also producing crappy unreliable rust buckets with a bit of innovation. The great British public thought Renaults were exotic and wonderful, and BL cars were boring crap. On another thread here it's pointed out that the dominant F1 car of the last decade is engineered in the UK - the chassis/body/concept in Brackley, the engine in Northampton. It is owned by a German company and the German national anthem plays when it wins. At the same time a shampoo gloop is being advertised as 'German engineering for your hair'
2) see above: BL had the following brands - Austin, Morris, Riley, Wolseley, MG, Austin-Healey, Vanden Plas, Jaguar, Rover, Triumph, Land Rover, Daimler. Renault had the following Brands: Renault. Management was too conservative/weak to kill brands, mainly because they thought it would upset the dealer network.
3) Financial markets (and probably regulation). The UK is subject to rapacious asset stripping. When I was a lad butterscotch meant Callard and Bowser. I turn to Wikipedia: The company was founded by two Scottish brothers, Richard Callard and John Bowser, in 1779 in Maryhill, Glasgow during the Scottish Enlightenment period.[citation needed]
Callard and Bowser was owned by Arthur Guinness & Sons from 1953 to 1982 when it was acquired by the American conglomerate Beatrice Foods. In 1988 it was purchased by United Biscuits. In 1993 the company was sold to Kraft Foods who operated it until its 2004 acquisition by Wrigley.
If you want butterscotch now you need to look further than C&B and buy Werther's 'Original'
Wikipedia: The sweet brand is named after the town of Werther in Westphalia, where the company was founded in 1903. In 1969, the sweet began marketing under the brand name Werthers Echte. The brand name Werther's Original was adopted in the 1990s for the international market.[2][dead link] They are now manufactured nearby, in Halle (Westfalen).
The manufacturer is August Storck (which also owns the quintessentially English brand Bendicks of Mayfair (made in Germany)) This is a 4th generation family company owned by Axel Oberwelland (they changed their name at some point from Storck as nobody could tell them apart from butter) .
Wikipedia: Axel Oberwelland (born 1 August 1966) is a German billionaire heir and businessman, the owner of the confectionery manufacturer August Storck, founded by his eponymous great-grandfather in 1903.[1] The company is best known for its brands Werther's Original, Riesen and Toffifee.
4) Industrial relations. When I was a business student in prehistoric times I became aware of the German concept of supervisory boards.
Wikipedia: German corporation law, the Aktiengesetz, requires all public companies (Aktiengesellschaften) to have two boards: a management board called a Vorstand and a supervisory board called an Aufsichtsrat.[2] The supervisory board oversees and appoints the members of the management board and must approve major business decisions.[3]
For German companies with more than 2,000 employees, half of the members of the supervisory board are elected by the employees. [4] When a German company has between 500-2,000 employees, the workers select one-third of the supervisory board.[5]
It seems to me that, had the UK adopted such a structure in the 1960s we may have had a more productive relationship between management and workers

I guess we must have had similar backgrounds because I could easily have written your comments up to the last paragraph. I certainly think that the City, which is there simply to recirculate capital back into business has become a parasite on business rather than a support. The focus is on "putting business into play" and not on "defending ans supporting british business". The money changers have taken over the Temple.

Where I disagree is with your last paragraph. Leaving aside the evidence of American success without that sort of system, I worked for years for British Steel as it then was. For a period we had just the sort of arrangement you talk about, but thanks to our national history / culture it was entirely negative. Discussion involving employee representatives ( invariably union shop stewards) never focussed on busines but always on employee conditions and issues like company cars, management dining rooms etc. They were like a re run of Citizen Smith. When it came to the negotiation of the annual pay round, the way we got local agreement was always the same - to ensure that the redundancy package ( we went from 200k employees when the industry was nationalised to the same output volume with 40k employees) covered the shop stewards.

Some of this of course is historical - old industries on sites that have a hundred or more years of history have this sort of issue in spades whereas new sites like |Nissan in Sunderland can start with a clean sheet. So Nissan works, but BL under Red Robbo was a disaster.

[leftieliberal]

Dec 13, 2021 0:54:13 GMT guymonde said:

Dec 11, 2021 9:18:57 GMT birdseye said:

4) Industrial relations. When I was a business student in prehistoric times I became aware of the German concept of supervisory boards.
Wikipedia: German corporation law, the Aktiengesetz, requires all public companies (Aktiengesellschaften) to have two boards: a management board called a Vorstand and a supervisory board called an Aufsichtsrat.[2] The supervisory board oversees and appoints the members of the management board and must approve major business decisions.[3]
For German companies with more than 2,000 employees, half of the members of the supervisory board are elected by the employees. [4] When a German company has between 500-2,000 employees, the workers select one-third of the supervisory board.[5]
It seems to me that, had the UK adopted such a structure in the 1960s we may have had a more productive relationship between management and workers

I think you will find that this was a structure imposed on German industry after WW2 by the Allied Powers (although it was an optional structure since the 19th Century). Tom Brown's "Tragedy & Challenge: An Inside View of UK Engineering's Decline and the Challenge of the Brexit Economy" (Matador, 2017) discusses this in some detail, based on his personal experience.

[guymonde]

Dec 13, 2021 16:58:29 GMT leftieliberal said:

Dec 13, 2021 0:54:13 GMT guymonde said:

4) Industrial relations. When I was a business student in prehistoric times I became aware of the German concept of supervisory boards.
Wikipedia: German corporation law, the Aktiengesetz, requires all public companies (Aktiengesellschaften) to have two boards: a management board called a Vorstand and a supervisory board called an Aufsichtsrat.[2] The supervisory board oversees and appoints the members of the management board and must approve major business decisions.[3]
For German companies with more than 2,000 employees, half of the members of the supervisory board are elected by the employees. [4] When a German company has between 500-2,000 employees, the workers select one-third of the supervisory board.[5]
It seems to me that, had the UK adopted such a structure in the 1960s we may have had a more productive relationship between management and workers

I think you will find that this was a structure imposed on German industry after WW2 by the Allied Powers (although it was an optional structure since the 19th Century). Tom Brown's "Tragedy & Challenge: An Inside View of UK Engineering's Decline and the Challenge of the Brexit Economy" (Matador, 2017) discusses this in some detail, based on his personal experience.

[guymonde]

Grr I just lost a short essay.
I have the book Leftie refers to - probably based on his recommendation in 'another place' a year or two ago. However my attention span rivals the Prime Minister's so I never got to the end of it (also I found some of it irritating).
I take Birdseye's point, but would observe the UK industrial relations problems in the 1970s owed a lot to mutual mistrust, with the workers suspecting management would sell them down the river (see comments about the role of finance, which we agree upon) and management believing the workforce were only in it to screw more out of the company.
This would have been very difficult to fix and Margaret Thatcher's 'fix' was to sidestep the problem by getting rid of much of industry and the associated power of the T&G and the AUEW (and the NUM of course, in a different industry). Adopting a more partnership model and putting in the slog to make it work - and some genuine shifts from both sides of industry - was an option we didn't really try.
I am in a heavily unionised sector now and just a few weeks ago we had a wildcat strike from HGV drivers (wonder why) which was quickly resolved by the intervention of the union, with a management and workforce ready to listen to each other's concerns.

[birdseye]

The Maggie Thatcher "getting rid of industry" is an old trope that simply isnt true. More was lost under Blair for example, but in the case of businesses like the motor industry buyers simply walked away. Having run fleets of British cars I dont think it was product quality. It was in the final years a matter of national image ( vide the German Engineering )and a complete lack of any buy british sentiment. By comparison the French continued to buy French, the Italians Italian and the Germans were even reluctant to buy Ford Cologne because it wasnt a German name, unlike Opel.

People often dont recognise that countries have national images which affect the way that their products are regarded. Italian design flair for example, German engineering, French food, American technology. What is our image? Bowler hats and country houses?

But having run an old long established and unionised site I would stronly disagree with " Adopting a more partnership model and putting in the slog to make it work". That misunderstand the strength of an established culture on a site, the traditional way in which people behave. Its an interesting issue which I could ramble on about big time but take it from me, the best way of solving such problems are a new site even, oddly enough, with many of the same work force. I tried the partnership approach. Made some progress but the union reps were still fighting the class war. Interestingly, the local union officials were much more sensible. Nevertheless I have see several viable businesses shut permanently by stuborn persuit of non viable pay and working practice deals. Often to get what was in the steel industry a generous redundancy package.

None of this goes to the question of why we dont develop successful big new businesses. Union issues are for the past. British workers are every bit as good as German ones. Somehow we have the attitude that once a business is big enough to have made the entrepreneur wealthy, its time to hand it over to the city anfd flog it off to private equity, the oroginal owner retiring to do the country squire bit.

[guymonde]

birdseye I'll go with that, at least in part, though Thatcher definitely shifted the mood music from protecting our industries to if anything encouraging them to fail or be swallowed by foreign companies/PE/foreign governments etc. When I was working for Renault (it was then nationalised) the French government handed back all the dividends they had received since it was nationalised after the war and told them to go and invest. Not very likely under Thatcher. They also got into trouble with the EU Commission for supporting various 'national champions' including one I worked for. Most if not all of them survive in French ownership, though not necessarily independent.
I do think in the 1950s to 1970s when I was growing up we had a sense of entitlement growing from 'winning the war' and that fuelled a lot of bad behaviours in industry and elsewhere.

[Deleted]

@tw

@"it was important to get the ball rolling."

Yes exactly.

Sky reported BoE saying CPI over 6% by spring !

[birdseye]

Dec 14, 2021 15:27:17 GMT guymonde said:

birdseye I'll go with that, at least in part, though Thatcher definitely shifted the mood music from protecting our industries to if anything encouraging them to fail or be swallowed by foreign companies/PE/foreign governments etc. When I was working for Renault (it was then nationalised) the French government handed back all the dividends they had received since it was nationalised after the war and told them to go and invest. Not very likely under Thatcher. They also got into trouble with the EU Commission for supporting various 'national champions' including one I worked for. Most if not all of them survive in French ownership, though not necessarily independent.
I do think in the 1950s to 1970s when I was growing up we had a sense of entitlement growing from 'winning the war' and that fuelled a lot of bad behaviours in industry and elsewhere.

Yes she shifted the mood music with lots of talk about services being the future. To some degree this was correct - its not only the UK that has become a services dominated economy. But without doing any proper research, it does seem to me that the UK is unique amongst "big" countries in giving up a relatively strong manufacturing base post WW2 and becoming services dominated to the level we are.

The Thatcher attitude must be seen in the context of repeated Britsh failures to make a success of state support. Certainly when I was working in a nationalised industry with Maggie on the throne there was no limit on cash investment by HMG. There wasnt at BL either. BL failed because it lost its home market and it didnt help that the trade unions were quite destructive. There still is this ingrained belief, even in the civil service, that state support for industry never works in the UK.

But to forget the past and look to the future, we need to ask ourselves why the likes of Musk chose the US for his big adventure and not the UK. In the past immigrants such as Bessemer and Brunel amongst many fuelled the industrial rise of the UK. We had pavements of gold. This no longer seems to happen so we have not only lost our inheritance of old industries but we arent developing the industries of the future. Sure thats a bit of a sweeping generalisation - there are a few exceptions but nothing like enough to prosper on.

[pete]

Dec 18, 2021 9:23:09 GMT birdseye said:

Dec 14, 2021 15:27:17 GMT guymonde said:

birdseye I'll go with that, at least in part, though Thatcher definitely shifted the mood music from protecting our industries to if anything encouraging them to fail or be swallowed by foreign companies/PE/foreign governments etc. When I was working for Renault (it was then nationalised) the French government handed back all the dividends they had received since it was nationalised after the war and told them to go and invest. Not very likely under Thatcher. They also got into trouble with the EU Commission for supporting various 'national champions' including one I worked for. Most if not all of them survive in French ownership, though not necessarily independent.
I do think in the 1950s to 1970s when I was growing up we had a sense of entitlement growing from 'winning the war' and that fuelled a lot of bad behaviours in industry and elsewhere.

Yes she shifted the mood music with lots of talk about services being the future. To some degree this was correct - its not only the UK that has become a services dominated economy. But without doing any proper research, it does seem to me that the UK is unique amongst "big" countries in giving up a relatively strong manufacturing base post WW2 and becoming services dominated to the level we are.

The Thatcher attitude must be seen in the context of repeated Britsh failures to make a success of state support. Certainly when I was working in a nationalised industry with Maggie on the throne there was no limit on cash investment by HMG. There wasnt at BL either. BL failed because it lost its home market and it didnt help that the trade unions were quite destructive. There still is this ingrained belief, even in the civil service, that state support for industry never works in the UK.

But to forget the past and look to the future, we need to ask ourselves why the likes of Musk chose the US for his big adventure and not the UK. In the past immigrants such as Bessemer and Brunel amongst many fuelled the industrial rise of the UK. We had pavements of gold. This no longer seems to happen so we have not only lost our inheritance of old industries but we arent developing the industries of the future. Sure thats a bit of a sweeping generalisation - there are a few exceptions but nothing like enough to prosper on.

Yes, it's always the trade unions and never the managements fault.

[birdseye]

Dec 27, 2021 16:43:30 GMT pete said:

Dec 18, 2021 9:23:09 GMT birdseye said:

Yes she shifted the mood music with lots of talk about services being the future. To some degree this was correct - its not only the UK that has become a services dominated economy. But without doing any proper research, it does seem to me that the UK is unique amongst "big" countries in giving up a relatively strong manufacturing base post WW2 and becoming services dominated to the level we are.

The Thatcher attitude must be seen in the context of repeated Britsh failures to make a success of state support. Certainly when I was working in a nationalised industry with Maggie on the throne there was no limit on cash investment by HMG. There wasnt at BL either. BL failed because it lost its home market and it didnt help that the trade unions were quite destructive. There still is this ingrained belief, even in the civil service, that state support for industry never works in the UK.

But to forget the past and look to the future, we need to ask ourselves why the likes of Musk chose the US for his big adventure and not the UK. In the past immigrants such as Bessemer and Brunel amongst many fuelled the industrial rise of the UK. We had pavements of gold. This no longer seems to happen so we have not only lost our inheritance of old industries but we arent developing the industries of the future. Sure thats a bit of a sweeping generalisation - there are a few exceptions but nothing like enough to prosper on.

Yes, it's always the trade unions and never the managements fault.

I dont know how old you are Pete. Do you not remember the likes of Red Robbo, of Jack Jones, Upper Clyde Shipbuilders, Meriden, Linwood, Scargill? Maybe you dont but I was there - not literally but working in industry and could see what was going on. The demarcation disputes, the lightning strikes, the permanent "work to rules". I am not saying that there wsnt bad management - the likes of the Dockers spring to mind, But even in the middle of WW2 we had strikes!

Outside the old nationalised industries ,like the railways, the situation is very different now. So the question has to be why we are not developing the industries of the future and that has nothing to do with whats left of the union movement.

[c-a-r-f-r-e-w]

Evans-Pritchard in the Telegraph arguing that recession will dampen down inflation

“Risk of US recession may soon kill off global inflation”

“The question is whether the Fed pursues seven rate rises this year or pulls back to navigate a soft landing”


“The Federal Reserve is tightening into a cyclical slowdown and the risks are rising,” said Lakshman Achuthan, head of the Economic Cycle Research Institute (ECRI) in New York.

“Either the Fed will blink and give up on rate hikes or it will forge ahead until something breaks, meaning a stock market crash, or a recession, or both,” he said.

…

“Monetarists are edging towards the same conclusion by a different route. For the last two years they have been the scourge of the New Keynesian establishment and the major central banks. They predicted correctly that inflation would approach double digits in the US, UK, and parts of Europe, as a mechanical consequence of extreme money creation twelve to eighteen months earlier.”

….

“But today these same monetarists are voices of caution. They warn that key measures of the money supply may soon be slowing too quickly, to the point where the greater risk lies on the other side of the equation. The Centre for Financial Stability says the broadest measure in the US - divisia M4 - has slowed from a growth rate of 28pc to 5.2pc over the last year. The previous excesses are fading away.”

[c-a-r-f-r-e-w]

Article in the Telegraph arguing that if Russia gets control of the Ukraine, it becomes a “commodity superpower” and a “Sino-Russian technology alliance” will be possible, allying Russian resources to China’s “great engines of production, and the distribution mechanisms.”

[c-a-r-f-r-e-w]

“For example, semiconductor manufacturing needs high grade neon and palladium, and Ukraine provides over 90pc of the high grade neon, and 35pc of the palladium used by US chip companies. Intel gets half of its neon from Eastern Europe. The smooth running of the global microchip industry, which underpins so many other sectors, may soon rely on the goodwill of Vladimir Putin.”

[birdseye]

The Ukraine might provide 90% of the neon but since neon is only found in the air, we all have access to it. Much the same applies to paladium which isnt that rare - the reason is comes from Russia and Unkraine is the complete ignoring of pollution issues, costs etc under the Soviet Unions which allowed big inefficient and dirty mining industries to prosper.

Similar situation with rare earth metals which as it happens arent particularly rare. But they overwhelmingly come from China who tolerate the production problems involved

[c-a-r-f-r-e-w]

Mar 2, 2022 21:21:27 GMT birdseye said:

The Ukraine might provide 90% of the neon but since neon is only found in the air, we all have access to it. Much the same applies to paladium which isnt that rare - the reason is comes from Russia and Unkraine is the complete ignoring of pollution issues, costs etc under the Soviet Unions which allowed big inefficient and dirty mining industries to prosper.

Similar situation with rare earth metals which as it happens arent particularly rare. But they overwhelmingly come from China who tolerate the production problems involved

Which presumably means there’s a need to develop less polluting methods? Which is the case for many things, but it might get brought forward in some cases.

[c-a-r-f-r-e-w]

Larry Elliot in the Guardian, argues that historically, we get periods of crisis, where there are years of economic instability, followed by the emergence of a new paradigm, accompanied by some years of stability. Then the pendulum swings back to instability.

“The current crisis has now lasted almost 15 years. It has included the near collapse of the global banking system, the avoidance of a second Great Depression by the printing of large quantities of electronic money through quantitative easing, barely rising living standards, populist insurgencies, the retreat from globalisation and a pandemic.

...

“There is, though, an unmistakeable sense that the old model is running on empty, while the talk of levelling up and greening the economy suggests that the equivalent of the economic settlement that brought stability to the postwar decades is lurking out there somewhere. The current era of permanent crisis has highlighted the faults of the current system and the difficulties involved in returning to the pre-2007 status quo. It hasn’t yet given way to a fully fledged alternative, although history suggests that sooner or later it will.

Taking 1900 as a starting point, the period since has followed a pattern: periods of stability and prosperity (1900-14, 1945-1973, 1991-2007) during which signs of problems to come became ever more apparent; and periods of crisis (1914-45, 1973-1991, 2007 to the present) during which a new paradigm gradually appeared. The longer and deeper the crisis, the more profound the eventual change.”

What the eventual change will be this time around, he doesn’t say.

[birdseye]

He really does overstate things or maybe just lapses into journalistic hyperbole. I have lived through the 1945 to 2022 period and I certainly wouldnt describe any of that time as starkly as he has done. Sure we had several brief periods when the usual culprit, the banks, made a complete cock up of things and other periods of economic mismanagement, strikes, oil shortages, devaluations. But those were minor and short term fluctuations on top of an undelying trend as recovery from WW2 created high employment leading to a huge growth in prosperity up until the rise of China and the offshoring of growth for the UK and US in particular. After the British century we had the American century and we are now heading into the Chinese one. All were / are characterised by thrift and industriousness at first fading into self indulgence and waste at the end.

"Faults of the current system?" Nonsense - economies are like any other growth system from plants to animals to companies to empires. They are born, they grow, they mature, they fade.

[c-a-r-f-r-e-w]

Well, the policy of full employment might also have had a part to play in making sure there were more jobs post-war! Indeed, the Labour approach to the oil crisis saw us back to growth in three years, inflation down to 8% from a high of 25%, and kept unemployment down to a bit more than a million. In contrast, Thatcher’s response to the second oil spike trebled unemployment, saw us lose a big chunk of industry and didn’t even do much good at bringing down inflation. (And the cuts, only saved money at first, with the effect being counter-productive as time went on. What saved her in the end was a collapse in oil prices that ushered in a world boom).

Whether or not he’s hyping the crises, I think his main point was that such crises tend to result in a change of paradigm, and he’s speculating that maybe we are going to see a new approach this time. I do think to some extent we already are seeing changes. Following the banking crisis we saw an extension of Keynesianism, where you use an approach to stimulus that is quite a bit closer to money printing, with QE. With the pandemic, we saw more QE and the state stepping in to furlough loads of workers. It also moved fast to sort out vaccines from various companies.

We might go on to see the state be more proactive in fixing our energy position too, pushing more renewables and nuclear, but we will see what the ratio of talk compared to action turns out to be.

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““The euro has become the successor of the Italian lira, not the successor to the Deutschmark, just as we feared,” said Professor Thomas Mayer, Deutsche Bank’s former chief economist and author of Inflationsgespenst (The Ghost of Inflation).”

…

“Southern Europe is now so deeply indebted - including France - that the ECB cannot raise rates. It is completely boxed in. Of course, everybody will blame Putin and claim that none of this could have been foreseen,” Professor Mayer said.”

….

“Germany has yet to recover from post-Covid supply disruptions, especially the shortage of semiconductor chips used in the car industry. It is now suffering a second hit from Ukraine, a manufacturing source of car components and as well as neon gas needed for chip production.

Unlike France and the UK, Germany has not yet recovered its pre-pandemic levels of GDP.”

…

“The huge differential in gas and energy prices between the US and Germany is hollowing out German industrial plants.

Chemical, fertiliser, steel, and metallurgy companies are either shifting output to US-based plants or losing global market share altogether.”

Telegraph