Declining Britain: Again!

On a BBC News programme yesterday, I heard the UK defined as 'the world's sixth-largest economy'.  I had been used to us being described as the fifth-largest, and had not seen any report of a new league table that relegated us; but that did not surprise me: I can't monitor everything, and we have become adept at burying bad news [as an unscrupulous civil servant suggested on 9/11].

It is no surprise to recognise that we will sometime be reduced to seventh, tenth and even  - ultimately - twentieth unless policy is radically changed. As the superb Anthony Hilton pointed out in last night's Evening Standard, Mrs May's speech on Monday to the CBI Conference took her [and her government] no further forward on important issues; The 'industrial strategy' is yet to be be unveiled: but it is expected to be much less radical than had been expected in the first year of the May regime. There is no indication of the potential shape of a Transitional Agreement with the European Union after March 2019; to the obvious consternation of managers of large and small businesses in all sectors of the economy. The headbanging advocates of Britain being set adrift to sink - alone, alongside only Ecuador - in the cold waters of the WTO Rules, remain powerful in the government - to the extent that the Brexiteers are demanding that Priti Patel [who includes hard opposition to EU membership, or even close co-operation within the European Economic Area, to the stupidities that made her departure from government inevitable] must be replaced by someone with similar views.

Hilton points out that even the triumphant new-technology companies that now dominate the US stock market - Microsoft, Google, Apple etc - benefit from hugely from research that was done in state-funded laboratories decades ago. This observation does not belittle the originality and drive of those who have carried these concept into intellectual property which can then be marketed to millions of enthusiastic customers: they have - and deserve - their billions of dollars. But it does lead to the painful admission that the UK has no comparable corporation under British ownership; even though the country continues to be hugely generative of both deep concepts and and innovative applications of the highest thought. I have rabbited-on endlessly about the small British firms that have been created to implement such ideas, that have been unable to accumulate the finances necessary to support their voracious needs as they pass through the stages of implementation to the ability to deliver a final product to the market, and thus succumb to foreign ownership. In a few conspicuous cases, opportunist buyers have agreed - for the time being - to keep the company HQ and laboratories in the UK, but they can renege on that at any time; and the intellectual property - the all-important ik - is free for them to exploit anywhere, anytime.

A serious Industrial Strategy would provide finance for such emergent companies - or divisions of existing companies - in sufficient quantity and on sufficiently loose terms to allow developments to reach the global market in good time: recognising that not all the guesses can be correct. There will be losers as well as winners [though history shows that losers often have attributes that can be developed in different directions and circumstances to become successful themselves]. Even the sixth-richest country must be able to afford the few billions that would be involved [which the government could borrow on extremely favourable terms, against all historical comparisons].

The UK is also being criticised, deservedly, for its constant reductions in the size, efficiency and capability of the armed forces. One of the regular themes of this blog has been the symbiosis - over many centuries - of money spent on research for defensive weaponry and dividends later gained from the civil exploitation of those technologies, This is precisely the time when the country should be searching for new, super-effective weapons systems, communications and defence capabilities: in which the UK has led for almost a millennium.

Behind all these thoughts lies the need for investment - especially by the state, in combination with people with ideas - to bring new concepts, new materials and new processes into being. They can only be objectified by manufacturing, and it is through innovation in manufacturing that the productivity of the economy can be increased. Factories that produce highly-desired output [regardless of whether the buyer is the armed forces or the mass market] can make significant profits because the customers are prepared to support the exclusivity of the producer firm's ik, part of the profit can be reinvested in new concepts and processes, thus the productiveness of the firm is increased, which means that the average output per employee - the productivity - of the enterprise can be raised and the economy can grow substantially.

This virtuous circle cannot be achieved without individual entrepreneurship [both inside and outside companies] and the active, continuous support of the government. The cretinous Economics that has stressed free-enterprise and free markets with minimum state input has fostered the disastrous decline into which the British economy has been locked for more than a generation.

I will carry on blogging as a small voice for reason.

Ambiguous Apples

The apple is one of the most accessible forms of food for human beings. It grows on smallish trees, and when it is picked up from the ground or plucked from the tree it is ready to eat. Apples of different varieties mature at different times from early summer to late autumn, and many varieties can also be stored well into the winter; though it is well known that if one apple in a barrel goes bad, it quickly causes the rest to rot: hence the phrase 'a rotten apple' applied to a disruptively antisocial person.

When people in the earliest stages of civilisation created their accounts of how society came into being, they built up a marvelous story of the creation of the world, of humanity being set into that context as a uniquely competent species, and how that species developed a power to be destructive as well as constructive. The tale that of the first woman, Eve, being tempted to eat the forbidden fruit - an apple - and leading her male partner to do the same is still fascinating as an insight into human nature. The idea that there are good and evil impulses in humanity, derived from the fatal decision of the first people to break the orders they had received from the universal creator, became well set in religion in the 'fertile crescent' in the middle east [the area now being devastated by 'Islamic State'] and thence globally. The humble apple remains a symbol of the power that human beings have to use their abilities constructively and creatively, or destructively in terms of how their actions impinge on other people.

Isaac Newton apparently really did get the idea that the force of gravity is universal by exercising his imagination on the simple question of why do apples - among all other terrestrial objects; and with the earth's moon - tend to descend towards the centre of the earth unless that progress is stayed by some intervening force or structure. Thus the apple is recorded as part of the origin of scientific thought.

Today the corporate results for Apple are due to be published, which are forecast to confirm that it has been consolidated as the biggest business in the world; by turnover, profits and the valuation of  its stock by the markets. The apple - with a human bite taken from it - was chosen as the logo of a business which was not a substantial processor or manufacturer of any material commodity. While the huge oil companies and motor manufacturers sold billions of dollarsworth of material commodities, many of which were processed into final products by the application of manifold patents and sold under copyright brand names, their ultimate dependence on material resources was unambiguous. Apple grew by franchising out the manufacturing processes, and thus the capital that had to be tied up in material manufacturing facilities came from other sources. Apple could incorporate products - some of them highly sophisticated - that were devised by other firms into the products that they sold, and thus maintain the momentum of their inventiveness without the burden of investment in factories or in the sort of human resources management that inevitably attaches to material production.  

Apple, Google and the other leading brands in what is [rather strangely] called the 'technology' sector of the economy are not dependent on the ownership of materially productive facilities. Most of the 'hardware' through which customers access their intellectual property are made by other corporations. The assets held by the tech companies include billions of dollarsworth of financial assets that have been accumulated from their past profits, alongside their ownership of the patents and copyrights and trademarks and brands that are defended at huge cost from 'piracy' by anyone who tries to make illicit use of their technology.

The essential difference between these 'tech' companies and those that trade in material assets is that the companies in the material sphere, exemplified by the big oil producers and by the firms that make the components of the iPhone [and assemble the final product], are selling products made from finite resources of which reserves are limited. Constant exploration has so far found enough new resources to meet foreseen demand into the medium-term future, but the material components of the planet are finite and a growing population is capable of exploiting them to the point of exhaustion.  The assets belonging to Apple are capable of indefinite expansion. New ideas can be implemented all the time, new experiences can be offered to customers, and there is no obvious limit to that expansion as the collective of human minds appears to be capable of delivering an infinite expansion of intellectual property. There is a potential limit to the physical facilities through which intellectual concepts and processes can be accessed, of course, when the human race destroys the resources of the planet on which our material existence depends. At some point in that final self-destruction of the human economy the material ability to generate electricity will fail, and then the 'technology' sector will be unable to operate; but that point will be well down the process of societal and economic decay.

I was privileged to know the mathematician who served as a professor of English Literature and who explored the capabilities and ambiguities of the human mind in an unusually profound way; who wrote a book entitled Seven Types of Ambiguity. He could have selected more than seven types but his message was that the expression of human thought is infinitely flexible, and ultimately all concepts are ambiguous. That is the basis on which the 'tech' sector has been founded, and from which its continuing productiveness will stem.