Please do forgive me for stating the glaringly obvious!
However, Mr Brown’s latest brainchild is to solve Britain’s rapidly growing unemployment problem by throwing pennies into a pot, which needs tens of thousands.
Far too little, much too late is perhaps the best objective critique.
Brown claimshe will create 500,000 training places in work and jobs: at a cost of just £2,500 a pop.
Sheer arrant nonsense.
And, just over one week before, he promised he would “create” 100,000 new jobs, as well!
The Old Excuses Are The Best!
I listened to Brown being interviewed on BBC’s heavyweight radio 4, two days ago. As before he blames the current economic problems Britain is facing on “International credit market troubles……………..”.
He is far too modest!
Britain’s current problems have been created by himself, alone with no outside assistance, since his strategy, if one can call a ragbag of error strategy, when Chancellor of the Exchequer, was to simply allow domestic credit to expand to the point of lunacy, the already over-heated housing market to incinerate with growth and consumer credit to reach stratospheric proportions.
At no time did he or his government ministers at Treasury even contemplate intervention or control.
What he did do is gratefully bank the rapidly increasing tax revenues: and waste them, with nothing saved for a rainy day. Worse, PSBR (Public Sector Borrowing Requirement) was escalated day-by-day, as NuLab spent cash like a demented octopus.
Brown’s much vaunted Economic Miracle – his own statement, repeated often to the point of nauseum, alongside his other self-awarded plaudits – was simply predicated on insane house price inflation and vast imports of goods, which then had to be distributed, warehoused, stored and retailed, mainly on credit.
Now of course that credit is no more: it is therefore hardly surprising that leading multiple retailers, are falling like flies!
Britain’s Dire and Accelerating Plight
For over thirty years, I have beaten the drum for small business finance and assistance: in Britain, SMEs (Small to Medium Sized Enterprises) employ nearly 50% of all private sector workers: they also generate circa 47% of Britain’s private sector GDP.
Yet from Thatcher onwards, SMEs have been fundamentally ignored. Their hardest hurdle has always been finance.
It is these very SMEs’ however, who can and do create technology-based start-ups. Neither HP nor Microsoft started as massive global enterprises: neither did Dell. They started as tiny opportunity exploiting businesses, driven by intense dedication and commitment.
None of which is useful, however is one cannot raise the necessary finance!
Way back in 1994, I published an analysis of Britain’s dire problems in failing to create a vibrant Venture Capital industry suitable to foster technology start-ups: it was a long and complex research project, yet very worthwhile.
My conclusions were simple and unequivocal: if Britain, then staggering through the aftermath of the Thatcher inspired bust (which I had clearly forecast, well before it hit in 1989) failed to invest heavily in technology and continued to over-rely on Thatcher’s darling, Service Industry, then the future was bleak.
At this point in this sorry tale, it is very well worth recalling that Britain has no vibrant silicon industry and no independent computer design and manufacturing activity: as a nation state, Britain is wholly reliant on overseas manufacturers. A dangerous position to be in, in what is now perceived as an Information Age. With few small exceptions, the country has no significant self-sustaining software industry either: which is hardly surprising, since software design tends to follow in the vacuum of hardware advance.
Education, Education, Education!
A highly significant aspect of my core premise focused on education; this was the result of my own voluntary involvement as a school governor.
In order to try and solve Britain’s youth unemployment problems – temporarily and to mask the realities – Thatcher had promoted the egalitarian concept of a free, relatively, university education for all. This was based on the simple concept of turning technical colleges and other educational establishments into what were called Polytech Universities; the stings in the tail being under-qualified staff, loans rather than grants (thus saddling youngsters with horrible debts) and a raft of “ Qualifications” which in the real World were basically worthless.
Still political expediency as always won the day, and youth unemployment statistics were suitably massaged.
Sadly, the net result was to denigrate British further education, throw a large number of “Graduates” into a labour market urgently seeking other than people qualified, if one can use that term, in such esoteric topics as Leisure and Tourism, Media Studies, Sociology, Hair Dressing and Make Up and a rag bag of other fundamentally useless disciplines.
I wrote robustly in my analysis that if Britain was to salvage any sound economic future then the starting point was education: and this had to commence with primary schools: focus on math and the physical sciences was critical to building the right calibre graduates and later designers and computer and information industry scientists.
There was clearly a Project Cycle Time: by this I mean that if Government started with the determination to establish a solid academic, science and industrial base, then there was a finite timescale for this to be achieved.
Starting with children at primary school (3 years) then junior school (another 3 years) then secondary school (5 years) then university (3 years and perhaps more for post-grad studies), thereafter, it would probably take a further 5 years as a minimum, for reasonably qualified graduates to learn their craft.
Totally, that’s a Cycle Time of at least 19 years.
Yet Brown vaingloriously crows that he will at a stroke “Create” jobs.
In his dreams.
The Tragic Waste Of Leadtime!
Thatcher and her short-term substitute, Major had nearly twenty years: and in terms of urgent realignment of Britain’s economic base achieved nothing: in fact quite the reverse.
Brown and Blair have had over eleven years; and have achieved even less.
Worse, Brown has acted like Nero, fiddling whilst Rome burned.
And he is still fiddling!
Political Expendiency Rules The Roost!
In the early 1990s, I had high hopes that Britain’s Labour Party, then in opposition, headed by John Smith (1992) offered a cogent and vibrant alternative to the Tory hegemony, from which the United Kingdom had suffered for too long.
I made contact with Labour’s HQ and as a result, for a time, worked with Jim Cousins, Front Bench Spokesman on Trade and Industry and then, heading towards ministerial position.
My central plank was easy: Government had to support both SMEs and technology, if Britain was to enjoy any chance of future prosperity and avoid typical economic Boom-Busts.
One of my gurus at the time, was the much missed Sir John Harvey-Jones, previously head of Britain’s chemical giant ICI and when he semi-retired, a slavish critic of Government’s economic and business incompetence and more importantly, an energetic and tireless ambassador for enterprise.
Sir John had agreed in principle to get behind my concept: a venture fund, which would, with decent tax breaks, invest solely in technologies and would recycle its capital profits (offset against expected losses: you can’t win ‘em all in this spavined old life!), by re-investment in yet more start-ups.
Now Jim Cousins was an interesting man: prior to politics he had worked, extensively, in industry. Thus in business terms, unlike so very many politicians, he wasn’t naïve about economic reality.
We enjoyed meetings on the terrace of the Houses of Parliament and Jim bought the concept and could see both the vision and the need.
And then suddenly, John Smith died: and Teflon Tony became leader.
Overnight, everything changed: expediency overcame pragmatism and humanity.
Jim Cousinstogether with Ms Anne Clwyd, a tireless campaigner on human rights and Clive Furness, travelled to Turkey to evaluate at first hand alleged human rights abuses. This was too much for Teflon Tony: Anne and Jim were sacked from the front bench!
From a totally and admitted selfish perspective, the various papers and dissertations I had delivered to the opposition government fell into a black hole.
More interestingly, of course, was the reality that Gordon Brown stole some of my concepts, in particular a venture fund trust which received significant tax breaks, and as so often the way, emasculated the core thrust and created, once in Government, a watered down weak and useless alternative.
It was ever thus.
I still wait for some accreditation: I am not holding my breath!
Forward To Economic Disaster!
As I warnedover four and a half years ago, Britain’s economy was a mess.
I later suggestedwhy Britain would fall not into recession but depression: I have no cause to change that view. Indeed, with Brown and his equally idiotic henchman Darling Darling (currently Chancellor of the Exchequer) simply throwing ever- larger volumes of government cash into a Black Hole of wishful thinking and abortive endeavour to try and perpetuate a flawed, dysfunctional and passé fiscal and financial system, proven to not work, the future is bleak, since every man woman and child is now saddled with forward tax debts of circa £17,500 per head.
Worse, in an age where Britain is compelled to import far too many essential goods, the forward view for sterling is worse by the day.
Brown’s latest wheeze is to go for what is called, so euphemistically, “Quantitative Easing”: which simply means printing billions and billions more currency notes a la Weimar Republic and Zimbabwe and Argentina.
It never worked in fiscal and monetary history: it never will, since all this does is shift the days of reckoning slightly forward, create later massive inflation if not hyper-inflation and adds vast tax burdens to Joe Public’s already groaning and unaffordable life costs.
Perhaps worse, it destroys sterling’s value on the global Forex markets, just at the time that Brown plans to float some £150 billion of new gilts (UK Government Bonds ).
I believe this is called shooting oneself in the foot!
So to return to my central premise, Gordon Brown is an idiot, if he thinks that at the drop of a hat, he can create hundreds of thousands of jobs, on a whim, when for ten years Brown and Blair simply ignored building reality, the continued destruction of what was left of British industry and an economy which relied principally on multiple retailing, on credit of imported goods and unsustainable and insane house price inflation.
Gordon Brown is an idiot if he believes for one moment in time that simply throwing borrowed money into an extant problem will make that problem go away.
He has tried this with the banks: they have said “Thank you very much!”, banked the cash and still refuse to lend into the system!
And the problem at its core is fundamental lack of real, meaningful jobs: not McJobs, part-time in supermarkets earning minimum wage. The necessary real new stable and long lasting jobs can and will only come from creating an economic, financial and academic fabric which encourages and nurtures state-of-the-art activities able to create and sustain Britain’s Competitive Advantage in the global economy.
Nothing more: and nothing less.
Put simply perhaps, Brown and his coterie of out-of their-depth idiots enjoy a perception and perspective, which can be best expressed thus: “We are up the creek and have forgotten the paddles. Our main problem has been excessive credit. To solve the problem we’ll borrow more money!”
Make any sense? No; not much.
Editor's Note: Michael Feltham writes on world economic issues. He predicted the housing crisis long before we heard about it in the corporate media or even on the internet, in one of his first essays published on Axis of Logic.
READ MICHAEL'S BIO AND ADDITIONAL ARTICLES IN FELTHAM ON THE ECONOMY