“If L S Lowry was painting today he’d be painting [in Notting Hill], not Manchester. Because this area is the dormitory for the biggest factory in this country: the factory of finance.” These are the words of Henry Mayhew, a City employee and Notting Hill residence interviewed in the BBC documentary The Secret History of our Streets. Manchester was once been the driving force behind the industrial revolution, but today most of the economic activity of the country is generated in one square mile.
Whatever you think of the bankers of the City of London, they are the economic engine of the UK and generate most of the wealth in the UK. This wealth does not make it far out of the South East or through many social classes, but the fact remains that we have traded factories for financial models.
This is mainly because our economy has been pivoted toward the City, through decades of privatization and financial deregulation. The 2008 financial crash and the subsequent recession has only increased our relevance on the City to generate economic activity. Neo-liberal economists would argue that this is because we have a competitive advantage - literally an advantage that makes you better than the competition - in banking and financial services. In Lowry's day, our competitive advantage was in steelmaking or coal mining. Things have changed. Time marches on. However, we cannot all be bankers and move to London, so we should probably think about the jobs everyone else is going to do.
A thousand people currently employed in an industry where the UK does not have a competitive advantage are about to lose their jobs as the Teesside Steelworks in Redcar closes down. With the closure of Tata Steel as well, it is clear that the UK steel industry cannot compete in the global steel market - especially against cheap steel being produced in China. Only the coldest neoliberal economist would dismiss the problems of these thousand people, their families and communities. Clearly something has to be done for them but retraining unemployed workers in their 40s and over is not something we have been historically good at in the UK and no one is talking about how we can change this.
Faced with the mass closure of steel plants, the conventional free-market wisdom is to rebalance the economy towards an area where we have a competitive advantage. The idea is that the government invests in science, engineering and computing education, to train young people in work in the high tech industries of the future. This is writing off the steel workers losing their jobs, but offering them the chance that their children can work in new industries.
Put this in the wider context of decreasing social mobility and we see how empty this promise is. People from poor backgrounds with unemployed parents have not historically done well in a liberalised labour market. Even if we created thousands of high tech jobs in former steel towns then these jobs would not go to the children of steel workers, because by taking their parents jobs away we are giving these children a competitive disadvantage in the labour market. Given the current state of social mobility and the labour market, what is left for these people or their children? The only jobs being created in these areas are working in a distribution centre - in other words low paid and insecure. In the current labour market the future does not look good for the people of Redcar.
The closure of Teesside Steelworks and the Tory's recent agreement with China to build a new nuclear power plant are often mentioned in the same breath. Opening up our domestic markets to global completion has destroyed the steel industry. There is no shortage of demand for steel in the UK, however it is much cheaper to import it than to buy it from Tata Steel, the company which owns the Teesside Steelworks. The fact that the Tories need to make a deal with China to build a new nuclear power plant is because the twin snakes of deindustrialisation and globalisation has got rid of all the British firms that could have built the new power stations. Any jobs created by opening our construction industry up to China will be offset by the job losses caused by opening our steel industry up to China.
The aforementioned neo-liberal economist's solution to this issue would be to move the entire county up the supply chain. Rather than competing in making huge amounts of raw materials at a low price, focus on making more complex products that China does not produce. The only problem with this is that China also wants to move up the supply chain and in the future we will be competing against cheaper Chinese software or financial products. Even if China does change, none of this will help the newly unemployed steel workers or their children, for the reasons mentioned above.
Cameron and Osborne clearly have not thought this through. As they open the country up to increasing competition from globalisation more and more businesses will be forced to close. Cameron and Osborne, like the neo-liberal economist, insist that job losses are a temporary and are a necessary pain to pass through as we move to more prosperous future economy, much the same way that they justify their spending cuts. The problem with this approach to globalisation, like austerity, is that it is never Cameron or Osborne or anyone they know or anyone in their constituencies who loses their jobs or tax credits. Their set are always the one to benefit from globalisation but never the ones to pay for it.
Ignoring the problems of globalisation is not a trend which began with Cameron and Osborne. Since the 1980s the UK has moved away from manufacturing and towards financial services and job losses have been dismissed as the cost of structural readjustment. This dismissal of the problems of globalisation has led to under investment in our manufacturing, which has meant closures and job losses. The proof of all this is in the China power plant deal. No firm in Britain can build it, because we have no invested in these skills in the race towards our competitive advantage in finance.
Globalisation, deindustrialisation and the problems it has cerated for communities has been met with a shoulder shrug from society as a whole. In Britain we are more than willing to throw thousands of steelworkers under the bus to have cheaper smartphones and holidays abroad. When we choose to think about the poor people who lose out we shake our heads and say there is nothing to be done.
No one on the left has a solution to this problem. Corbyn is critical of the free market which created the problem but he does not have a solution. He talks about investing in infrastructure but you cannot talk about infrastructure without talking about industrial infrastructure. There is a difference between what we can produce and the economic capacity of the country, i.e. having roads and railways are pointless without factories or services to generate economic activity. Using state spending to give these declining industries a competitive advantage will not work either, the government already spent £1 billion on the Teesside Steelworks and could not make it produce steel at a competitive price.
So, we come back to the same problem. What are these communities supposed to do as their jobs disappear? Move to London? Clearly not an option for everyone. Invest in a Northern Powerhouse to create new employment outside London? Good idea and something I support, but there are four problems:
1. There is a lot of talk about this but nothing is actually happening.
2. It does not help the people who are losing their jobs today.
3. Making Manchester or Liverpool a bit more like London will not help Blackpool or Whitehaven or Workington. The brain drain will just have less far to travel
4. By the time all these new industries are established in the Northern Powerhouse they will have to close because China will have moved into these industries in a big way and the North will have gone from being unable to produce steel a competitive price to being unable to produce software or microcircuits at a competitive price.
Maybe the solution is an L S Lowry type figure taking pictures, or making films about these towns and their people, so that it becomes harder to dismiss them. We need to have more understanding and sympathy for the people who are losing their jobs. That is the best idea I have and calls of compassion have a poor track record at tackling economic problems.
We need to do something about the loss of these jobs, we cannot just leave these people and communities to slide into absolute poverty because it is what our neo-liberal, free market ideology demands. The left does not have an answers to this questions, these industries their workers and unions used to be the backbone of the labour movement, why is there not a left wing clamer to do something about these job losses? Corbyn's retro approach to politics will not work in this situation. We need new thinking.
The middle class should pay attention to what is happening in Redcar, as the twin snakes of globalisation and automation are coming for their jobs too. We can try and move up the supply chain to protect the jobs we still have but China is also doing so and competing against China in a liberalised global market has not gone well so far.
Putting up trade barriers is not the solution, that is the same as pretending the world economy has not become globalised. Retraining workers who lose their jobs under the current system is not a solution, not unless we redesign our education system and spend a lot more money on it. Shrugging your shoulders and saying there is nothing that can be done for these people is not a solution either. We need radical new thinking to tackle this problem. We need thinking that questions the established orthodoxies of the free market but also accept some of the aspects of globalisation that cannot be changed.
The lesson from what is happening at the Teesside Steelworks is that during the time of Lowry the work which sustained our economy was done by many people in unionised and relatively well paid and more secure jobs. Now the work is done by a few people and everyone has less secure jobs. We have gone from factory workers to bankers and cleaners. We need to tackle this issue of deindustrialisation, economic change and globalisation before we become a country with only a few highly specialised City jobs, which still make money in the one specific competitive nieche China has not priced us out of, while the rest of us work in low skilled, insecure and low paid jobs.
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