And Another Thing

jon livesey

Brilliant. We ought to "create" a manufacturing sector, at exactly the time when "virtuous" manufacturing economies are currently contracting a lot faster than the "sinful" Anglo-Saxon variety.

And it gets better. We should "expand" an automobile industry, when automobile sales are down fifty percent, so that it can become a - well, what exactly; a subsidized industry along the lines of British Leyland, perhaps? We all know how well that worked.

I have a very simple question for "manufacturing" fogies. Have you personally invested all your retirement money in manufacturing? If not, why are you proposing that the rest of us ought to?

Herbert Thornton

jon livesey -

It is foolish to imagine that Britain can make its living by means of a 'service' economy, especially in the sense that it means the provision to the world of 'financial services'. It has become painfully clear that the value of these 'services' has been very much over-rated. Some would say they have been nothing other than a swindle, largely orchestrated by charlatans. It is almost enough to inspire some sympathy for Mao Tse Tung's sending 'intellectuals' to work among China's peasants during the Cultural Revolution.

Besides, to the extent that anybody is going to want financial services, & bearing in mind that they can be provided via the Internet, India for example is going to be able to provide them much more cheaply than supposedly clever financial spivs in London.

It is irrational to look down on the manufacturing of real goods as being only for 'fogies'. To do so is as empty-headed as looking down on the other group that actually produces various useful and necessary things - i.e. British farmers.

Le laboureur m'a dit en songe : "Fais ton pain
Je ne te nourris plus : gratte la terre et sème."
Le tisserand m'a dit : "Fais tes habits toi-même."
Et le maçon m'a dit : " Prends la truelle en main."

(René François Sully Prudhomme)

Dave

Readers of Paul Johnson will also be interested in the Texas historian T. R. Fehrenbach. He can be found at mysa.com under "opinion columnists".

I found his thoughts on the 1930s most intriguing. The only country that actually countered the deflation of that time was Germany.

While Herr Schickelgruber could not have cared less about the standard of living of the average German, his military buildup did do wonders for the German economy.

That is because he had to reach into every nook and cranny of Germany to obtain all the necessary materials. With an assured buyer for the goods, lenders opened their wallets to primary and ancillary producers alike, all sorts of financial and economic activity ensued and the expansion of the tax base helped pay back the borrowings that spurred all this.

In addition to which, the different components of military goods have numerous civilian applications as well.

Had England and America been working on their arsenals as well, their depressions would have ended and World War Two would have been less severe as well.

Does this have relevance today? What do you think?

David B. Chapman

Spot on, Paul. However, I would't hold your breath. David Chapman.

Herbert Thornton

Dave -

It is encouraging to see attention being drawn to Germany's astonishing economic recovery after the disastrous Weimar inflation. Military expansion certainly played a part in it, but I should have thought that from the viewpoint of the German economy, there would have been even stronger effects if the financial genius, Hjalmaar Schacht, had been allowed to concentrate German effort on non-military industry and public works of various kinds, rather than on building up military power.

The important point I want to make is that Germany's post-Weimar economic miracle was not achieved through the financial skills of Adolf Hitler, but by those of Hjalmaar Schacht. Schacht was dedicated first and foremost not to Naziism, but to sound economics - which led, later in World War 2, to his being imprisoned in a concentration camp.

Dave

Herbert Thornton,

I certainly did not mean to imply that Hitler was economically or financially astute. Far from it. As far as his role went, the economic recovery was serendepity. Ditto for "guns and butter" Goering.

Real point is that there is no such animal ass macro-economic stimulus. All stimulus is micro-economic in nature. The German military buildup did stimulate every nook and cranny,
not to mention crook and nanny.
Later, same thing happened in the US when seeking economic results gave way to procuring huge quantities of useful material.

I had not heard of your Hjalmar Schact. Will look him up shortly. Went to a concentration camp? Sounds par for the Third Reich course.

I do suggest you take a look at the last few Fehrenbach columns at mysa.com.

He is of the opinion that US military thinking has emphasized economy of force at the expense of adequate mass.
And therefore a buildup of ground forces is in somewhat urgent order.

Well worth the read, I would say.

Herbert Thornton

Dave,

And I certainly didn't mean to imply that you thought Hitler was financially astute - I was trying to make the point that Schacht (whose name, incidentally, I mis-spelled - it's Hjalmar Schacht) -
was an exceptionally able economist.

I think that the reason he isn't held in much regard nowadays is that he joined the Nazi Party which is enough to damn almost anybody. There's a short article about him, warts and all, here -
http://www.spartacus.schoolnet.co.uk/GERschacht.htm

Thanks for the reference to mysa.com. and Fehrenbach - I've bookmarked it.

Derek Rowntree

I don't know how Paul imagines that reducing people's pay by 5-25% will help reduce the National Debt -- unless he proposes to do it by increasing their income tax by 5-25%. And, even that will help only if the extra tax revenue is not handed out in benefits to the 1,250,000 extra people he wants to see lose their jobs.

Michael Prendergast.

Mr Johnson,
Your description of the judge's compulsory contribution to sharing the finacial burden of Britain in 1931,made me laugh.Nothing has changed.They whine,howl and threaten even more now.And are just as selfish.

Herbert Thornton

Mr Johnson makes many excellent points, but I fear that they do not take into account the stupendous, mountainous, mind-boggling amount of British debt.

To my mind, the most alarming parallel between Britain's present and the past is not Britain's condition during the thirties, but the condition of Germany after World War I and during the Weimar inflation.

Granted the British government has not yet either repudiated the debt nor fully embarked on virtually the same thing by printing enough money to, in effect, extinguish the debt - but what else can it do?

Peter Holttum

Jon is right short term, but Paul is onto something long term. However nobody goes into non City job except the professions with any red blood. How different France where the Lycee's mix up the future leadership elite in a melange of bankers, engineers and public servants. Science & engineering in UK is vanishing from the classroom and university. People have voted with their feet. Come back the honest Quaker entrepreneurs who founded so much of our economic base - including ironically Lloyds Bank.