Friday, May 22, 2009

Why relying on "comparative advantage" is chasing rainbows

Research carried out by the Institute of Education, part of the University of London, has reached the conclusion that "work-based training" is a waste of time and money and that "many courses would do little to help Britain emerge from the economic downturn".

Professor Lorna Unwin, who carried out the study alongside academics from Cardiff and Southampton universities, said: "All too often learning is regarded as something separate from work itself and is seen solely in terms of formal episodes of 'training' that can be counted and costed – the bean-counting approach.

We'll come on to the "bean-counting" in a moment, but first ponder this.

At the moment, official estimates state there are around five million adults in Britain lacking basic literacy, while 17 million struggle with simple arithmetic.

That 17 million adults equates to more than one half of the available British workforce. That on it's own is a statistic that damns any pretence that the comprehensive school programme has been a success - if we had known, when they embarked on the wrecking of our education system, that after 40 years half our adults would be barely numerate with a further 5 million barely able to read would we have gone ahead with it?

Why do we persist with the lie that comprehensive education is "working" when it clearly isn't? The answer, of course, is that comprehensive education is part of the progressive doctrine - and as all our parties are progressive parties, none of them will actually admit the damning truth.

However, this condemns them.

Ministers have encouraged adults to enrol on courses to boost the level of basic skills.

If comprehensive education was working, why would ministers have to encourage adults to enrol on courses to boost the level of basic skills. That is what we have eleven years of state education for! If they've not reached the required level of basic skill in eleven years then there is clearly something wrong with the system.

So, state education is not providing our population with even the basic skills - but that's not the end of the problem.

In the latest study, researchers investigated the different courses being offered across Britain but insisted many were "unrelated" to businesses' needs.

It blamed Government targets which they said were fixated by the number of people with qualifications - rather than the type of course.

Which brings us back to the bean-counters. The Labour government's fixation with targets is what drives the bean-counting - the aim of which is not specifically to improve standards, but to provide the government with the figures so that they can feel good about themselves - and to use as propaganda.

Take the goal of having 50% of school leavers attending university - a spurious figure plucked out of the air. Why 50% - why not 70% or 100%? The important thing about university is not how many are going, but that we have the required number for our needs doing the courses that our industries and businesses require. Thirty years ago or so, that was roughly around 30% - and that was at a time when we a considerably larger industrial base than we do now.

I don't know how close we are to that 50%, but what is apparent is that many graduates are struggling to find employment related to their degree. What is the point of spending countless thousands of pounds educating someone to degree standard just so that they can work in McDonalds or end up using those skills in some other country?

The article goes on to bash the quango system.

Authors of the study - Improving Working as Learning - also criticised the complex system of bodies set up to lead training and skills initiatives.

"What was once a collection of disparate bodies jostling for the right to serve and influence employers has itself become a many-headed bureaucratic hydra, which, in turn, devours part of the funding intended for the 'real' economy," researchers said.

Not just "part" of the funding - a considerable chunk of it. The Learning and Skills Council alone has a budget of some £10.4 billion! - and that is just one of the bewildering myriad of bodies set up in the education sector.

All of this brings me to my point. I keep hearing people - in newspapers, websites, blogs and so on - talking about our "comparative advantage" in the globalised economy. This "comparative advantage" is based on the belief that we, as a supposedly developed high technology nation, have skills which the rest of the world needs. Although we don't make anything anymore, they argue, that doesn't matter because we have the skills to develop the technology and design the things that the rest of the world wants.


Our education system is so completely wrecked that half our workforce is barely literate or numerate - and it isn't getting any better. Meanwhile, those developing nations are churning out hundreds of thousands of highly qualified, highly skilled and exceptionally competent graduates year after year. Why on earth would they come to us for something they can get better and cheaper in their own nation?

There are only two areas where we maintain any sort of comparative advantage with the rest of the world - arms and pharmaceuticals. Our arms industry is shrinking rapidly with the bulk of it now residing with one company - Bae - while pharmaceuticals gets a universally bad press thanks to the demonic outpourings of the left who moan about these companies "profiteering" from the sick and needy in the third world (does anyone realise how much it costs to develop a drug, how long it takes to get it approved and how little time is left on the patent by the time it gets to market? - and that's with the 1 in 20 drugs that ever get that far! What are they supposed to do - give it away?).

Neither of those two industries are sufficient to maintain that comparative advantage - and pretty soon we won't be world leaders in those areas either.

Without a decent education system to produce the workforce we need we can not maintain a comparative advantage. Without a decent industrial and production base we can not maintain an economy that matches our living standards - something has to give. Any changes we make in our education system will take a generation or more to bear fruit - even if we started today we would not feel the benefit for 25 years or more and there is no indication whatsoever from any of our political parties that they have either the will or the know how to do that anyway.

Without that decent education system we have no comparative advantage. There are seventeen million adults in Britain who can not add up properly - there are probably three times that many Chinese adults with high quality degrees in highly sought after subjects. How are we supposed to compete with that?

Comparative advantage does not exist for Britain. Either we adopt protectionism or we accept that we're going to have to get used to considerably lower living standards.


Mark Wadsworth said...

Adopting protectionism WILL lead to lower living standards, so that's not much of a choice!

Stan said...

How so, Mark?

Protectionism isn't the simplistic "let's ban all imports" which most people seem to think - it means having the freedom to negotiate who you import with and what you import as a nation. That freedom allows you to utilise comparative advantage to the greatest effect.

You also overlook the fact that most nations already employ protectionism - obvious examples being French agriculture and German industry - but rather than use straightforward, transparent methods such as tariffs and restrictions at the border they employ convoluted legal methods to disguise the fact that they are protecting their industry - and these methods are considerably more expensive to maintain than transparent trade restrictions.

Without protectionism and in a "free market" globalised world how are we supposed to maintain our high wage, high living standard society?

You must surely realise that the market dictates not only what something costs BUT what you can earn as well? If someone somewhere can do your job for a tenth of what you earn, why would an employer employ you to do it?

Without protectionism we are competing in the same job market as someone in India who will do what you do for considerably less.

Don't be fooled by GDP "growth". A rise of 2% in GDP is cancelled out - and more - by a trade deficit of 4-5% of GDP. That is the same as you getting a 2% raise while inflation is running at 4-5% - your income, in real terms, is declining.

We've papered over that fact for the last 15 years with high property prices and massive debt - but the reality has to hit home eventually. Unless and until we get the trade deficit to a level where it is either positive or lower as a percentage of GDP than GDP growth then we will remain economically fragile.

How else can we do that other than by adopting protectionism?

Anonymous said...

"...three times that many Chinese adults with high quality degrees in highly sought after subjects..."

At least three times, I would guess.

AND they work for a few dollars a day, AND they don't have any environmental or Elf'n'Safety stuff sapping their productivity. AND no EU regulations.

We are probably doomed.