baldysblog.co.uk

Whilst I could never understand the economic rationale behind setting up the Eurozone which was always a total nonsense to me, the political case was obvious for those who believed in a “United States of Europe”, another nonsense if ever there was one. But whilst I have no love for either, I certainly wish them no harm because the UK is outside the Eurozone and hopefully in due course we shall be outside of the EU too.

The Media is full of stories about the economic crisis in Greece which is in the Euro but in deep shit because of the way it ran its budget therefore the question is: “Will the richer Eurozone countries bail Greece out ? Is this the first test for the Euro and will the currency fail if they can’t or don’t do so ?” To be honest the real problem has nothing to do with this in any case in my opinion…

It’s the Wages Stupid !

It is entirely irrelevant whether we are talking about Greece, Portugal, Spain, Ireland, the UK, the Euro or Sterling, there is one common cause that lies behind all these “financial problems” and it could be simply described as WAGES but in the broadest sense beyond just the cost of labour.

The European Disease (it also increasingly applies to the US), is very simple, we are paying ourselves far too much whether in wages or State provided Services. The “Capitalist System” hasn’t failed but it has been sabotaged by a complacent Western Mind Set on the one hand and the country all manufacturing seems to have been exported to, China, holding on to an artificial exchange rate, there will be tears before bedtime over this for China sooner rather than later.

Let me make it clear, I’m not “having a go” at the Chinese, there is a very wide cultural gap and always will be with them but also I do believe that Western Governments and “Activists” do not have the right to criticize China the way they do over say ‘Civil Rights’ because there is no Western politician who would have a clue how to govern, feed, shelter and clothe a population of 1.3 billion !

Perhaps the biggest failure of all is that people in the West have forgotten how to “Create Wealth” and a good example is the takeover by Kraft of Cadburys, where is the wealth creation in that ? If I were a Kraft shareholder I would want all the Senior Management put against the wall for wasting my money on over paying for a business they didn’t need just because they had run out of ideas how to develop Kraft as a business. This is the same stupidity as under “Fred the Shred”, RBS was destroyed through several acquisitions too far.

A British Dynamic

In the UK our choices are very simple and reflect what most western countries need to do, cut wages and the range of ‘services’ we expect the State to provide. The problem is that you will never hear a politician say this or an electorate that is happy to support such an approach even though it is very neccessary.

Rather they will rely on currency devaluation and inflation to do it for them. However we do need to go well beyond this to be really radical such as reintroducing a revised form of “National Service” that extends beyond just the military. Youth unemployment is very high and unlikely to come down any time soon so there is a labour pool available which apart from food, shelter and clothing, you pay a subsistence wage to and with infrastructure projects available which otherwise we “cannot afford” but with cheap labour we then could.

New electricity pylons disfiguring the countryside, too expensive to bury the cables ? Not now.

The laughable Labour promise of 2Mb broadband – NO, we need 100Mb, too expensive to dig the roads up ? Not now.

Railway renewal, same story. If commercial interests are too lazy or stupid to invest, neither they nor the Unions deserve to be considered too much, their futures are being undermined by themselves and their own indolence, they shouldn’t be allowed to take the rest of the Country with them. When these infrastructure assets are completed, lease their use back to commerce and let the taxpayer take the profit plus feed “individual benefits” of various kinds back to the young people who built them in the first place.

The real problem is Wages, get them down and local manufacture and economic activity becomes viable again. The world of mass produced consumer goods may well have already effectively ended, the future may well be smaller volumes, higher quality and “Repairable” manufactured goods, no more the throw away society !

In the UK we need to encourage and develop more small businesses, slash all the employment Laws to nothing even if it means leaving the EU because Global Conglomerates with tightly regulated employment terms and conditions are now “Just so yesterday”, high time we in the UK moved on forward again as the trading nation we are.