Britain doesn't need an industrial strategy it needs a workforce strategy

A promise to our workforce that if they do the right thing - finish school, learn manners, present well - we will get them into a decent, stable job that offers prosperity.

Some years ago I listened to a talk by a man who worked in Wythenshawe in South Manchester. I don’t remember much about the lecture but one thing stuck in my mind - Wythenshawe has high levels of worklessness despite being right next to Manchester Airport, one of the biggest sources of work, at every skill level, in the North West of England. It wasn’t that people from Wythenshawe didn’t want those jobs but rather that poor literacy and criminal records made them ineligible.

We talk a lot about people who are not working and make a lot of assumptions about the reasons why people aren’t working but that little fact from south Manchester reminds us that the barriers aren’t always individual fecklessness.

Right now the US military faces something of a recruitment crisis, the worst since the draft was scrapped in 1973. Part of the reason is that the military starts with excluding three-quarters of the pool of possible recruits. As the Wall Street Journal reports:

“The Department of Defense said 77% of American youth are disqualified from military service due to a lack of physical fitness, low test scores, criminal records including drug use or other problems”

The WSJ article is about the problems facing the military but we should perhaps ask a question about those who do not qualify. After all this is the recruitment base for more than just the military. This is what we once called the industrial workforce and its quality is declining. The same situation applies in the UK where obesity, poor literacy, drug use and a penchant for face tattoos rule people out from the military.

Looking at this issue Aaron Renn suggests that, in his words “...our leaders have presided over the degradation of our youth”. Renn points to obesity, drug use, mental ill-health, and petty criminality as standard features of that industrial workforce and reminds us of how business has been able to ignore the domestic workforce:

“...globalization broke the link that previously bound the American elite and workers together. What was good for General Motors was good for America and vice versa. In that era, American companies could only make money if the American consumer could buy their products. They also had to employ American workers to make their product, meaning the quality of the American labor force was a key concern.

Today, companies like Apple make money globally, and can take a portfolio approach to markets. They no longer require American workers to build their products, only design them. For those companies that still have key operations here, they turned to globally sourcing labor through immigration - legal and illegal - to reduce their dependence on the American worker as well.”

If we are looking for critical differences between fast-growing economies with rising productivity like those in the Far East and European economies, the most obvious difference sits with education, not merely literacy and numeracy but personal discipline and responsibility. We know that good manners, politeness and reliability get you a long way regardless of IQ and level of skills or education. But we refuse to confront the reality - our loss of discipline as a society:

“During the world cup finals, not for the first time, we expressed delight and amazement at Japanese fans and players as they picked litter, swept floors and left changing rooms looking spotless. This behaviour exists because people are brought up to have respect for their environment, to be clean and tidy and to behave like good guests. It is not something peculiarly Japanese, we in Britain used to behave that way too. And it starts with not tolerating bad behaviour in small children (and the parents of small children), with making it socially unacceptable to litter, spit and swear. Plus treating other people properly by instilling good manners and politeness into the young.”

Renn’s article references Julian Simon (more famous for his winning bet with catastrophist Paul Ehrlich) who called human beings ‘the ultimate resource’ arguing that the wealth of a nation is its people not its natural resources. What is clear from that military recruitment data is that the developed world - the US, UK, the EU - is paying too little attention to that crucial resource. In the UK nearly a fifth of young people leave formal education without any substantive qualifications and when we look at the children of the less well off (as defined by those receiving free school meals) this proportion rises to nearly four in ten. And while there is a big overlap with poor educational outcomes, one in six 19 year olds have a criminal record and approaching one in five report some sort of mental health problem.

So when we talk about industrial strategy and bemoan the decline in manufacturing, we should maybe pause to consider whether that strategy should start with getting a workforce that is able to compete with disciplined, literate and skilled workers in Vietnam or Indonesia? Keir Starmer spoke today about the importance of oracy - speaking well - in what seems a departure from the established focus on reading and writing. But what is missing from Starmer’s analysis is any talk of personal discipline, how we get the sort of culture we saw from those Japanese football supporters. Elocution is important  and, as Starmer says “key to doing well in that crucial job interview, persuading a business to give you a refund, telling your friend something awkward.” But so is dressing smartly, eye contact and a polite form of address. Manners really do maketh man.

A while ago I wrote about how the National Conservatives and ‘postliberals’ lack an economic policy that makes sense:

“The US National Conservatism project has a website where it publishes essays of interest and relevance to the debate as well as some videos and recommended books. As far as I can tell not a single one of these essays, videos and books touches on economic policy, National Conservatism seems entirely contained within discussions about what we mean by nationalism (important so we don’t look too fascist) and attacks on ‘woke’ progressivism. Yet outside the bubble live ordinary people and those ordinary people, especially right now, are much more interested in their job, the wages and their families well-being than the pronouns used by a short-haired person on the telly. If conservatives are not talking about what conservatism offers the ordinary worker, they are not talking about what matters.”

It is true that if society can’t offer stability, security and prosperity to young people they have less incentive to do their side of the deal by learning skills and working hard. So the starting point for an industrial strategy isn’t grand ideas about onshoring and import substitution but investing in our principal resource - people. And that investment isn’t just a matter of spending money on skills or getting more 18 year olds into college, it is about getting that societal discipline we marvel at in East Asian countries. The success of these countries owes more to good education and social discipline than it does to the sort of import substitution programme that some British conservatives call an industrial strategy.

A conservative industrial strategy wouldn’t be a warmed-over version of Roosevelt’s New Deal such as we see Biden doing with his Inflation Reduction Act and CHIPS Act, it would be a real compact with the current and future industrial workforce. Right now we are focused on the eye-watering amounts of money Biden is throwing, more-or-less randomly, into the US economy. We understandably focus on the size of those inputs - $369 billion just on ‘green jobs’ - without asking about the expected outcomes. And remember that none of that money is going into fixing the problem that means the US military can’t recruit - poor literacy, drug addiction, mental ill-health and crime. The US government is spending money to create jobs that maybe half the workforce isn’t fit or able to do.

The same is true here in Britain. We hear talk of a ‘green new deal’ or a ‘new industrial strategy’ and summon up images of men in sturdy boots walking along cobbled streets to the factory, a sort of fantasy of industrialisation rather than a genuine offer of stability, security and prosperity to our actual industrial workforce. What we get is little more than protectionism - here’s Nick Timothy, once chief of staff for Theresa May:

“...we can make our own rules for public procurement, state aid and subsidies for strategic industries.”

“We need to heavily tax foreign ownership of assets like land and property.”

“We need strategies for the industries where we excel, like life sciences, and for rapidly developing industries where we have great advantages, like compound semiconductors”

Above all, according to Timothy like a reincarnated New Deal Democrat or a Soviet commissar, we need a plan. We aren’t clear whether this is just a plan like Biden’s to look good by pouring billions in state subsidy into favoured businesses or a genuine Soviet-style Five-Year Plan but what is clear about Timothy’s plan is that it involves what look like 21st century corn laws:

“We cannot counter a newly competitive, neo-mercantilist world with open borders, unilateral free trade and the same old orthodoxy of non-interventionism. We need a completely new approach based on investment, innovation and re-industrialisation.”

For our new conservatives this approach will be underpinned by getting universities, again, as if in some Soviet utopia, to provide “...the research, elite graduates and technical education we need.” The actual industrial workforce will, one assumes, still be leaving school at 18 and a fifth of them will be functionally illiterate.

An industrial strategy predicated on important substitution and protectionism all contained in The Plan, simply isn’t going to work. OK it will look and sound good, just as Biden’s largess looks and sounds good, but nothing in the plan points to better outcomes and nothing in the plan (or the US government’s schemes) is directed to getting a better disciplined, better educated workforce. Or even to help those in our current workforce whose mental or physical health limits or prevents them from working.

A genuinely conservative approach wouldn’t involve a national industrial strategy lifted wholesale from the pages of Fabian socialism but rather a promise to our workforce that if they do the right thing - finish school, learn manners, present well - we will get them into a decent, stable job that offers prosperity. And we’d build on that promise by improving discipline in schools, through supporting families, by investing in clean, safe streets, by clamping down on bad behaviour, and by rewarding those who play by the rules. This strategy needs to include protections for the self-employed and seasonal workers. It should learn from the old guilds and friendly societies about how we can create communities of support based on voluntary cooperation not dependency on the state. And it should remove the barriers to new business and individual initiative.

What the strategy should not involve is things we like the sound of, that - a moment’s thought will tell us - have been tried before and have failed before. Roosevelt’s New Deal was a failure - it made the great depression worse not better. Industrial planning in the Soviet Union didn’t deliver prosperity, in many cases it took natural resources and advantages and made them unproductive. The so-called industrial strategies of post-war Japan and more recently Korea were not based on protectionism but on exporting, on turning an educated and disciplined workforce into a competitive advantage. And countries like Vietnam and Indonesia are repeating the strategy. 

So let's start with getting a happier, healthier and more literate workforce. Let’s stop cutting the things that make for social discipline like street cleaning, litter enforcement and dealing with bad behaviour. And let’s back the undoubted genius of our people by creating the environment for them to succeed, to back prosperity. This means some big changes such as refocusing local government onto visible services and away from delusions of economic grandeur and, above all, social services. It should mean lower business taxes and a simpler planning system. And it means building the infrastructure for energy, water and travel that meets the needs of ordinary people and a growing economy.