Before 2008, this was simply the complaint of one businessman, railing against an economic system that was designed around services, software and real estate, and seemed to be running very smoothly indeed. But the global economic downturn has given his message a new universality. After all, it was the financial-services and property sectors that collapsed; industry-driven economies such as Germany and Singapore experienced record-breaking export booms and avoided the crisis.
Countries such as Canada and Britain have a weakness: Having abandoned manufacturing almost completely, they are vulnerable to the uncontrollable destinies of natural resources and the financial industry. But Mr. Dyson describes it as only one symptom of a larger problem: a Western world, especially the former branches of the British Empire such as Britain and Canada, that has lost its will to invent and make things.
“The trouble with Britain is that it built its success on the riches of its empire, rather than building its success on a manufacturing economy – we went out to the empire and flogged them what products we had, and took their resources, and made money off it. There was no need to be the best.”
Canada followed a similar path, shifting its economy away from manufacturing and into a greater reliance on natural resources and financial services (although not as much as Britain – Canada still maintains some export leaders, such as Bombardier and Research in Motion). This, Mr. Dyson says, is a recipe for vulnerability, as it has made his country, and ours, dependent on the shifting fates of resource pricing and market activity. The solid employment and export earnings of an industrial would provide more stability, he says.
Can we compete with Asia and South America?
But he fears it may be too late. “The problem now is that China is rising rapidly, the Southeast Asian countries, the United States is very strong on technology, Japan, Korea and now South America – so what on Earth is [Britain's]future going to be? No empire any longer, the North Sea oil drying up and we're not a cheap manufacturing nation; we've even lost our ability to manufacture.”
The Dyson solution involves shifting the education system, the tax system and the government's priorities to making industrial manufacturing something that is once again desired, supported and rewarded.
For example, Mr. Obama, buoyed by the success of George W. Bush's Detroit auto-industry bailout and the strong uptick in exports with the cheaper dollar, is pushing for a U.S. industrial policy designed to make goods exports easier. As he points out, manufacturing made up 25 per cent of the U.S. economy in 1980; it has now fallen to less than 10 per cent. A study last month by the Washington-based Brookings Institution makes the case for a reindustrialization of America, finding that manufacturing jobs boost average salaries and productivity, provides the research and development investments that are the main source of innovation for the service industry and, perhaps most importantly, provides a large-scale rise in foreign-exchange earnings that would reduce the U.S. balance-of-payments deficit – the fundamental cause of the economic crisis.
“Economists agree that the United States must rebalance growth, away from consumption and imports financed by foreign borrowing, toward exports,” says Laura D'Andrea Tyson, the economist who chaired Bill Clinton's Council of Economic Advisers. “The only way the United States can … make a significant dent in its trade deficit for the foreseeable future is by increasing exports of manufactured goods.”
In a tip of the hat to Mr. Dyson, George Osborne, Britain's Chancellor of the Exchequer, tabled “a budget for making things” last year and loaded it with tax relief for small business, laws to reduce planning and bureaucratic barriers, grants to entrepreneurs and plans to double the number of technical colleges and apprenticeship programs.
Indeed, Mr. Dyson played a large part in the election of Mr. Cameron's government: He wrote a report, “Innovative Britain,” calling for tax and education systems designed to move people into design and manufacturing; it was a major subject of the 2010 election, and almost all of its recommendations have been implemented.
Now, he is pushing particularly hard to reinvigorate the inventing trades in Britain: He points out that only 6 per cent of British graduates study engineering, compared with 13 per cent in Germany and 40 per cent in Singapore.