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Try telling that to those living in Redcar and Port Talbot.
Dr Alex Strickland
Surely, the main issue is whether or not the state has any sort of legitimate role to play in the development of the national economy and if so what that role should be. Steel is a cyclical product and markets will rise and fall. The idea that adopting a non interventionist laissez faire approach will resolve the problem is clearly wrong. Perhaps the UK should learn from developmental economic models in Japan, Europe and elsewhere and be mindful of the strategic importance of the economic sector in relation to building a long term sustainable manufacturing base for the British economy. Even putting to one side the social cost to communities throughout Wales that are directly impacted upon, there is a strong argument that the government should not allow such a strategic economic sector to simply fail on account of market movements that could look very different in five or ten years time. Closing down steel capacity is not the same as closing down an ice cream van – simply because the books dont balance over the short to medium term. Of course the banks needed to be saved during the financial crisis of 2008/9 but the whole argument shows just how political the economy has become – winners share the spoils and the losers pay the price. The fact that the winners are in London and the losers are in Wales just underlines the point even more. Any price paid for the failure of the steel industry will be political as well as economic – and one wonders how we will explain to future generations just why it seemed to make sense to allow such a strategic sector to fail on account of short term view coupled with a misplaced and blinkered adherence to ideological free market dogma that itself has been seriously undermined by the financial crisis of the last decade.
If there is a market failure then there is a clear need for a government to step in. I’m just not clear what the market failure is in this instance. What do you think?
I don’t think the struggles are all down to Chinese dumping either. Clearly this will have an impact, but steel output has stagnated and employment has fallen for the last 40 years in the UK.
A lot of people have also pointed to steel being a key or strategic industry. Again, I’m not convinced by this, nor do I really know what it means. I’m sure many voices said the same thing when industries such as mining (where will we get our power from?) and textiles (where will we get our clothes from?) came under threat.
I suppose the issue in part is how we cope with the consequences of globalisation. The chinese dumping issue shows market forces at their worst – with an ability to inflict huge social damage, whilst all the time being beyond political control. The fact that the future of Welsh industry can be decided in large part by a boardroom in India somehow shows the lack of local or domestic control that exists over the economy in the modern age. As I understand it, steel is strategic because it acts as a vital input into the production chain of manufacturing economies. If the UK decides it wishes to abandon manufacturing then that is a choice it makes – but again the consequences will be both political and economic not only in Westminster but in communities abandoned to their fate by the invisible hand of short term market forces. In addition to the fact that such communities take decades to recover, the social costs are great and there is little sign of any kind of an industrial policy to guide development of the British economy. I fear that without strategic intervention in terms of setting an industrial strategy, the gains from the devolution agenda in terms of transport improvement, skills development and business support may be too little too late ?