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The Financial Crisis 2008 and the Miners’ Crisis 1980s

August 22, 2011

We are told by the media that any regulation of the financial sector will result in that sector ‘going elsewhere’, taking their business to other countries and that somehow this would be a bad thing for the UK.

But when the mines were closed down in the UK in the 1980s – amidst scenes of violent unrest and communities being destroyed, a way of life of 100 years being lost – the idea that mining should leave the country and go somewhere else was a good thing. Why? Because mining was regarded as inefficient and the industry was a burden – economically it made more sense to mine for coal somewhere else.

Now the financial sector in this country has cost the tax-payer tens of billions of pounds. It is a far greater burden on those not involved in the sector than propping up the mining industry would ever have been. So why should we be upset if the financial sector decides to go elsewhere?

The answer to this may be a little more complex than the answer to the question of why the mining industry should be allowed to perish in this country – for one thing, many more people are indirectly implicated; but I do not think it is nearly so complex as is made out.

The fact is that it would very likely do the UK no harm if the size and importance of financial services reduces and the size and importance of other sectors, notably manufacturing, increased again.

I know that this would put some in the financial sector out of work. That is tough. But it would be nowhere near as tough as what happened to many thousands of workers and entire communities in the middle and north of this country only 30 years ago.

It is impossible to avoid the thought that those in the City have better political connections than the miners could ever hope to have. The decision to support the financial sector is as political (a matter of vested interests and personal friendships) as it is a matter of economics and logic.

Two more comments on this.

Despite the claim that the sector would leave en masse for Dubai, or Singapore or Shanghai, I think that is unlikely. Even in Finance there is more to life than work, and the schools, the weather, the police, the music, the food – almost everything about life that most people value – are better in London than most other places in the world. These things alone would be enough to keep a substantial number of people working here – perhaps no more, no fewer than we need.

And finally, lest it appears that I am starting to bash the bankers in the now traditional sense, I want to make it clear that I view very few individuals as responsible for the mess. It really is a case of the system as a whole not working. Most people just join the system and do their best in it. You cannot blame them for that.

But equally you cannot blame those of us who say it is now time for tough love and to call the bluff of those who threaten to leave. What was good enough (or bad enough) for the miners must surely be good enough for their white-collar compatriots. And if those in any white collar sector are really so smart as to justify vast wage differentials, surely it would not take long for such highly paid individuals to retrain for the new engineering or other growing sector ?

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From → Economics

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