Steel issue shows limitations of sovereignty

The debate around the future of the UK steel industry has demonstrated just how ludicrously parochial political debate here has become. People lined up to argue over how losing hundreds of jobs in Port Talbot was the UK Government’s fault, the Welsh Government’s fault, the Remain side’s fault, the Leave side’s fault, the fault of any politician I don’t like…

It is just possible that it isn’t any politician’s fault.

The fact is, since the mid-’90s in particular, we have all literally bought into an economy based on cheap supply from the Far East.

We are not necessarily wrong. Upon retirement in 1997 my father bought an Internet-capable (US-built) PC for the modern equivalent of around £5,000. Its capabilities would be comfortably passed by a basic (Chinese-built) £100 mobile phone now.

So it goes on across a vast range of goods – phones made in China, vacuums made in Malaysia, electronics made in Indonesia, etc etc. In such countries, wages are much lower and workers’ rights much inferior (even basic welfare or pension provision is almost unknown).

But we don’t care, as long as we get the goods cheap and can spend the rest of our wages on leisure activities, fancy cars and holidays (perhaps to places like Dubai, largely built by migrant workers on pitiful salaries with no basic rights at all).

Let us be clear, any politician seeking to deny us this standard of living, even though it is in effect based on slave labour (just not our slave labour), would never attain office.

China and other countries have used this income to grow their economies and create a burgeoning middle class – which, just every few years, grows by a size equivalent to the entire population of the UK. One of the inevitable consequences was a construction boom in the Far East (most obviously in China), and then something of a bust, with a further consequence that China had an excess steel supply which it dumped cheaply on the world market.

So it is that Chinese economic decisions affected an Indian company to the extent that hundreds of jobs were put at risk in South Wales. This is globalisation, an inevitable consequence of the cheap supply economy into which we have all eagerly bought – not “politicians”, us!

Such also is the limitation, or indeed near irrelevance, of the concept of “sovereignty”. It was not a current Welsh Government or UK Cabinet Minister’s decisions which threatened the UK steel industry; it was a Chinese economic decision and an Indian company board’s reaction to it.

This is the ludicrous nonsense of “take back control”. This is a globalised world of quality European imports and cheap Far Eastern imports. We need to be part of a big team, not exposed on the sidelines.

 

Advertisements

2 thoughts on “Steel issue shows limitations of sovereignty

  1. Thanks for this blog post regarding the steel industry; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

  2. China have imposed import tariffs on European steel, so there is or at least was a market for our engineered specialised steels in China. I think there is some validity for a bit of tit for tat here. There is some validity in also punishing China by importing cheaper Indian steels for non specialist purposes or improving steel recycling rates, or finding alternative markets.
    Europe is not alone here, North America, Russia and India have all been victims of this protectionist move. If Russia a nation with vast coal and iron and a strong engineering heritage is suffering, the largest country by area is suffering, it’s not a good arguement the Little Britons are making that alone the UK could beat China like they did to some extent in the Opium wars, with an Empire they could no longer afford after two world wars of course.

    There is some logic in something like the car manufacturing sector a small degree of importing cheap Chinese steel and recycling it could hit imports of Chinese coal and iron.
    I suppose UKIP and other populists may use this as an opportunity to limit Chinese engineering students migrating here and of course that has a loss to our universities who have worked hard to get that international money in, particularly Queen’s University. Another petty response may be a boycott/divestment in Hong Kong financial services. The reasonable arguement being if we’re making China so rich we may not have the money left to even buy their goods because they could hold all the commodities, all the manufacturing and provide many of the services too (e.g. Alibaba beating Amazon).

    The EU’s heritage is of course coal and steel, two commodities we used with vast unsustainable wrecklessness and ones Europeans invaded other nations European or otherwise to get to. To stop over reliance on these commodes, we became silicon nations, relying on an element that makes up a considerable amount of the ground we walk on, the limits on our electronics was not an absence of available sand but the energy needed to make and transport it and a few non-silicon components like rare earths and iron for disk drives. Silicon may give way to nanotechnology one day. We also became gas distillers, sulphur and chlorine chemists. We found uses for the lemons we had.

    One day China may face the European problem, it might consider act like Iran and use one commodity Uranium to save another that will rapidly increase in value Oil for when prises increase. It might wish to increase its steel recycling rates rather than importing African coal and Russian iron, It might wish to become more of a frugal and resourceful economy, not for mercy to the Europeans but in order to protect its own.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: