Britain's Industrial Decline: Adding Insult to Injury
William R. Hawkins
Tuesday, January 30, 2001
The British Royal Navy is planning to build two new aircraft carriers to be delivered in 2012 and 2015, at a cost of $3.3 billion. This has been a controversial decision because defense spending in the UK has been tight and the military across the board has been withering away.
This reflects the underlying long-term decline of British industry on the world stage. Nothing better demonstrates the sad plight of the country whose fleet was once called "the bulwark of the island" by the great William Blackstone than that the new warships may be built by a French corporation.
Lord Horatio Nelson, who beat the combined French and Spanish navies at Trafalgar in 1805 to assure London's global dominance, must be spinning in his grave.
In contrast, the ghost of Napoleon is undoubtedly smiling at this latest invasion effort. The French corporation is Thales, the formerly state-owned firm Thomson-CSF. It was privatized in 1996 and then changed its name after purchasing the British firm Racal Defence Electronics Ltd. Thales had also acquired Shorts Missile Systems in Belfast and Pilkington Optronics Ltd. in Glasgow to establish itself as a major contender in the UK.
Indeed, the British defense industry has declined to only one major native player: BAE SYSTEMS, which had been created by the merger of British Aerospace with Marconi Electronic Systems. As a result, the British government is actually helping position the French Thales as a prime contractor for the carrier construction program in order to maintain competition for the bid.
A hundred years ago Great Britain was the world's only Superpower. It had led the Industrial Revolution. Its empire ruled a quarter of the human race. London was the financial capital of the world. Most people still believed the popular lyric "We don't want to fight, but, by jingo, if we do; we've got the ships, we've got the men, we've got the money too!"
But some looked below the surface. The prominent commercial lawyer Lord Penzance warned in 1886 that "The advance of other nations into those regions of manufacture in which we used to stand either alone or supreme, should make us alive to the possible future. Where we used to find customers, we now find rivals....prudence demands a dispassionate inquiry into the course we are pursuing, in place of a blind adhesion to a discredited [free trade] theory."
A great debate took place as the 20th century dawned, and the British trade deficit in manufactured goods grew. There were some hopeful "protectionist" stirrings within the Conservative Party. However, the 1906 Liberal Party landslide kept the country committed to "free trade" and the deficits continued.
Not until after the shock of World War I would England adopt new trade and industrial strategies. A system of imperial preferences meant "to make the Empire independent of other countries in respect of food supplies, raw materials and essential industries" were adopted. But by then too much ground had been lost, England could not pull out of its industrial decline.
Yale Historian Paul Kennedy has summarized the factors that led to England's fall: "a failure to invest sufficiently in new plant and laboratories, and in entire new industries; an inadequately trained work-force, and an insufficient supply of engineers and scientists as compared with foreign rivals;...a social culture which accorded far greater prestige to the professions and service industries (law, medicine, merchant banking,
stockbroking) that to the business of building ships, turbines, machine tools and other manufactures."
We cannot allow the debate over trade policy to be lost again; not if we want the United States to fare better in the 21st century than England did in the 20th century.