Time is of the essence

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Time is of the essence


What comes to mind when you think of the United Kingdom? Big red buses? Fish and chips? The Beatles? Colonialism, if you’re of a more critical disposition?

You may well have been to London, and remarked at the wealth and swagger of the place. As a tourist you’ll have seen this, and perhaps spent a day in Oxford or Cambridge or Stratford-upon-Avon, the birthplace of Shakespeare.

It is unlikely you’ll have visited places like my hometown as a tourist, and understandably so. The area I grew up in is in long-term decline. Half of the shops are boarded up, and the most of the rest seem to exist merely to cater to poor people: betting shops to provide false hope; fried chicken and pizza shops to provide cheap, nutrition-less calories; and payday lenders to advance cash to the broke at usurious rates of interest.

This is also England, though. And outside of the orbit of London (and the places that those who did well in London retire to), it is pretty normal. Three years ago, a book by one Guardian and one Mail on Sunday columnist titled “Going South: Why Britain Will Have a Third World Economy by 2014” came out, and the only thing about it that surprised me was the boldness of the date they chose. The basic thesis isn’t really something I would argue with.

Whenever I travel back and forth between London and “the regions,” I feel as though I should take my passport. There is an increasing sense that we are becoming a poor country with London attached. We are heading towards being a Malaysia and a Singapore in one state, but without the sunshine.

Why is this? In my opinion it goes back a few decades and can be explained with the word “deindustrialisation.” Our country - and indeed, the United States - has been seduced by the idea of the service economy, as opposed to having a balance of manufacturing and services. We do still manufacture, but roughly speaking, we use productivity gains to produce the same stuff with fewer and fewer people, rather than produce more, and ramp up quality. Manufacturing is only around 10 percent of the U.K. economy now.

Roughly speaking, the narrative went that as a high-wage economy, we simply could not hope to compete with the likes of China in manufacturing. The answer therefore was to give up on it and become a nation of bankers, management consultants and lawyers. Indeed, we are and always have been pretty good at those things - but they are activities inevitably centered on London, and are options available only to those with fancy educational backgrounds.

The other types of service employment the U.K. offers - and now the mainstay of the ordinary person from the ordinary town - are in fields like retail, call centers, and so on. Even then, there are too few of these jobs, and those that exist pay minimum wage and rarely offer the chance of serious career progression. As a result, people are miserable, broke and lack ambition; many just collect state benefits. Some poor urban areas have life expectancies in the low 60s and serious problems with crime and drug abuse. Individually, one can say, “Sort your life out!” But when you have millions of people like this existing when once there were very few, you have to ask if there is a problem with the system itself.

I used to think all this was normal until I spent a few months in Switzerland - a super high-wage economy - and saw that all across the country, there were people with normal backgrounds earning excellent wages in cutting-edge manufacturing industries. They were working-class people, but their kids were growing up very comfortably and had a sense of a decent future.

During my days as a reporter in Seoul, I would sometimes attend conferences on Korea’s economic future. Virtually everyone there would be U.S.-educated (Korean or foreign) and from a privileged background, and so naturally, the kind of prescriptions they would offer for Korea’s economic future would involve the service economy.

If you’re a banker or a management consultant, the service economy probably looks like a roaring success.

We shouldn’t neglect services, of course, and Korea can certainly improve in that regard. But Korea isn’t likely to become a nation of bankers any time soon - do you suppose London and Hong Kong are just going to roll over and say, “Sure, take our business”?

For sure, there are a few blue oceans, but as Cambridge University professor of economics Chang Ha-joon is fond of saying, the much-vaunted medical tourism sector would need to grow several hundred-fold to replace an industry like car manufacturing in Korea.

Anyway, services versus manufacturing isn’t a straight-up binary choice - countries like Switzerland and Germany show that while difficult, it is possible to excel in both. That is what Korea should pursue if it wants to avoid the sad, economically divided fate of my country and the U.S. Right now, Ulsan is the richest city per capita in Korea. But many now-depressed British industrial cities were once considered wealthy, and motor city Detroit was once the very richest in America. There’s still time left for Korea to make the right choice, but not much.

*The author, former Seoul correspondent for The Economist, is co-founder and chief curator of Byline and the author of “Korea: The Impossible Country” and “North Korea Confidential’’.

by Daniel Tudor

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