Innovation is a distraction from true economic rebalancing says John Elliott, chairman of Ebac.
Innovation is a much overused word.
Like motherhood and apple pie it is very difficult to say anything negative about it. However, this pie-in-the-sky belief that somehow we can innovate our way to economic health hasn’t worked, doesn’t work and won’t work.
We have the luxury of over consuming in the developed world because the developing world over produces and this imbalance in world trade is at the core of the financial crisis – which will re-emerge worse than ever if we do not address our trade balance and use the millions of able bodied but unemployed people we have in this country to make the things we currently import. This requires no manufacturing innovation.
Do you agree?
Should innovation and exports be driving industrial strategy?
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The biggest problem with our economy, and many others across the world, is that it is out of balance and the constant merry-go-round of money being borrowed and spent between countries is unsustainable.
We are a nation which once thrived upon manufacturing, but we have stopped making many of the things which our country consumes. Instead, we borrow from other countries money which we then spend in their economy, buying products we could easily manufacture ourselves.
Obviously, I am not saying we can domestically manufacture everything we consume but we can seek balance.
High tech innovation will not bring us that balance. It should be the cherry on the cake. The problem is, we gave the cake away long ago.
The Government continues to completely miss this point. They promote innovation, export and high value added production, while the biggest demand is the routine stuff that we all buy day in and day out.
This policy isn’t working because there simply isn’t enough demand for innovative, high value added goods to pay for all the daily consumed routine products.
In our economy, what do people actually need? We need to be fed and watered, we need shelter, the things which make our house a home, and we need clothes.
Many of the things which go towards meeting these needs can be made in the UK, but aren’t. The UK can manufacture its way out of this economic imbalance by employing people, the people it already pays to do nothing, to man factories that make clothes, domestic appliances, furniture and so on.
My company, Ebac, is preparing to enter the domestic appliance market, making washing machines and fridge freezers, as well as its current product lines, including water coolers, dehumidifiers and air source heat pumps. We have a strong workforce who enjoy making things.
This is what will make a difference to our economy. People employed to do a good honest day’s work for a wage packet to match, contributing towards a balanced economy by making products this country needs. Innovation has its place, but it is not the answer to our country’s fundamental problems.