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When one cargo cult fails…

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Cargo cults have been a feature of Pacific Islander beliefs for at least as long as European and Chinese sailing vessels traded goods across the ocean.  As Peter M. Worsley wrote in a 1959 article:

“Throughout Melanesia primitive men await a black Messiah who will bring them a largess of ‘cargo’ (European goods)…

“…the arrival of the Whites was accepted, even welcomed, for it meant access to bully beef and cigarettes, shirts and paraffin lamps, whisky and bicycles. It also meant access to the knowledge behind these material goods, for the Europeans brought missions and schools as well as cargo.”

Political commentators though, have co-opted the term “cargo cult” to refer to a misguided policy designed to bring about a result without understanding the process by which such a result is actually achieved.  As an example, during the Second World War, the US military built airstrips and docks on the islands it needed, to create a logistics chain for its forces to advance toward the Philippines and Japan.  After the war these were maintained as refuelling stations and for emergency landing.  The result was that US dollars flowed into those islands blessed with airstrips; and those dollars could be exchanged for modern technologies and consumer goods.  The governments of those islands without airstrips and docks wrongly concluded that the key to prosperity was to build their own.  And so a lot of effort was made for very little reward; as cargo laden aeroplanes and ships failed to arrive.

By the late 1980s, it was clear to the centre left parties on both sides of the Atlantic that they had lost.  The Reagan-Thatcher-Mitterrand administrations had overturned the post-war consensus and replaced it with a neoliberalism characterised by minimal government interference in the economy, save for the weakening of the remaining trade unions.  By the time Governor Clinton and Tony Blair rose to lead their respective parties, there was no possibility of turning the clock back; for example by committing to high levels of infrastructure spending together with state support for industries that might otherwise locate abroad.  Indeed, by the 1990s, many of those industries had already moved to Asia; and those which hadn’t had simply been allowed to close.

That left the centre left parties with a problem.  Their activist and membership base had shifted from the old trade unions of the post war years.  Instead, the membership and activist base had become distinctly middle class and metropolitan. This was reflected in the policy platforms developed in the early 1990s.  However, to win national elections, they had somehow to maintain the support of their old working class base.  And to do this, they had to offer policies which promised to raise them from the privations of the Thatcher-Reagan years.  And so the neoliberal higher education cargo cult was born.

Observing that the most successful industries and countries in the world of the 1990s contained a high proportion of graduates, the neoliberal left concluded that the solution for the working classes and for the ex-industrial, rundown seaside and small town rural regions was to send their youth off to study in one of the many universities being created.  In the UK, the Blair government aimed to squeeze half of all school leavers through the university system.  And to do this they had to convert every small town polytechnic, higher education and further education college into a university.  But whereas prior to the 1990s – when around ten percent of youngsters went to university – the state had been able to subsidise education; in order to cram fifty percent through the system, they were obliged to cut maintenance grants and to introduce tuition fees.  Predictably, despite promising that tuition fees would remain low, successive governments raised them.

To add to student woes, the old polytechnics and FE and HE colleges had provided education and training to local people.  Universities, in contrast, were set up to accommodate students from anywhere; both nationally and abroad.  University administrators soon spotted the potential for a Ponzi scheme in the provision of student housing.  Each student came with a cheque for £9,000 from the government to fund their tuition.  And that alone provided an incentive to cram as many students into a lecture theatre as was physically possible.  But £9,000 is a drop in the ocean compared to the amount students would have to borrow to pay for accommodation during their three years in university.  And so universities got into bed with property developers to take advantage of the loophole in planning law which exempts student accommodation from Britain’s building standards.  Giant student tower blocks soon began to blight the landscape of every town and city centre in the country; as university administrators understood that the more students they could pack in, the richer they would become.

As with the Pacific Islanders in the late 1940s, it was a lot of effort and a lot of money for little return.  Prior to the pandemic, Britain had some 20 to 30 successful universities whose courses were in demand around the world, and which had built successful partnerships with leading-edge corporations.  The trouble is that they are the same universities and courses that were producing these results before Blair’s reform of education.  Second and third tier colleges which had converted to universities were doing a fair job churning out graduates.  But instead of creating new industries and new graduate jobs, they created qualification inflation.  Jobs which were previously available to anyone with good grades at GCSE or A level became “degree only,” while genuine graduate employment became the preserve of those with master’s degrees and doctorates.

At the other end of the employment ladder, prior to the lockdowns and restrictions, Britain had some of the highest qualified baristas, burger flippers, pint pullers and sheet changers in the world… precisely the jobs which have been all but wiped out in the last year.  Meanwhile, the regions that the Labour Party needed to win elections continued to get poorer.  So much so that, out of desperation one assumes, they voted Tory in large numbers in 2019; making it impossible for Labour to form a government for years to come.

The Tories though, are in a strangely similar position to the Blairites in the 1990s.  The rise of Boris Johnson had all of the hallmarks of a palace coup, designed to push aside the old, soft-Brexit Tories and turn the party into a UKIP tribute act.  This left them – as with Blair in the 1990s – with the problem of developing a policy platform designed to appeal to a broader electoral base than either May or Cameron had been able to secure.

The promise to “Get Brexit Done,” no doubt provided Johnson’s Tories with a far bigger majority than they thought possible.  But in doing so, it effectively obliged them to pick up the hot potato of those ex-industrial, rundown seaside and small town rural regions which have been declining for the best part of half a century; whose fortunes worsened considerably after 2008; and which are likely to come off worse in the aftermath of the pandemic restrictions.  Winning 50 red wall seats from Labour is one thing; placating 50 backbench MPs whose jobs now depend upon improving the economic fortunes of those places is altogether more difficult.

And so, like so many Pacific Islanders of yore, the Tories have looked around the world for the things that appear to contribute to the prosperity of competing states, and have decided that freeports and export hubs are among the hallmarks of the few national economies which are still growing.  The thinking is that if this infrastructure is put in place, high-value exporting businesses will surely follow.  And so Belfast, Cardiff, Edinburgh and – for reasons not immediately obvious – Darlington, are to be the recipients of the new state export hubs; while East Midlands Airport, Felixstowe and Harwich, Humber region, Liverpool City Region, Plymouth, Solent, Thames and Teesside are to become tax-avoiding freeports.

Cited by the BBC, Justin Urquhart-Stewart, co-founder of Seven Investment Management and the Regionally investment platform, points to the obvious flaw in government thinking:

“The trick they’re missing is the concept is right, but actually what you need is to create the businesses, encourage exports and then provide the export advice… The capitals of the three nations and Darlington are not necessarily where the industries are.”

In truth, even this objection is optimistic; because “the concept is right” only for the world before 2020.  Faced with supply chain shocks as a result of the lockdowns and restrictions imposed by governments around the world, importers are rethinking and simplifying their business processes.  So that while a good degree of exporting is likely to continue, the post-pandemic trend is likely to be toward bringing home as much manufacturing as possible.  This means that exporting goods is going to become a lot more competitive in the years ahead… something that spells trouble for a primarily consumer-focused country like the UK.

Once again, there is a huge risk that Britain is about to spend a lot of its dwindling energy and resources on a cargo cult which cannot, in and of itself, create the export goods that the wider world market will want.  It may, of course, allow existing exporters to dodge some more tax; making the pound even weaker on international currency markets.  But just as the UK now has millions of unneeded graduates, a decade from now we may well end up with thousands of business export advisors, without any actual exporters to advise.

As you made it to the end…

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