Intertwined global supply chains mean that there can never be unequivocal answers to economic questions, says our management consultancy columnist Mick James, but being part of this interdependence is essential.

Hurray – the price of oil is down and Britain can enjoy world-beating growth and become the richest country (in terms of GDP per head) in the world. Or do I mean, boo, the price of oil is down, we face years of damaging deflation and the Scottish economy is ruined? And don’t get me started on the Swiss franc.

One of the reasons I decided to study economics was that I could never understand the difference between bad news and good news. If the pound went up it was bad because it increased our cost of living; if it went down it was bad because it would hurt our exports. What was the right level for the pound?

Studying economics taught me that there was, of course, a right level for the pound which was the one it was currently at, because this was a price set by the market. Phew! But then of course we learned there was a right level for inflation, which was the Bank of England target. This is slightly different from the exchange rate, because it never is at that level, except momentarily on its way somewhere else.

We live, as we know, in a very unstable world but it’s distressing how much of that instability is caused, not so much by wars and famines but our financial and governmental systems.

I recently wrote about how the uncertainty caused by the upcoming general election was in many ways more damaging to business than any possible result. It occurred to me afterwards that this a very unusual election in that it is the first since probably the Second World War where it is not actually possible to vote for the status quo.

Yet this happens at a time when the options available to any future government are so limited that there would be a definite value in avoiding the petty turmoils and upheavals that attends any change of government. Even though a lot of this will just be rebranding it all comes at a cost and there’s always a risk that some worthwhile scheme or allowance will get lost in the clearout of “not-invented-here” items.

Arguing for inertia is never cool or sexy. The fact that a huge chunk of the population don’t vote is seen as an excuse for frantic stimulation rather than an argument for leaving things as they are.

Stability is often seen as anti-democratic. There are currently huge stirrings against the Transatlantic Trade and Investment Partnership (TTIP) which seeks to create greater freedom of trade between North America and the EU. Bizarrely, the people who are most against this seem to harbour no objections to the European free trade area, nor the supra-national controls this imposes on governments’ ability to act. Are these rational objections or just some sort of knee-jerk response to globalisation or the involvement of the United States? Ironically, many of these objections appear in the Guardian, a paper that has bet its whole future on opening up the American market.

One of the main sticking points is the use of “investor-State dispute settlement mechanism”, or ISDS, which allow companies to go to independent arbitration if they feel a country is riding roughshod over its interests. This is being portrayed as an intolerable infringement of national sovereignty and democracy. Yet, at the same time as the EU is being urged to resist ISDS, it is also being applauded for cracking down on the national sovereignty – over tax – of Luxembourg, a tiny country now so crammed with corporate HQs that you wonder how there is any space left for the traditional Luxembourg activities of…er (I’ll have to come back to you on this one).

Who’d be a politician when you have to play to a crowd that is following two different narratives simultaneously?

Just the other day I caught the end of an episode of Top Gear, which contained a slightly OTT but nevertheless interesting tribute to the British motor industry. Challenging the popular wisdom that “we don’t make anything anymore” and particularly not cars, they got every vehicle manufacturer in the country to send examples of their products to London, and lined them up in the Mall.

It was an impressive display, with everything from Rolls Royces to JCBs, and Formula One cars to ice-cream vans. If some of the cars were more assembled than fully manufactured in the UK, they were more than balanced out by the missing vehicles which only have UK made engines or gearboxes. And who’s to say who adds more value to a Rolls Royce, the man who presses out the doors or the painter who puts the coach lines on?

I don’t know if we’re ever going to conquer the world with our ice cream vans, but I’m sure many of those represented will benefit massively from a lowering of trade barriers – some of the motorcycle marques that are now being revived went under partly due to the strain of keeping up with US vehicle legislation.

And these intertwined global supply chains, these cars that are multinational coalitions of design and technology and branding, help explain why there will never be unequivocal answers to whether this or that piece of economic news is good or bad. What we do need to do is make sure that we don’t end up excluding ourselves from this incredible interdependence. To paraphrase John Donne: no island is an island.


All views expressed in this article are those of Mick James and do not necessarily reflect the views of and

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