Globalisation, immigration, protectionism and David Cameron

Read BBC news today [http://news.bbc.co.uk/1/hi/uk_politics/5318636.stm]. Conservative party leader David Cameron says that UK wage depression is dued to globalisation and it is incorrect to blame it on immigrant (I think it is mainly eastern european that he is referring to).

Well, perhaps there is no one to be blamed and the UK residence just have to wake up and realise that honey moon is over and it is time to work hard, brush up their skills and compete diligently.

Industrialisation that began in the 1500+ has made many european countries, including UK of course, very rich and placed them way ahead technologically, politically and strutucally of Asian competitors. When basic needs are met, people tend to look for ways to improve their quality of life. After a while, they take for granted that it is their god damn right to live comfortable, simply because they are lucky to be borned (or live) in the right country. By doing so, they effectively live off capital (this includes the system, the building, roads) etc that the previous generations have created and yes, they believe that it is their right to live that way.

Being riched, having a well function political system and large education budget put the Brits at tremendous advantage compared to Asian competitors. But yet, the products of the education system is fair disappointing. Rather than taking advantage of the advantage, many squanders the opportunities.

Suddenly, China economic progress grew tremendously in the 1990s (Actually China was growing at about 10% since Deng's 1978 free economic zone experiment, but as the size of the economy was small, it can easily be ignored. In the 90's China economy has reached a significant size, and growing at 10% from that size is now sufficient to shake the world. Also, suddenly, India under M. Singh reformed its economy and now their enterprise are able to compete around the world. Suddenly, Internet changed the way we communicate and the world becomes so much closer. Suddenly, telecom advancements has brought down telephone call prices significantly.

All these factors contributed to a very globalised world where the most competitive will stay on an edge, and those who are in high cost areas must strive to deliver high value products and services. e.g. Eletronic Design Services where while an engineer cost £30k per year but the end product is worth, say £10m a year. For those who are in the IT field will clearly know that any years ago, you could get a good job by knowing how to use WordStar, but as more and more people comes to the bandwagon, unless one upgrade oneself, one will be in trouble. This is exactly the scenario we have today - upgrade or suffer. Strangely, rather than calling the brits to move up the value chain, Mr Cameron choose to blame globalisation. Even more strangely, globalisation is nothing new. UK companies have been known to move production to the colonies during the era of british empire. Back then, it was easier for the Brits to move up the value chain and stayed OK as the colonies and other competitors wasn't fiecely competitive. Their adapted, albeit, probably, more easily. Today situation is the same, despite harder, the only way is to upgrade, rather than blaming globalisation (I think that means China and India) for their woes.

Putting this into another analogy, a group of students use to get good results because it was easy to pass (assuming that the pass rate is defined according to the mark achieve by say 40th percentile of the exam-mark curve). Now, the school opens its place to pupils from the next neighbourhood who works much harder. The original set of students will now suffer because it is no longer easy to achieve the 40th percentile mark. So, those students decided that they should blame the new comers. It is an easy way out, but that will change nothing. Working harder is the only way out...

Now China and Indian company has gone global to begin their shopping spree (Mittal Steel bid for Accelor), Legend's bid for IBM PC division, Huawei invasion in Europe. Next 10 years will be quite different from what we have today. Upgrade, or be left behind....