Rebalancing the economy — the UK case

Today’s FT has an interesting article on how the UK is approaching the question of rebalancing its economy [registration required]. The article implies that most people believe the UK economy veered too much to the financial industry and away from other sectors. It even quotes Prime Minister David Cameron:

“That doesn’t mean picking winners, but it does mean supporting growing industries – aerospace, pharmaceuticals, high-value manufacturing, high-tech engineering, low-carbon energy. And all the knowledge-based businesses including the creative industries,” he said in his first big economic speech.

All of this talk is welcome. The real trick, of course is how to pull it off. There the debate is joined — with all the standard issues of how much and what type of government assistance to offer and where growth will come from. The latter question is seeming to drag the debate in the UK back to the old services versus manufacturing canard (as least as outlined in the article).
However, there was one striking remark in the article’s sidebar discussion on sectoral job growth – “How the World Makes its Living”:

Boundaries between manufacturing and services have blurred: much of industry today sells advice as well as hardware while services such as consultancy feed off manufacturing. But most people’s jobs are unlike the blue-collar roles of former generations.

That insight (which long time readers of the blog will know is a constant refrain here) can help cut through the fog. Rebalancing is an important goal. But it does not mean returning to the economic structure of the part. The world has moved on; the I-Cubed Economy is here.
We need a economic structural policy that understands and builds upon this transformation – not one that is stuck in the mindsets of the past. And one of those mindset from the industrial era is this simplistic notion of “advancement” from agriculture to manufacturing to services. Economic dynamics is not like climbing a predetermined ladder. It is about transformation. The simply notice of the fact that the boundaries between manufacturing and services has blurred is a recognition of that transformation.
Now, can we build on that recognition?

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