Denseman on the Rattis

Formerly known as the Widmann Blog


The export boom that never happened

The Nightmare Factory
Originally uploaded by Sugeo

More than a year ago I blogged why I wasn’t convinced that a collapsing pound would solve all of the UK’s financial problems.

Today Edmundo then wrote a blog posting about the worsening trade balance.

He’s been quite optimistic in the past that the Bank of England’s strategy was right, so it’s interesting that he’s starting to realise that this recession will lead to the revision of many economics textbooks.

I liked the golf problem mentioned in his blog posting – it’s something which has been overlooked by most observers:

One person recently explained this phenomenon to me as a golf problem. British managers, he said, are too fond of golf. When profits are good, unlike many of their overseas counterparts, who go out and seek further opportunities, they take to the golf course rather than trying to build on those profits. So a devaluation invariably fattens their profits rather than prompting them to expand market share. Anecdotal and vague as this social observation is, there is some grounding in economic evidence: Britain does, according to economist Bill Martin, have a historical tendency to import more and export less as its economy grows.

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