#calvinjones — Public Fediverse posts

@Daveography

He'll definitely be missed. I've learned lots from him.

#CalvinJones #ParkTools #retirement

@Daveography

He'll definitely be missed. I've learned lots from him.

#CalvinJones #ParkTools #retirement

@Daveography

He'll definitely be missed. I've learned lots from him.

#CalvinJones #ParkTools #retirement

@Daveography

He'll definitely be missed. I've learned lots from him.

#CalvinJones #ParkTools #retirement

Gonna miss the most trusted mustache in the game: https://www.youtube.com/watch?v=60mjoZ0XeVA

#BikeToot #CalvinJones

Gonna miss the most trusted mustache in the game: https://www.youtube.com/watch?v=60mjoZ0XeVA

#BikeToot #CalvinJones

Gonna miss the most trusted mustache in the game: https://www.youtube.com/watch?v=60mjoZ0XeVA

#BikeToot #CalvinJones

Gonna miss the most trusted mustache in the game: https://www.youtube.com/watch?v=60mjoZ0XeVA

#BikeToot #CalvinJones

Once again, a shoutout to #CalvinJones from #ParkTool for terrific videos on everything! Especially handlebar tape…

For how clever I can be, it seems I cannot wrap my head around on how to properly wrap the tape on the road bike handlebars…🤡

It’s been always ending up in a big frustration, but somehow today it went well…🤡

Once again, a shoutout to #CalvinJones from #ParkTool for terrific videos on everything! Especially handlebar tape…

For how clever I can be, it seems I cannot wrap my head around on how to properly wrap the tape on the road bike handlebars…🤡

It’s been always ending up in a big frustration, but somehow today it went well…🤡

Once again, a shoutout to #CalvinJones from #ParkTool for terrific videos on everything! Especially handlebar tape…

For how clever I can be, it seems I cannot wrap my head around on how to properly wrap the tape on the road bike handlebars…🤡

It’s been always ending up in a big frustration, but somehow today it went well…🤡

Once again, a shoutout to #CalvinJones from #ParkTool for terrific videos on everything! Especially handlebar tape…

For how clever I can be, it seems I cannot wrap my head around on how to properly wrap the tape on the road bike handlebars…🤡

It’s been always ending up in a big frustration, but somehow today it went well…🤡

Stone by stone: Deconstructing and rebuilding innovation in Wales

The last guest post in the series of four by Professor Calvin Jones about the Welsh economy describes how innovation has developed before and after devolution. You can read his first three posts in the series:

• Blog post 1: If we tolerate this; Wales in the world economy
• Blog post 2: Must Everything Go? The Prospects for economic (re-)localisation in Wales
• Blog post 3: Faster: imagining a Wales that *really* goes for growth

Header photo: courtesy of William Warby

• Wales innovates (not)
• Everything everywhere all at once
• The future has been here forever
• Ask what innovation can do for you…
• Conclusion

“In the war against the Welsh, one of the men of arms was struck by an arrow shot at him by a Welshman. It went right through his thigh, high up, where it was protected … by his iron chausses, and then through the skirt of his leather tunic. Next it penetrated the … saddle … and finally it lodged in his horse, driving so deep that it killed the animal”

Gerald of Wales, 1188

The Welsh … appear to have been the first to develop the tactical use of the longbow into the deadliest weapon of its day. During the Anglo-Norman invasion of Wales, it is said that the ‘Welsh bowmen took a heavy toll on the invaders’. With the conquest of Wales complete, Welsh conscripts were incorporated into the English army for Edward’s campaigns further north into Scotland.

Castelow, 2016

t didn’t stop in Scotland of course. Not much does. In the Hundred Years’ war between England and France, across the battles of Crecy, Poitiers and Agincourt, English and Welsh longbowmen killed perhaps 20,000 soldiers, thousands of knights and half a dozen or so princes for handfuls of their own losses. Indeed, England’s soldiers were more likely to die from dysentery than the poke of a French lance. Only the arrival of gunpowder displaced the bow as the ultimate leveller between rich and poor

The Welsh didn’t invent the longbow. They took a stone age tool, improved it, and developed new techno-social structures – in what then passed for the military – to maximise its impact. Then the English came along, took it and supercharged it, in ways that were impossible for the Welsh. Not only were English kings able to integrate archers into a fully-featured military machine, and move that machine to continental Europe, but they were, at their best, able to coordinate financial and human resources, and modify behaviours across the entire ecosystem of medieval England to deliver an effective fighting force where and when needed. Edward Longshanks banned all Sunday sports across England apart from archery to ensure relevant skills were widespread and sharp, and as late as 1508 England banned the low-skill-required crossbow to ensure the longbow remained sovereign.

The Welsh king couldn’t do that. Hell, he didn’t even exist. The integration of the longbow into medieval warfare might have sent quite a few Anglo-Normans (and some of their horses) to an early grave, and even extended the independence of a few Welsh princedoms for a few years longer… but in the long term it made no difference at all. Why? Because Innovation, in its origins, and its place, and in its application and its benefits, is inherently contextual. And our context stinks.

Wales innovates (not)

Wales is rubbish at innovation – at least as commonly understood. Per capita spending on research, development & innovation is the lowest in the UK. Sectors, from farming through manufacturing to services, underperform in terms of capital investment, R&D and sheer dynamism. Higher education and public R&D pull up no trees. And none of this is new. Our industrial legacy is a raft of firms that are mostly either tiny, or large multinational facilities focussed on production or resource extraction – neither foregrounding innovation. The UK Government shovels science spending into the Golden Triangle. And government itself has become – in the UK and Wales by extension – a machine for allocating money, rather than bodies that actually domuch of anything. Our levels of qualifications and skills – an important driver of innovation – are poor.

Despite our longstanding lack in this area, Welsh Government attention on innovation has been patchy. At various points over the last 25 years, we’ve had an innovation strategy, one for science; and sometimes both. Higher education remains the ugly stepchild of devolution, largely ignored unless it’s really screaming, or if England does something we need to copy. Innovation is increasingly important for two reasons though: Firstly, it was earmarked by Vaughan Gething when Economy Cabinet Secretary as critical to the delivery on Wales’ national objectives in a strategy that sought to include public and civic bodies in the innovation landscape via a ‘missions’ approach. Secondly, at the other end of the M4 but still with a missions framing, Labour has focussed on economic growth in a way that makes a step-change in UK innovation performance, and hence productivity, central.

Both these approaches have limitations. In Wales, nothing is said about the changes to structures, incentives or funding that might actually encourage wider innovation. In London, there is (yet) little thought about how innovation and economic growth will make people’s lives better, beyond the obvious (but untrue) equivalence of increased economic growth and tax take with increased public spending. Innovation is, across much of the public and academic realm, posited as an unquestioned good. It isn’t.

Everything everywhere all at once? Really?

Last month two Harvard students described how they used a pair of unobtrusive Meta Ray Ban smart glasses to take photos of strangers’ faces, which were then automatically linked to an invasive face recognition database. Whereupon an LLM cross referenced with a variety of people-search databases to deliver intelligence on that person, including their name, address, and interests. The students even approached strangers and pretended to know them based on the information they had gleaned.

Innovative, no?

We have been trained to blithely think of innovation as positive and desirable. Which is a hard sell if you’re a Tesco cashier that’s just lost their job to a crappier, less chatty but cheaper self-swipe till. Successful innovation does not mean successful places. If you need convincing, just count the number of homeless people across Silicon Valley, or look at the backers of the 47th President of the USA. Or consider being a single female on a late train home as some creep stares at you through a pair of Zuckerberg’s latest AI toy.

Closer to home, we need to worry about how far R&D and innovation address the key issues we face, even if we do capture a decent proportion of innovation-related economic activity. Newport’s semiconductor cluster supports almost £400m of GVA, and 2,600 jobs, but Newport remains… well, Newport. It will take a lot of work to make an improved innovation performance touch the sides of Wales’ economic wellbeing needs, especially when innovation is clustered in the relatively wealthy (and urban) parts of the region, and liable to attracting labour from a lot further afield than Merthyr or Llandysul. And there is a risk that a focus on innovation – or at least innovation in pursuit of innovation for growth – risks further dilution of an economic narrative that already includes the foundational economy, the wellbeing economy, the circular economy, and a global-value-chain-climbing manufacturing action plan. Some of these are innovation friendly, or innovation-adjacent, but how is an open question.

We should also not forget that innovation is not costless. It requires organisations to divert staff, money and time away from the day-to-day to understand how to get there from here and start plotting a path. Immediate performance suffers for the long term good. This is hard. Not least for example in an NHS which has been long unfit for purpose, but wherein no-one has yet diverted sufficient resource into the obvious solution: preventative rather than ameliorative medicine, alongside of course a radically changed public health policy. Meanwhile, innovation challenges the value (and existence) of products, services and processes in organisations… and hence of the people in charge of the soon-to-be-obsolete bits. Those who have succeeded by clawing to the top of a particularly shaped organogram might not be overjoyed at the prospect of suddenly losing budget to – or heaven forbid reporting to – that weird nerd from the back cubicle who has written a whizz bang piece of code. Much easier just to… quietly lose the new ideas.

And of course, with innovation there is risk. We all know that Wales is more dependent on public sector employment and activity (and that in the closely associated third sector) than most regions. This is then a higher proportion of employees who will not – cannot – be rewarded for innovative thoughts with bonuses or promotions, but where the risk of getting it wrong is significant. who work in organisations where the watchwords are stewardship, safety, and spending public money wisely. Places where success then largely means getting the money out the door into safe hands by March 31st. The clearest example of this tension was perhaps when the regional development bank was given the schizophrenic remit of both encouraging growth and innovation in inherently risky firms and turning a buck.

The future has been here forever

It doesn’t have to be this way. We can’t really do innovation, but our technocratic, linear notion of invention, innovation and technological time ignores reality, and ignores the fact that really, honestly, there’s already enough stuff out there. Raise your eyes from this screen a sec and look at the surrounding office/living room/pub/park bench/factory floor/S&M dungeon. How much of what you see and use was invented in Wales? Yep, nowt. So why do we spend swathes of time worrying about what we invent and innovate here, but (almost) none purposefully and systematically searching the world for cool new stuff – technical and social – that we could be adopting or adapting? When transformative innovations do arise, we adopt them by the force of multinational economic logic, not proactive public policy.

Take climate change. We are busy developing sophisticated regulation mechanisms to enable the roll out of marine renewables that are decades away from commercial viability, and looking forward to welcoming, um, community-scale nuclear, whilst failing to quickly roll out onshore wind and solar technologies that are already grid-competitive, in part because we understandably can’t get over the thought of disrupting our untouched rural landscape, dense with ancient broadleaf forests and teeming with lynx and aurochs; reverberating to the cries of white tailed eagles wheeling over the salmon-packed rivers [checks notes. throws notes in bin].

Love Treorchy? Want to see it thrive? There’s a cool little app for that. Want to create more Treorchys by, I dunno, the policy innovation of levelling the playing field a bit by taxing out-of-town shopping centre car parks? Nah.

Ask not what you can do for innovation, but what innovation can do for you

Innovation is, and will always be, difficult for Wales. It requires spare capital – human, financial, political, and organisational, capacity we simply don’t have. Where innovation does occur locally, it is – by virtue of our small, peripheral and boring economy, and lack of industrial diversity and economic ownership – unlikely to be applied locally. Thus we need to reverse the logic of the innovation question. Not to encourage it for the sake of, but take a good, hard look at where we are going and what’s needed to get there. Then we need to understand whether the technology, policy, or approach already exists somewhere, and whether we can obtain and apply it here in Wales. Only after this process will we be left with an ‘innovative gap’ that we might need to fill locally.

One obvious and important example: it’s a decent bet that within a decade, nobody will be dangerously obese in Wales. We will have taken huge strides towards our goal of a (physically) healthier Wales. This will happen because of GLP-1 and related drugs that were very much not invented here. The policy question is then clearly, not how Wales invents new drugs, but how we access these new tools in ways that are affordable for the entirety of a patient’s life. And how we ensure that the newly svelte population don’t just sit on the couch, but are encouraged use their improved mobility to engage in activities that improve the muscle mass, physical resilience and mental health that the drugs might leave unchanged. That is, we need to ask how we harness innovations to drive wider wellbeing.

We will of course at some points have to invent stuff. Let me again give you example.

I make no apologies for repeating myself. We need an education system that is forward-focussed. That teaches kids andgrownups how to learn. That creates a workforce – and citizens – fit for the future. We started on this a decade or so, but massively underfunded it, and caved to established interests when it came to the important bits: qualifications. We’ve ended up with a qualifications system that is more old-fashioned than England’s for God’s sake (just look!). We are processing our kids through a system that owes most of its structure and pedagogy to the O- and A-levels introduced in 1951 (but which was upgraded and tweaked in 1975, and whoo-hoo 1986!). We worry about slipping down PISA rankings in maths and English in a world where AI is already acing the rules-based mathematics taught in schools and college, and moving on to proving theorems. A world where, somewhat depressingly, I can, no longer distinguish between a coursework written by a very good Master’s student, and one written by Chat-GPT. Taxi for Professor Jones please.

In Wales we control every bit of the education elephant, from the nursery trunk to the tiny adult tail. And what have we done to change this system, to prepare our people for a massively changed and challenged future? As my daughter sits in her Year 7 history class, learning about 1066-and-all-that; as my eldest did in 2017; as I did in 1982, I can only conclude the answer is… Nothing much.

If government won’t, or can’t innovate, hamstrung by cash, party politics and the timid but successful part of the electorate that bothers to vote, how can we expect anyone else to?

Conclusion

The new UK Government’s core focus on economic growth will, within the enduring institutional logic of UK government which always trumps party, see more focus on sectors, clusters, ‘high value’ activities, investment and exports. This inherently economic-competitive framing will create tensions with the (prior) Welsh Government approach that saw economic activity and innovation as part of a much wider system. Labour in Cardiff Bay might congratulate itself on coming to the ‘missions’ approach earlier than its UK HQ, but this a double-edged sword. The mission approach (as popularised) emphasises ambition, inspiration and boldness; high levels and big themes. It requires dynamic adaptability, and the deconstruction of silos to bring cross sector, discipline and learning. Systematic and cross cutting policy, consistency over time, and substantive community engagement. Vision. Headroom.

These are, unfortunately, all things that Welsh Governments have struggled with. In their absence, the notional adoption of mission-based innovation risks an ever-larger implementation gap, and a future full of even more strategies full of even more lovely case studies that are full of sound and fury; signifying nothing because levers of traditional innovation simply aren’t here, or can’t be pulled.

The alternative is (in theory) simple. Work out what kind of Wales we want and radically reshape our public policies to suit. Work out what approaches and technologies we need, and beg steal or borrow what we can – from wherever they are. Make sure best practice spreads. Then ask. What doesn’t exist that we need?

Only then should we look to bring new stuff into a world already collapsing under the weight of it.

#CalvinJones #Cymru #Economics #Innovation #Prosperity #Wales

This third guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here, and his second post here.

Header photo: courtesy of Jim Nix.

• What is economic growth?
• (New) Labour
• Skills to pay the bills?
• Mo money, no problems?
• Slow reflections/strange delays

There is no present in Wales,
And no future;
There is only the past,
Brittle with relics,
Wind-bitten towers and castles
With sham ghosts.

R.S. Thomas

Bloody hell Ron, lighten up mun.

On the other hand… It’s always worth having a bit of R.S. There’s something there isn’t there? As he bounced around Wales, from south to north, east to west, infused by the landscape and the people, he became able to distil and communicate, in Saesneg then Cymraeg, some of those scarce and fleet things that are universally Welsh. Things that will return the same knowing nods in Glynne Arms in Hawarden, the Ship & Castle in Aber, and the Bunch of Grapes in Ponty. We get it, we know, we’re on the edge. Done-to. A bit crap. Good natured grumblers. Stuck. One of my immigrant mates is always struck by how passive we are (her word not mine!).

Mostly, I… kinda celebrate most of this. It makes us different. In some ways perhaps even unique. Our inability to swim strongly in the mainstream opens interesting backwaters and deep pools, and incentivises us to think about life and work in ways that are more expansive, inclusive and careful. I like this because I’m at heart an optimist. But it’s not all good. Sometimes, and especially where I live, it still feels like the last day of the miners’ strike. A dead culture stamping on a human face – for ever. Port Talbot and the rural wilds have it yet to come.

You, my dear constant reader, will know my solution to this is to forget about materiality and economic prosperity, to embrace wellbeing, and modesty, and community, and each other, in some sort of degrowth-steady-state-doughnut-post-carbon-insert-hippy-buzzword economy All have a big cwtsh and shop in Oxfam for hemp notebooks instead of Apple for aluminium ones whilst preparing thoughtfully for a straightened future…

But (and bear with me here). What if I’m wrong?

I know. Tough to imagine, isn’t it? I’ll give you a minute.

If economic growth does matter – if it is the engine for climate and ecological and wellbeing transformation – then we need to think about how Wales might grow faster in terms of traditional GDP. About what economic theory and evidence tell us to do; structurally, long-term, holistically – to develop a growth orientation we have lacked for generations.

Figure 1: Gross Value Added per Capita (UK=100)

We don’t. Instead, we ‘projectify’ our economy – we imagine a freeport here, a new motorway there, some nuclear skills up top, which means even where we have a decent statement of the problems, we have a limited sense of what it might take to actually raise our GDP per head, long term, if we really went for it, to the exclusion of all else.

So. Here’s my take.

Back to Basics. What is Economic Growth?

Economic growth is what we call it when there is more stuff bought and sold in an economy of our choosing this year, rather than last year – once we ignore the effects of price inflation. That’s it. Not complicated, is it? Until you start to measure it, when you need to do tough things like collect data on all this buying and selling – of goods, services, labour – and then reallocate the value of the purchase to where it actually ends up (I’m sorry to tell you that your horrific monthly streaming bill is doing virtually nothing for Wales’ economy). You must also decide whether you care about the overall size of the economy (by measuring GDP), or more how much ‘stuff’ there is spread around your resident population (where GDP per capita is what matters).

So that’s the ‘what’. How about the how? Well, if you want a bigger economy you have to have more ‘inputs’ working together to make more outputs. These inputs include labour and capital (with the latter including physical and natural for example). In the simplest case, if the ‘level’ of an economy is determined by the contribution of these inputs, and then growth is only possible if you increase the amount of one or more inputs. For example, if female labour force participation increases, or an inward investor brings capital in the shape of a factory to a less-developed country – bingo! But you don’t always have to increase bums on seats. It has long been recognised that human capital – education, training, skills – plays an important role in increasing the contribution of each, um, bum. Literate, well-educated and well-trained workers can each contribute more. Education matters.

So far, so good. But finding more inputs is tough. Increasing labour (for example via immigration), capital, or the level of education are generally ‘one off-ish’ interventions. They certainly can’t fully account for the sustained growth we have seen in some countries for hundreds of years. Instead, economists like Josef ‘honestly, not a vampire at all’ Schumpeter suggested that economic growth is primarily due to the ‘creative destruction’ of never-ending innovation; technological change that increases the contribution of economic factors. A good example of this is that pre-internet, it could have taken you a month’s wait, a trip to the newsagent and the death of a thousand trees for my, um, wisdom, to enter your brain via your eyeballs. Yet here you are, with me economically levelling you up, straightaway on your iPhone 15 16, hungover in bed at 8.30AM. Shazam!

Yes, you may crawl to the bathroom for a tablet, don’t be long.

So the sustained economic growth that Wales needs to close the prosperity gap relies on ‘a process of continual transformation. The sort of economic progress that … would not have been possible if people had not undergone wrenching changes.’

There are then lessons here for Wales: maximise our economic inputs at work in the region (and attract more whenever we can); and spur – and embed – innovation to an extent never seen before in this small corner of the globe.

(New) Labour

The first, and most obvious thing to note is that Wales has – for generations – lagged successful (or even average) regions in the proportion of people economically active; that is, in or looking for work. This is, in terms of GDP potential, resource utterly wasted. Getting our rate of economic inactivity down from the current 28% to the UK average of 22%, and getting all those people (somehow) into work would add 115,000 people to the workforce and, even in low-pay Wales, add almost £4bn to the bottom line.

Doing that in practice is, of course… difficult. Even high post-pandemic labour demand has not done much to move the dial – because we have a problem of labour supply. People are older; sicker; perhaps disillusioned by the tales of their parents and grandparents; under-skilled; under-caring, because under-cared for… brittle relics everywhere. My esteemed colleague Rob Huggins talks, reluctantly, about a place steeped in learned helplessness. But he’s from Beddau so you can probably ignore him.

Nonetheless, it’s clear that to maximise the application of economic resources, the pro-growther must enable, persuade or force more people back to (or into) work. Coercion has been tried over the decades, usually by UK-national governments of the rightist type, and with very limited success, either during Austerity or back in the 1980s, when many in Wales could retreat into a low-cost life of family, hobbies and informal work ‘hobbles’, rather than following Norman Tebbit’s exhortations to ‘get on your bike’ and find work.

So the first and obvious thing to do here is not to scold and punish (although that might come), but to help those who already want to work but can’t. The key intervention is not in the economy, but in health and care; and not just in the Welsh NHS (or the National Disease Service as a consultant friend calls it), but holistically, in preventative public health and improving access to work through transport, skills, and better child and adult care systems. Luckily this is a rare area where our Thatcherite hawk can find common purpose with our happy-clappy Future Generation hippy. Poor health hurts everyone. As just one, awful example the legs, sight and lives lost to Type 2 diabetes in Wales represent both deeply tragic human tragedies and a waste of productive labour, as those afflicted cannot work, and as more and more resources are diverted to the job of caring for them. The half-billion-and-exploding cost to Wales is only the smallest foreshadow of the future. Even the most hard-headed economist theorist recognises that investment is a requirement for future growth. When it comes to our people and enabling infrastructures, we are doing far too little of it.

So as a start, Eluned and RT and Sir Keir give it a comradely shake and make Wales a health-creating, ‘sanitogenic’ instead of obesogenic environment. Luckily, we know some of what works. So screw taxes down (more) on sugary junk ‘til the pips (or the Coke equivalent) squeak. Restructure our town centres, employment sites and leisure hotspots to, as far as we can, force those 10,000 steps. And ban all junk-food and junky advertising and sponsorship, not just to kids (and yes, I’m looking at you gambling).

It would be nice to think that the above would go a long way to sorting Wales’ economic activity problem (and, in the case of junk food taxes generate a fair bit of cash and make us happier and healthier). But getting people into jobs is not much good if they are poor jobs. Wales has done surprisingly well since devolution in increasing the female employment rate. But any impact on GDP has been diluted by low productivity. In 1998, just before the Glorious Revolution, economic value created per hour worked in Wales was 86.6% of the UK average. In 2021 it was 84.1%.

More work needed then.

Skills to pay the bills?

Wales is under-educated, under-trained and hence under-skilled, with this especially true of the poorest parts. From an economic growth perspective, this raises so many red flags that Bulls’ ears are twitching from Lawrenny to Lixwm. Our industrial heritage is disappearing in the rear-view, leaving us with education challenges that were insoluble as pupil and adult education spending fell through Austerity, and COVID bore down hardest on the poorest. In the longer term, the huge demands that our ill-health makes on public expenditure means improving human capital is only possible if Wales gets healthier over the next decades – as it will under my sensible and modest plans above! Of more concern is understanding how education links to economic growth in any future economy – and then how we operationalise the link.

I went around many of these houses in 2019, thinking about what a fit-for-the-future school-age education system in Wales would look like. I leave you, dear reader, to peruse at leisure, but would reflect on the fact that back then I suggested abandoning GCSEs as they promoted a dominant model of ‘teaching-to-the-exam’, rote learning in narrow tramlines, and effectively threw away the formative years of ‘non-academic’ pupils via poorly regarded vocational routes.

In 2024, in the light of COVID, the staggering incursions of AI (and my own experience of watching The Boy negotiate both GCSEs and A-Levels), my views have if anything hardened. We are, in schools and universities, not educating but accrediting; ‘sorting’ learners for the convenience of middle-class parents and disengaged (but disparaging) employers. And based on student factors that probably have only the merest connection with future productivity.

What growth-oriented education and training looks like in an AI dominated, as well as climate, ecologically and demographically constrained world is a subject too chunky for this blog. But it is clear that it doesn’t look like an under-resourced version of the education system of England in 1985 – which, for all the in-theory wonders of the new curriculum is essentially what we have as soon as kids reach their teens. The modest changes to GCSEs upcoming in Wales next year are a reflection of this. A move towards more non-exam assessment is welcome, as is the nod to digital enablement (although both raise issues around disadvantage and required resources), but nothing in the 2023 consultation raises the issue of what GCSEs are for in terms of the wider socio-economic and future contexts. Search in vain for the words: economy, society or environment. Search in vain for a public value or economic growth rationale as to why we need for age-16 public exams at all, when almost no learners leave education at this age. My daughter, not yet started on her GCSE journey, will probably enter the labour force in 2030 or 2033. Are we even trying to give her the skills, competencies and flexibilities she might need? And if we aren’t, how can we expect her to be productive?

Spoiler: she’s learning about 1066.

Wales has the powers to completely redesign education, qualifications, and skills provision in pursuit of its national aspirations and yet… we continue to train accountants and plumbers and planners and beauticians and yes, economists, in exactly the same way as anywhere else – despite this having left us for ever at the back of the economic pack. We could junk our 19th century legacy of hyper-narrow professions and workplaces in favour something much more holistic, bespoke and future-focused. And if that means divergence with the rest of the UK, and a lack of outward mobility of skilled youth, well… in pursuit of our growth objective, we don’t want them to leave anyway, do we?

Mo money, no problems?

Growing and improving the workforce mean nothing if there is no good work. And here, of course we mean good private sector jobs: the tax-guzzling non-profit public sector, and incestuously financed third sector are, (for growth purposes remember), no good at all. Wales is seen as suffering from a dearth of development finance, especially for SMEs. Which are basically the entire locally-owned economy. Matching increases and improvements in labour with an increase in capital thus takes us on a path long trodden by poor economies seeking to develop and modernise: Attracting, and in the best cases embedding, Foreign Direct Investment.

I know what you’re thinking: Wales has been here before, and with a little visible effect on closing our GDP gap (although it’s interesting to wonder where Wales’ GDP would be without the FDI successes of the late 20th century). And I would agree that at a time when global FDI is in decline – and inward investment to the UK has been in steep decline since 2016 – placing our bets here seems… optimistic. Indeed, I can take off my growth-economist hat (the one with little helicopter rotors on the top) and slip on my comfy catastrophising Crocs to point out that the key thing for economic growth in Wales over the next decade is to (at least) keep the foreign capital already here. Wales’ private GDP is very dependent on a handful of non-local firms. The back of my envelope, my finger in the air and a squinty eye at HMRC data reckons that a half dozen firms – Airbus; Valero; GE at Nantgarw; Dow; Tata and Celsa – account for a big chunk of Wales’ international exports. The closure of any of these investors, and their valuable inbound earnings would make the growth mountain harder to climb.

This is not to say that nothing new can be done, but a growth-oriented FDI strategy would need nuance, focus and consistency – especially in view of our (current) lack of skills in the workforce. The embedded semiconductor cluster around Newport is an example of the ‘triple helix’ success of government, industry and academia. And our longstanding relationship with Sony led to Pencoed producing over 50 million units of the endlessly versatile Raspberry Pi. The next successes will rely on a sophisticated, targeted and distinctive offer. Could our strengths in Cyber and Fintech not translate into a clear offer for investors based on security? Where is our hydrogen economy going? What are we actually pitching for?

Answers on a postcard please.

Slow Reflections / Strange Delays

You knew us better than we knew ourselves
And the truth it seems to hurt so much –
Bradfield/Wire/Moore

I started this blog as a thought experiment, expecting to reinforce my own beliefs that the pursuit of increased economic growth in Wales was probably futile and, given the increased resource consumption and global South impacts it implies, also unethical. I still believe those things but…writing this blog has also convinced me that there are some potentiallybig synergies between a focus on growth, and a better functioning society overall.

Some of those overlaps might give rise to concerns about the limitations on freedom of individual choice, given the type of government intervention I suggest above, but a laissez faire Wales is not a high growth Wales. It is a sick Wales. A disengaged and despondent Wales. A Wales that disregards economically valuable resources. And, as I’ve said elsewhere before, a Wales that lacks autonomy. Capitalism has gone so wrong in our little corner that there is a good measure of government-directed social re-knitting that would equally fulfil the needs of growth; a wellbeing economy; the foundational economy; doughnut economics…

Maybe we should argue the toss – about what the economy is for – after we’ve re-learned the basics of just… including people, civically and economically.

Any Wales that is fitter for the future is a changed Wales. And that change will only come with deep, embedded, circular and (I would argue) bespoke innovation. Also, the sort of innovation without which economic growth is a dead end. This is the looming question that I have ignored so far in this blog: how do we innovate more (and better) in Wales and then capture those benefits? Can we defy R.S. Thomas, and leave our mouldering quarries and mines to create a dynamic and prosperous future for Wales, here in the present?

The next and final Afallen blog for 2024 will ask just this question.

https://afallen.cymru/2024/10/07/faster-imagining-wales-faster-growth/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales

This third guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here, and his second post here.

Header photo: courtesy of Jim Nix.

• What is economic growth?
• (New) Labour
• Skills to pay the bills?
• Mo money, no problems?
• Slow reflections/strange delays

There is no present in Wales,
And no future;
There is only the past,
Brittle with relics,
Wind-bitten towers and castles
With sham ghosts.

R.S. Thomas

Bloody hell Ron, lighten up mun.

On the other hand… It’s always worth having a bit of R.S. There’s something there isn’t there? As he bounced around Wales, from south to north, east to west, infused by the landscape and the people, he became able to distil and communicate, in Saesneg then Cymraeg, some of those scarce and fleet things that are universally Welsh. Things that will return the same knowing nods in Glynne Arms in Hawarden, the Ship & Castle in Aber, and the Bunch of Grapes in Ponty. We get it, we know, we’re on the edge. Done-to. A bit crap. Good natured grumblers. Stuck. One of my immigrant mates is always struck by how passive we are (her word not mine!).

Mostly, I… kinda celebrate most of this. It makes us different. In some ways perhaps even unique. Our inability to swim strongly in the mainstream opens interesting backwaters and deep pools, and incentivises us to think about life and work in ways that are more expansive, inclusive and careful. I like this because I’m at heart an optimist. But it’s not all good. Sometimes, and especially where I live, it still feels like the last day of the miners’ strike. A dead culture stamping on a human face – for ever. Port Talbot and the rural wilds have it yet to come.

You, my dear constant reader, will know my solution to this is to forget about materiality and economic prosperity, to embrace wellbeing, and modesty, and community, and each other, in some sort of degrowth-steady-state-doughnut-post-carbon-insert-hippy-buzzword economy All have a big cwtsh and shop in Oxfam for hemp notebooks instead of Apple for aluminium ones whilst preparing thoughtfully for a straightened future…

But (and bear with me here). What if I’m wrong?

I know. Tough to imagine, isn’t it? I’ll give you a minute.

If economic growth does matter – if it is the engine for climate and ecological and wellbeing transformation – then we need to think about how Wales might grow faster in terms of traditional GDP. About what economic theory and evidence tell us to do; structurally, long-term, holistically – to develop a growth orientation we have lacked for generations.

Figure 1: Gross Value Added per Capita (UK=100)

We don’t. Instead, we ‘projectify’ our economy – we imagine a freeport here, a new motorway there, some nuclear skills up top, which means even where we have a decent statement of the problems, we have a limited sense of what it might take to actually raise our GDP per head, long term, if we really went for it, to the exclusion of all else.

So. Here’s my take.

Back to Basics. What is Economic Growth?

Economic growth is what we call it when there is more stuff bought and sold in an economy of our choosing this year, rather than last year – once we ignore the effects of price inflation. That’s it. Not complicated, is it? Until you start to measure it, when you need to do tough things like collect data on all this buying and selling – of goods, services, labour – and then reallocate the value of the purchase to where it actually ends up (I’m sorry to tell you that your horrific monthly streaming bill is doing virtually nothing for Wales’ economy). You must also decide whether you care about the overall size of the economy (by measuring GDP), or more how much ‘stuff’ there is spread around your resident population (where GDP per capita is what matters).

So that’s the ‘what’. How about the how? Well, if you want a bigger economy you have to have more ‘inputs’ working together to make more outputs. These inputs include labour and capital (with the latter including physical and natural for example). In the simplest case, if the ‘level’ of an economy is determined by the contribution of these inputs, and then growth is only possible if you increase the amount of one or more inputs. For example, if female labour force participation increases, or an inward investor brings capital in the shape of a factory to a less-developed country – bingo! But you don’t always have to increase bums on seats. It has long been recognised that human capital – education, training, skills – plays an important role in increasing the contribution of each, um, bum. Literate, well-educated and well-trained workers can each contribute more. Education matters.

So far, so good. But finding more inputs is tough. Increasing labour (for example via immigration), capital, or the level of education are generally ‘one off-ish’ interventions. They certainly can’t fully account for the sustained growth we have seen in some countries for hundreds of years. Instead, economists like Josef ‘honestly, not a vampire at all’ Schumpeter suggested that economic growth is primarily due to the ‘creative destruction’ of never-ending innovation; technological change that increases the contribution of economic factors. A good example of this is that pre-internet, it could have taken you a month’s wait, a trip to the newsagent and the death of a thousand trees for my, um, wisdom, to enter your brain via your eyeballs. Yet here you are, with me economically levelling you up, straightaway on your iPhone 15 16, hungover in bed at 8.30AM. Shazam!

Yes, you may crawl to the bathroom for a tablet, don’t be long.

So the sustained economic growth that Wales needs to close the prosperity gap relies on ‘a process of continual transformation. The sort of economic progress that … would not have been possible if people had not undergone wrenching changes.’

There are then lessons here for Wales: maximise our economic inputs at work in the region (and attract more whenever we can); and spur – and embed – innovation to an extent never seen before in this small corner of the globe.

(New) Labour

The first, and most obvious thing to note is that Wales has – for generations – lagged successful (or even average) regions in the proportion of people economically active; that is, in or looking for work. This is, in terms of GDP potential, resource utterly wasted. Getting our rate of economic inactivity down from the current 28% to the UK average of 22%, and getting all those people (somehow) into work would add 115,000 people to the workforce and, even in low-pay Wales, add almost £4bn to the bottom line.

Doing that in practice is, of course… difficult. Even high post-pandemic labour demand has not done much to move the dial – because we have a problem of labour supply. People are older; sicker; perhaps disillusioned by the tales of their parents and grandparents; under-skilled; under-caring, because under-cared for… brittle relics everywhere. My esteemed colleague Rob Huggins talks, reluctantly, about a place steeped in learned helplessness. But he’s from Beddau so you can probably ignore him.

Nonetheless, it’s clear that to maximise the application of economic resources, the pro-growther must enable, persuade or force more people back to (or into) work. Coercion has been tried over the decades, usually by UK-national governments of the rightist type, and with very limited success, either during Austerity or back in the 1980s, when many in Wales could retreat into a low-cost life of family, hobbies and informal work ‘hobbles’, rather than following Norman Tebbit’s exhortations to ‘get on your bike’ and find work.

So the first and obvious thing to do here is not to scold and punish (although that might come), but to help those who already want to work but can’t. The key intervention is not in the economy, but in health and care; and not just in the Welsh NHS (or the National Disease Service as a consultant friend calls it), but holistically, in preventative public health and improving access to work through transport, skills, and better child and adult care systems. Luckily this is a rare area where our Thatcherite hawk can find common purpose with our happy-clappy Future Generation hippy. Poor health hurts everyone. As just one, awful example the legs, sight and lives lost to Type 2 diabetes in Wales represent both deeply tragic human tragedies and a waste of productive labour, as those afflicted cannot work, and as more and more resources are diverted to the job of caring for them. The half-billion-and-exploding cost to Wales is only the smallest foreshadow of the future. Even the most hard-headed economist theorist recognises that investment is a requirement for future growth. When it comes to our people and enabling infrastructures, we are doing far too little of it.

So as a start, Eluned and RT and Sir Keir give it a comradely shake and make Wales a health-creating, ‘sanitogenic’ instead of obesogenic environment. Luckily, we know some of what works. So screw taxes down (more) on sugary junk ‘til the pips (or the Coke equivalent) squeak. Restructure our town centres, employment sites and leisure hotspots to, as far as we can, force those 10,000 steps. And ban all junk-food and junky advertising and sponsorship, not just to kids (and yes, I’m looking at you gambling).

It would be nice to think that the above would go a long way to sorting Wales’ economic activity problem (and, in the case of junk food taxes generate a fair bit of cash and make us happier and healthier). But getting people into jobs is not much good if they are poor jobs. Wales has done surprisingly well since devolution in increasing the female employment rate. But any impact on GDP has been diluted by low productivity. In 1998, just before the Glorious Revolution, economic value created per hour worked in Wales was 86.6% of the UK average. In 2021 it was 84.1%.

More work needed then.

Skills to pay the bills?

Wales is under-educated, under-trained and hence under-skilled, with this especially true of the poorest parts. From an economic growth perspective, this raises so many red flags that Bulls’ ears are twitching from Lawrenny to Lixwm. Our industrial heritage is disappearing in the rear-view, leaving us with education challenges that were insoluble as pupil and adult education spending fell through Austerity, and COVID bore down hardest on the poorest. In the longer term, the huge demands that our ill-health makes on public expenditure means improving human capital is only possible if Wales gets healthier over the next decades – as it will under my sensible and modest plans above! Of more concern is understanding how education links to economic growth in any future economy – and then how we operationalise the link.

I went around many of these houses in 2019, thinking about what a fit-for-the-future school-age education system in Wales would look like. I leave you, dear reader, to peruse at leisure, but would reflect on the fact that back then I suggested abandoning GCSEs as they promoted a dominant model of ‘teaching-to-the-exam’, rote learning in narrow tramlines, and effectively threw away the formative years of ‘non-academic’ pupils via poorly regarded vocational routes.

In 2024, in the light of COVID, the staggering incursions of AI (and my own experience of watching The Boy negotiate both GCSEs and A-Levels), my views have if anything hardened. We are, in schools and universities, not educating but accrediting; ‘sorting’ learners for the convenience of middle-class parents and disengaged (but disparaging) employers. And based on student factors that probably have only the merest connection with future productivity.

What growth-oriented education and training looks like in an AI dominated, as well as climate, ecologically and demographically constrained world is a subject too chunky for this blog. But it is clear that it doesn’t look like an under-resourced version of the education system of England in 1985 – which, for all the in-theory wonders of the new curriculum is essentially what we have as soon as kids reach their teens. The modest changes to GCSEs upcoming in Wales next year are a reflection of this. A move towards more non-exam assessment is welcome, as is the nod to digital enablement (although both raise issues around disadvantage and required resources), but nothing in the 2023 consultation raises the issue of what GCSEs are for in terms of the wider socio-economic and future contexts. Search in vain for the words: economy, society or environment. Search in vain for a public value or economic growth rationale as to why we need for age-16 public exams at all, when almost no learners leave education at this age. My daughter, not yet started on her GCSE journey, will probably enter the labour force in 2030 or 2033. Are we even trying to give her the skills, competencies and flexibilities she might need? And if we aren’t, how can we expect her to be productive?

Spoiler: she’s learning about 1066.

Wales has the powers to completely redesign education, qualifications, and skills provision in pursuit of its national aspirations and yet… we continue to train accountants and plumbers and planners and beauticians and yes, economists, in exactly the same way as anywhere else – despite this having left us for ever at the back of the economic pack. We could junk our 19th century legacy of hyper-narrow professions and workplaces in favour something much more holistic, bespoke and future-focused. And if that means divergence with the rest of the UK, and a lack of outward mobility of skilled youth, well… in pursuit of our growth objective, we don’t want them to leave anyway, do we?

Mo money, no problems?

Growing and improving the workforce mean nothing if there is no good work. And here, of course we mean good private sector jobs: the tax-guzzling non-profit public sector, and incestuously financed third sector are, (for growth purposes remember), no good at all. Wales is seen as suffering from a dearth of development finance, especially for SMEs. Which are basically the entire locally-owned economy. Matching increases and improvements in labour with an increase in capital thus takes us on a path long trodden by poor economies seeking to develop and modernise: Attracting, and in the best cases embedding, Foreign Direct Investment.

I know what you’re thinking: Wales has been here before, and with a little visible effect on closing our GDP gap (although it’s interesting to wonder where Wales’ GDP would be without the FDI successes of the late 20th century). And I would agree that at a time when global FDI is in decline – and inward investment to the UK has been in steep decline since 2016 – placing our bets here seems… optimistic. Indeed, I can take off my growth-economist hat (the one with little helicopter rotors on the top) and slip on my comfy catastrophising Crocs to point out that the key thing for economic growth in Wales over the next decade is to (at least) keep the foreign capital already here. Wales’ private GDP is very dependent on a handful of non-local firms. The back of my envelope, my finger in the air and a squinty eye at HMRC data reckons that a half dozen firms – Airbus; Valero; GE at Nantgarw; Dow; Tata and Celsa – account for a big chunk of Wales’ international exports. The closure of any of these investors, and their valuable inbound earnings would make the growth mountain harder to climb.

This is not to say that nothing new can be done, but a growth-oriented FDI strategy would need nuance, focus and consistency – especially in view of our (current) lack of skills in the workforce. The embedded semiconductor cluster around Newport is an example of the ‘triple helix’ success of government, industry and academia. And our longstanding relationship with Sony led to Pencoed producing over 50 million units of the endlessly versatile Raspberry Pi. The next successes will rely on a sophisticated, targeted and distinctive offer. Could our strengths in Cyber and Fintech not translate into a clear offer for investors based on security? Where is our hydrogen economy going? What are we actually pitching for?

Answers on a postcard please.

Slow Reflections / Strange Delays

You knew us better than we knew ourselves
And the truth it seems to hurt so much –
Bradfield/Wire/Moore

I started this blog as a thought experiment, expecting to reinforce my own beliefs that the pursuit of increased economic growth in Wales was probably futile and, given the increased resource consumption and global South impacts it implies, also unethical. I still believe those things but…writing this blog has also convinced me that there are some potentiallybig synergies between a focus on growth, and a better functioning society overall.

Some of those overlaps might give rise to concerns about the limitations on freedom of individual choice, given the type of government intervention I suggest above, but a laissez faire Wales is not a high growth Wales. It is a sick Wales. A disengaged and despondent Wales. A Wales that disregards economically valuable resources. And, as I’ve said elsewhere before, a Wales that lacks autonomy. Capitalism has gone so wrong in our little corner that there is a good measure of government-directed social re-knitting that would equally fulfil the needs of growth; a wellbeing economy; the foundational economy; doughnut economics…

Maybe we should argue the toss – about what the economy is for – after we’ve re-learned the basics of just… including people, civically and economically.

Any Wales that is fitter for the future is a changed Wales. And that change will only come with deep, embedded, circular and (I would argue) bespoke innovation. Also, the sort of innovation without which economic growth is a dead end. This is the looming question that I have ignored so far in this blog: how do we innovate more (and better) in Wales and then capture those benefits? Can we defy R.S. Thomas, and leave our mouldering quarries and mines to create a dynamic and prosperous future for Wales, here in the present?

The next and final Afallen blog for 2024 will ask just this question.

https://afallen.cymru/2024/10/07/faster-imagining-wales-faster-growth/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales

This third guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here, and his second post here.

Header photo: courtesy of Jim Nix.

• What is economic growth?
• (New) Labour
• Skills to pay the bills?
• Mo money, no problems?
• Slow reflections/strange delays

There is no present in Wales,
And no future;
There is only the past,
Brittle with relics,
Wind-bitten towers and castles
With sham ghosts.

R.S. Thomas

Bloody hell Ron, lighten up mun.

On the other hand… It’s always worth having a bit of R.S. There’s something there isn’t there? As he bounced around Wales, from south to north, east to west, infused by the landscape and the people, he became able to distil and communicate, in Saesneg then Cymraeg, some of those scarce and fleet things that are universally Welsh. Things that will return the same knowing nods in Glynne Arms in Hawarden, the Ship & Castle in Aber, and the Bunch of Grapes in Ponty. We get it, we know, we’re on the edge. Done-to. A bit crap. Good natured grumblers. Stuck. One of my immigrant mates is always struck by how passive we are (her word not mine!).

Mostly, I… kinda celebrate most of this. It makes us different. In some ways perhaps even unique. Our inability to swim strongly in the mainstream opens interesting backwaters and deep pools, and incentivises us to think about life and work in ways that are more expansive, inclusive and careful. I like this because I’m at heart an optimist. But it’s not all good. Sometimes, and especially where I live, it still feels like the last day of the miners’ strike. A dead culture stamping on a human face – for ever. Port Talbot and the rural wilds have it yet to come.

You, my dear constant reader, will know my solution to this is to forget about materiality and economic prosperity, to embrace wellbeing, and modesty, and community, and each other, in some sort of degrowth-steady-state-doughnut-post-carbon-insert-hippy-buzzword economy All have a big cwtsh and shop in Oxfam for hemp notebooks instead of Apple for aluminium ones whilst preparing thoughtfully for a straightened future…

But (and bear with me here). What if I’m wrong?

I know. Tough to imagine, isn’t it? I’ll give you a minute.

If economic growth does matter – if it is the engine for climate and ecological and wellbeing transformation – then we need to think about how Wales might grow faster in terms of traditional GDP. About what economic theory and evidence tell us to do; structurally, long-term, holistically – to develop a growth orientation we have lacked for generations.

Figure 1: Gross Value Added per Capita (UK=100)

We don’t. Instead, we ‘projectify’ our economy – we imagine a freeport here, a new motorway there, some nuclear skills up top, which means even where we have a decent statement of the problems, we have a limited sense of what it might take to actually raise our GDP per head, long term, if we really went for it, to the exclusion of all else.

So. Here’s my take.

Back to Basics. What is Economic Growth?

Economic growth is what we call it when there is more stuff bought and sold in an economy of our choosing this year, rather than last year – once we ignore the effects of price inflation. That’s it. Not complicated, is it? Until you start to measure it, when you need to do tough things like collect data on all this buying and selling – of goods, services, labour – and then reallocate the value of the purchase to where it actually ends up (I’m sorry to tell you that your horrific monthly streaming bill is doing virtually nothing for Wales’ economy). You must also decide whether you care about the overall size of the economy (by measuring GDP), or more how much ‘stuff’ there is spread around your resident population (where GDP per capita is what matters).

So that’s the ‘what’. How about the how? Well, if you want a bigger economy you have to have more ‘inputs’ working together to make more outputs. These inputs include labour and capital (with the latter including physical and natural for example). In the simplest case, if the ‘level’ of an economy is determined by the contribution of these inputs, and then growth is only possible if you increase the amount of one or more inputs. For example, if female labour force participation increases, or an inward investor brings capital in the shape of a factory to a less-developed country – bingo! But you don’t always have to increase bums on seats. It has long been recognised that human capital – education, training, skills – plays an important role in increasing the contribution of each, um, bum. Literate, well-educated and well-trained workers can each contribute more. Education matters.

So far, so good. But finding more inputs is tough. Increasing labour (for example via immigration), capital, or the level of education are generally ‘one off-ish’ interventions. They certainly can’t fully account for the sustained growth we have seen in some countries for hundreds of years. Instead, economists like Josef ‘honestly, not a vampire at all’ Schumpeter suggested that economic growth is primarily due to the ‘creative destruction’ of never-ending innovation; technological change that increases the contribution of economic factors. A good example of this is that pre-internet, it could have taken you a month’s wait, a trip to the newsagent and the death of a thousand trees for my, um, wisdom, to enter your brain via your eyeballs. Yet here you are, with me economically levelling you up, straightaway on your iPhone 15 16, hungover in bed at 8.30AM. Shazam!

Yes, you may crawl to the bathroom for a tablet, don’t be long.

So the sustained economic growth that Wales needs to close the prosperity gap relies on ‘a process of continual transformation. The sort of economic progress that … would not have been possible if people had not undergone wrenching changes.’

There are then lessons here for Wales: maximise our economic inputs at work in the region (and attract more whenever we can); and spur – and embed – innovation to an extent never seen before in this small corner of the globe.

(New) Labour

The first, and most obvious thing to note is that Wales has – for generations – lagged successful (or even average) regions in the proportion of people economically active; that is, in or looking for work. This is, in terms of GDP potential, resource utterly wasted. Getting our rate of economic inactivity down from the current 28% to the UK average of 22%, and getting all those people (somehow) into work would add 115,000 people to the workforce and, even in low-pay Wales, add almost £4bn to the bottom line.

Doing that in practice is, of course… difficult. Even high post-pandemic labour demand has not done much to move the dial – because we have a problem of labour supply. People are older; sicker; perhaps disillusioned by the tales of their parents and grandparents; under-skilled; under-caring, because under-cared for… brittle relics everywhere. My esteemed colleague Rob Huggins talks, reluctantly, about a place steeped in learned helplessness. But he’s from Beddau so you can probably ignore him.

Nonetheless, it’s clear that to maximise the application of economic resources, the pro-growther must enable, persuade or force more people back to (or into) work. Coercion has been tried over the decades, usually by UK-national governments of the rightist type, and with very limited success, either during Austerity or back in the 1980s, when many in Wales could retreat into a low-cost life of family, hobbies and informal work ‘hobbles’, rather than following Norman Tebbit’s exhortations to ‘get on your bike’ and find work.

So the first and obvious thing to do here is not to scold and punish (although that might come), but to help those who already want to work but can’t. The key intervention is not in the economy, but in health and care; and not just in the Welsh NHS (or the National Disease Service as a consultant friend calls it), but holistically, in preventative public health and improving access to work through transport, skills, and better child and adult care systems. Luckily this is a rare area where our Thatcherite hawk can find common purpose with our happy-clappy Future Generation hippy. Poor health hurts everyone. As just one, awful example the legs, sight and lives lost to Type 2 diabetes in Wales represent both deeply tragic human tragedies and a waste of productive labour, as those afflicted cannot work, and as more and more resources are diverted to the job of caring for them. The half-billion-and-exploding cost to Wales is only the smallest foreshadow of the future. Even the most hard-headed economist theorist recognises that investment is a requirement for future growth. When it comes to our people and enabling infrastructures, we are doing far too little of it.

So as a start, Eluned and RT and Sir Keir give it a comradely shake and make Wales a health-creating, ‘sanitogenic’ instead of obesogenic environment. Luckily, we know some of what works. So screw taxes down (more) on sugary junk ‘til the pips (or the Coke equivalent) squeak. Restructure our town centres, employment sites and leisure hotspots to, as far as we can, force those 10,000 steps. And ban all junk-food and junky advertising and sponsorship, not just to kids (and yes, I’m looking at you gambling).

It would be nice to think that the above would go a long way to sorting Wales’ economic activity problem (and, in the case of junk food taxes generate a fair bit of cash and make us happier and healthier). But getting people into jobs is not much good if they are poor jobs. Wales has done surprisingly well since devolution in increasing the female employment rate. But any impact on GDP has been diluted by low productivity. In 1998, just before the Glorious Revolution, economic value created per hour worked in Wales was 86.6% of the UK average. In 2021 it was 84.1%.

More work needed then.

Skills to pay the bills?

Wales is under-educated, under-trained and hence under-skilled, with this especially true of the poorest parts. From an economic growth perspective, this raises so many red flags that Bulls’ ears are twitching from Lawrenny to Lixwm. Our industrial heritage is disappearing in the rear-view, leaving us with education challenges that were insoluble as pupil and adult education spending fell through Austerity, and COVID bore down hardest on the poorest. In the longer term, the huge demands that our ill-health makes on public expenditure means improving human capital is only possible if Wales gets healthier over the next decades – as it will under my sensible and modest plans above! Of more concern is understanding how education links to economic growth in any future economy – and then how we operationalise the link.

I went around many of these houses in 2019, thinking about what a fit-for-the-future school-age education system in Wales would look like. I leave you, dear reader, to peruse at leisure, but would reflect on the fact that back then I suggested abandoning GCSEs as they promoted a dominant model of ‘teaching-to-the-exam’, rote learning in narrow tramlines, and effectively threw away the formative years of ‘non-academic’ pupils via poorly regarded vocational routes.

In 2024, in the light of COVID, the staggering incursions of AI (and my own experience of watching The Boy negotiate both GCSEs and A-Levels), my views have if anything hardened. We are, in schools and universities, not educating but accrediting; ‘sorting’ learners for the convenience of middle-class parents and disengaged (but disparaging) employers. And based on student factors that probably have only the merest connection with future productivity.

What growth-oriented education and training looks like in an AI dominated, as well as climate, ecologically and demographically constrained world is a subject too chunky for this blog. But it is clear that it doesn’t look like an under-resourced version of the education system of England in 1985 – which, for all the in-theory wonders of the new curriculum is essentially what we have as soon as kids reach their teens. The modest changes to GCSEs upcoming in Wales next year are a reflection of this. A move towards more non-exam assessment is welcome, as is the nod to digital enablement (although both raise issues around disadvantage and required resources), but nothing in the 2023 consultation raises the issue of what GCSEs are for in terms of the wider socio-economic and future contexts. Search in vain for the words: economy, society or environment. Search in vain for a public value or economic growth rationale as to why we need for age-16 public exams at all, when almost no learners leave education at this age. My daughter, not yet started on her GCSE journey, will probably enter the labour force in 2030 or 2033. Are we even trying to give her the skills, competencies and flexibilities she might need? And if we aren’t, how can we expect her to be productive?

Spoiler: she’s learning about 1066.

Wales has the powers to completely redesign education, qualifications, and skills provision in pursuit of its national aspirations and yet… we continue to train accountants and plumbers and planners and beauticians and yes, economists, in exactly the same way as anywhere else – despite this having left us for ever at the back of the economic pack. We could junk our 19th century legacy of hyper-narrow professions and workplaces in favour something much more holistic, bespoke and future-focused. And if that means divergence with the rest of the UK, and a lack of outward mobility of skilled youth, well… in pursuit of our growth objective, we don’t want them to leave anyway, do we?

Mo money, no problems?

Growing and improving the workforce mean nothing if there is no good work. And here, of course we mean good private sector jobs: the tax-guzzling non-profit public sector, and incestuously financed third sector are, (for growth purposes remember), no good at all. Wales is seen as suffering from a dearth of development finance, especially for SMEs. Which are basically the entire locally-owned economy. Matching increases and improvements in labour with an increase in capital thus takes us on a path long trodden by poor economies seeking to develop and modernise: Attracting, and in the best cases embedding, Foreign Direct Investment.

I know what you’re thinking: Wales has been here before, and with a little visible effect on closing our GDP gap (although it’s interesting to wonder where Wales’ GDP would be without the FDI successes of the late 20th century). And I would agree that at a time when global FDI is in decline – and inward investment to the UK has been in steep decline since 2016 – placing our bets here seems… optimistic. Indeed, I can take off my growth-economist hat (the one with little helicopter rotors on the top) and slip on my comfy catastrophising Crocs to point out that the key thing for economic growth in Wales over the next decade is to (at least) keep the foreign capital already here. Wales’ private GDP is very dependent on a handful of non-local firms. The back of my envelope, my finger in the air and a squinty eye at HMRC data reckons that a half dozen firms – Airbus; Valero; GE at Nantgarw; Dow; Tata and Celsa – account for a big chunk of Wales’ international exports. The closure of any of these investors, and their valuable inbound earnings would make the growth mountain harder to climb.

This is not to say that nothing new can be done, but a growth-oriented FDI strategy would need nuance, focus and consistency – especially in view of our (current) lack of skills in the workforce. The embedded semiconductor cluster around Newport is an example of the ‘triple helix’ success of government, industry and academia. And our longstanding relationship with Sony led to Pencoed producing over 50 million units of the endlessly versatile Raspberry Pi. The next successes will rely on a sophisticated, targeted and distinctive offer. Could our strengths in Cyber and Fintech not translate into a clear offer for investors based on security? Where is our hydrogen economy going? What are we actually pitching for?

Answers on a postcard please.

Slow Reflections / Strange Delays

You knew us better than we knew ourselves
And the truth it seems to hurt so much –
Bradfield/Wire/Moore

I started this blog as a thought experiment, expecting to reinforce my own beliefs that the pursuit of increased economic growth in Wales was probably futile and, given the increased resource consumption and global South impacts it implies, also unethical. I still believe those things but…writing this blog has also convinced me that there are some potentiallybig synergies between a focus on growth, and a better functioning society overall.

Some of those overlaps might give rise to concerns about the limitations on freedom of individual choice, given the type of government intervention I suggest above, but a laissez faire Wales is not a high growth Wales. It is a sick Wales. A disengaged and despondent Wales. A Wales that disregards economically valuable resources. And, as I’ve said elsewhere before, a Wales that lacks autonomy. Capitalism has gone so wrong in our little corner that there is a good measure of government-directed social re-knitting that would equally fulfil the needs of growth; a wellbeing economy; the foundational economy; doughnut economics…

Maybe we should argue the toss – about what the economy is for – after we’ve re-learned the basics of just… including people, civically and economically.

Any Wales that is fitter for the future is a changed Wales. And that change will only come with deep, embedded, circular and (I would argue) bespoke innovation. Also, the sort of innovation without which economic growth is a dead end. This is the looming question that I have ignored so far in this blog: how do we innovate more (and better) in Wales and then capture those benefits? Can we defy R.S. Thomas, and leave our mouldering quarries and mines to create a dynamic and prosperous future for Wales, here in the present?

The next and final Afallen blog for 2024 will ask just this question.

https://afallen.cymru/2024/10/07/faster-imagining-wales-faster-growth/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales

This second guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here.

Header photo: courtesy of Jim Nix.

1. The problem (as defined by me)
2. Solution the First: play their game
3. Solution the Second: invent another game
4. Escaping our history

London never sleeps it just sucks,
The life out of me,
And the money from my pocket.

‘Londinium’
Mark Roberts / Catatonia
© Brodyr Warner 1998

Ah, what a song. But is it a metaphor or… just a song?

The problem (as defined by me)

So. We all know Wales has some longstanding economic… issues. There has been a tendency by some – perhaps increasing – to blame our economic woes on the ‘noisy neighbours’, handily dovetailing with concerns about cultural and linguistic marginalisation over the centuries. It was the English what did it!

So far so defensible. Maybe? But this notion ignores the (resolutely English) single mother scraping by on Universal Credit in Newcastle. Welsh ‘economic exceptionalism’ wilts a little when you realise the UK is probably the most regionally unbalanced country in Europe. As I have previously argued there is something different about peripheral economies and Wales does seem to suffer from peripherality more than most, but the specific ‘Welshness’ of this needs unpacking. We might start with the more widely applicable notion that ‘development develops inequality’ through a process of unequal exchange. Markets are organised, and this is done by powerful firms, institutions and countries that are resolutely core – right in the middle of the nexus of relationships, geography, intellectual property and ownership that constitute political-economic power. Then, if the system allows such actors to exploit and extract critical natural and human resources that might emerge in the periphery, well… them’s the rules.

It is one thing to recognise and (as I do) accept this characterisation of the global economic system. Quite another to know what to do about it. As Joshua discovered in Wargames, sometimes the only winning move is not to play.

But that seems… impossible. So how do we play to win? Or at least lose less badly? How do we halt or at least reduce the flow of value out of our little part of the periphery, and capture more of it here?

Solution the First: Play their game better

Imagine Wales is a rusty old bucket. With a dragon on you say? OK, fill your boots. But try to fill the bucket with money – from the Westminster block grant to the Welsh Government, and out via procurement; or from Welsh residents’ wages or welfare payments; or from Wales-based company exports; and it all drains away through the holes in the bottom. Fill those holes and the money stays longer, adding more wages, profits, and wellbeing.

Plugging the holes – stopping the leaks can take many forms. And it is potentially powerful, because we start from a low base – this is, for example, an overwhelmingly farmed country that imports almost all its food. Nuts! My economic model suggests if we could shift these purchases so that just, say, 10% more of consumer spend was on Welsh food – so about 85% imported instead of 95% – we could add over £1 billion to Welsh output, £500m to value added, and create around 9,000 jobs. If, of course, we could find the land to grow the food people want, and at the price they could afford. More on which… later. Or perhaps in a future blog if my head starts hurting.

This form of localisation has of course more than purely economic benefits. The pandemic and subsequent supply shocks (Ukraine, that bloody boat) made it crystal clear that long supply chains are often vulnerable supply chains – the last thing you want for critical products (like, I dunno, medicine). Meanwhile, exchanging functionally identical products between countries may make economic sense (somehow) but is energy-and-climate bonkers.

It’s not just ‘stuff’ of course. The 16th Century Acts of Union welcomed Wales into England’s warm legal embrace, and the consequence, half a millennium later, is a suite of common EnglandandWales legal and professional structures. Not only judges, but planners, architects, and lawyers of all kinds can work (pretty much) seamlessly across the porous border. The result has definitively not been the hollowing out of the English professional class by expansionary Welsh firms 🙂.

This financial, professional, competence, and I would argue, ‘civic’ leakage has left us with an economy that is narrow and weak, and a cultural life lacking depth and reach. Is it any wonder that graduates from Welsh universities (along with those from the North) flock to the South East of the UK to work? Or that the UK Government, along with private companies simply can’t find an excuse to undertake R&D in Wales – in fact, anywhere outside the ‘Golden Triangle’? Or that Welsh companies are always the acquired, never the acquirer?

Plugging the leaks – playing this game better – means concentrated, nuanced engagement with a system that is stacked against the peripheral. It means, for example, going far beyond what Karel Williams characterises as the ‘postcode stock-take’ of current public procurement tracking, welcome though that is. On this side, things are now harder with the new(ish) UK Internal Market Act which ensures no regulation will “directly or indirectly discriminate against a service provider from another part of the UK”. So – no local sourcing for its own sake, any more than when Brussels was looking over our shoulder. This is the sort of ‘level playing field’ that ignores structural power and pre-existing financial ‘clout’. And works so well in sport of course.

For the public sector then, deep thought is needed to reshape procurement to genuinely demand ‘foundational economy’ and social (and perhaps cultural/linguistic) benefits in ways that will be naturally more deliverable by – and this is important – responsible, sustainable and embedded Welsh businesses. To ensure that the new Social Partnership Act comes to life in a way that, perhaps, the Future Generations Act initially struggled to. And critically, to be prepared to pay more for contracts that deliver a wider range of benefits, and which at least begin to change the structure of the Welsh economy. To (as Karel Williams and Kevin Morgan suggest) actually resource, develop and reward strategic procurement as a profession in Wales. To work to a situation where we procure locally, not out of the goodness of our public sector hearts, but because it delivers. Easy then.

Of course, localisation is not only about public procurement. The largest UK experiment in re-localisation so far was of a completely different sort. To illustrate, in England the ‘Preston’ model’ focused on the localisation of public procurement to deliver a claimed £40m improvement in the town and perhaps £200m across Lancashire as a whole. Excellent stuff. But Scotland meanwhile has undertaken the localisation – indeed, effective autarkisation – of its £10bn higher education system. Students don’t go in, students don’t come out! Around 85% of Scotland’s UK-resident students are Scottish, and the great majority stay there after graduation – with of course huge impacts on the economy. It’s like North Korea, but with worse weather and an unstable political system.

And this is the result of a deliberate and calculated decision by their regional government – right at the start of devolution – to treat Scots differently but only if they made an education decision seen as more widely beneficial. Could we do this in Wales? Well, there was clearly no appetite when tuition fees were last examined by Kirsty Williams in 2017, and perhaps our smaller sector makes it a bit more difficult to sell: eight universities compared to fifteen (as of today, Tuesday, but don’t hold me to that). But this is a sector that is about to undergo a significant cross-UK shake-out in any case, as international student numbers collapse and the business model goes with them. Here we have a real and urgent opportunity to re-localise. At the moment, there is little ‘extrinsic’ incentive for academics to set themselves the task of helping solve Wales’ problems over a sustained period; no large ongoing research pots, or ‘local impact weightings’ in career progression or hiring for example. Given the difficulties inherent in squeezing globally-recognised papers from studies of a small, data-poor regions, it is left to individual academics to undertake (often excellent) work through the hard yards of developing external stakeholder relationships, and bending large UK-level grants to Wales-appropriate ends.

Given the almost laughably low level of business and government R&D undertaken in Wales, can we really afford the vast majority of academic research in Wales not to be for Wales? If Universities are looking down the barrel of big reductions in the international student fees that currently subsidise research, a new funding model will be needed. And maybe, at the same time, some new objectives found.

What was that thing about never wasting a good crisis?

There are potentially other big localisations we can consider. For example, whilst the £10bn of local government pension funds under management by Hymans (checks the internet: no office in Wales) are doing well in terms of fossil disinvestment and climate risk, the proportion invested in Wales seems to be, as far as I can judge, £68m… Nought point seven percent. And look, I know this is complicated, I know there’s a primary fiduciary duty on trust managers, and perhaps Welsh investments are more risky but…. 0.7%? Really? And we’ve been talking about this for years, and getting nowhere. In 2018 the Institute for Welsh Affairs suggested that Welsh pensions weren’t invested in Wales due to the “cultural and behavioural decisions of pension fund trustees, boards and consultants/ investment managers”. Basically, London folks can’t be bothered with understanding, and carrying out due diligence, on such trivially small investments in this wonky little peninsular. And nobody makes them. Even though it’s our money.

This stuff, this £10bn, matters (especially in a context where our public sector can’t easily borrow against the future). If we don’t even invest our own money here… why would anyone else? This is not all down to the pension fund supply side however: If all that is on offer in Wales small yet politically toxic renewables, we will get nowhere in developing a more locally oriented investment model – in pensions or elsewhere. Joining up floating, responsible and patient funds with at-scale, commercially attractive investment opportunities in socially, climate and ecologically useful stuff is a priority. But I’m not sure we even really understand the key barriers, let alone have the will to address them. A similar argument might be made at the other end – for a more bespoke Welsh finance system better suited to the needs of our micro organisations. But the Interwebz reveal I first argued for a Cardiff stockmarket over a decade ago, and I do hate repeating myself 🙂.

Solution the second: Invent another game

So… it is perhaps possible to play this game better, by identifying where Wales is especially weak, where opportunities exist to lever greater local value, and then to focus on both big-ticket and long-grind interventions that might make a difference. But… we live in a world where the material prosperity we chase is fundamentally enabled by ecological destruction, climate chaos, huge flows of materiel and economic value, from the global south, and deeply unpleasant impacts on the poorest. Striving to be a slightly bigger dog in a dog-eat-dog world is in my view (and that of the Future Generations Act) a non-starter. The re-localisation of production – and even adding circularity – does nothing unless we also deal with the other half of the equation: our hyper-global, and hyper-problematic consumption.

Despite some measurement, governments talk much less about the radical changes to our consumption habits needed to secure a liveable future. The unsustainability of consumption is not unrelated to the remoteness of the consumer from where the goods are produced. We never see the emissions created as flowers are flown from Kenya to our local petrol station, just-in-time for 8pm on your anniversary. I have literally no idea which server is streaming my Netflix-Disney+-AppleTV-Paramount film at any given time, let alone how its powered, or whether any children were harmed in the production of the phone I’m watching on). And we pay almost none of the (horrific) environmental costs of all the food we eat. All a bit depressing I know. Think I need a few days in Ibiza to recover.

This, then is perhaps another emergency we can’t afford to waste? Wales has done really quite badly from the existing system of global capitalism. Surely a new, more sustainable system would be naturally (sic) more local, helping keep prosperity in Wales and wellbeing high?

Well, maybe. And maybe not.

The first point to make is that Wales is, really, a very unlocalised economy right now, for almost all our big purchases: Food, financial services, energy are just some of the biggest, most leaky examples. To switch these to regional supply to any meaningful extent not only requires a geographical transition but also a product transition, on both sides: for example, in both what we eat and what we grow. And the elephant in the room is that once we bring this stuff closer to home, it’s more costly – firstly because we lose out on all the cheap land and cheap labour and cheap energy that currently underpins our imports, and secondly because there’s only any point in doing this if we incorporate the costs of ‘externalities’ in production.

Escaping our history

I look to the future, it makes me cry (well not really, I couldn’t resist it). More seriously, this is… quite a difficult ask in a country where a fifth of children are already living in absolute poverty and where the public sector is currently undergoing decimation-by-Barnett. It is hard therefore to see how any substantive transformation towards locality could happen without significant income redistribution, a completely different regulatory and tax approach, and deep behaviour change on the part of consumers. That’s going to look great on the side of a 2026 election campaign bus.

In the absence of these frankly unlikely things, maybe we are left with just playing the existing game a bit better, taking small wins where we can, and hoping that this translates to a slightly less crap outcome. But remember, crises aren’t often obvious until they arrive. A decade ago, when I was writing about peak oil and feeling especially hopeless (but had more hair), I would be asked what would get the fossil-fuel addicted Welsh economy ‘off oil’ – given the same social and political constraints we face now…

My answer back then would be ‘the fall of the Saudi government and its replacement by an Al-Qaeda junta that turned off the taps’. That never happened, and Wales remains resolutely carbonised. But the point is not lost. Any one of a number of tipping points – ecological, climate, geopolitical or financial – could significantly reduce our ability to draw resources from across the globe. The signs are already there. Bankruptcy happens gradually, and then suddenly. Economic transformation and a higher reliance on our own resources is, I believe not a choice. Our choice is whether it is careful or chaotic. Just, or just exploitative. A more local, self-sufficient, resilient and fair Wales can and should be imagined – indeed, our Future Generations Act demands it. The good thing is that imagination costs nothing.

https://afallen.cymru/2024/06/13/must-everything-go-the-prospects-for-economic-re-localisation-in-wales/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales

This second guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here.

Header photo: courtesy of Jim Nix.

1. The problem (as defined by me)
2. Solution the First: play their game
3. Solution the Second: invent another game
4. Escaping our history

London never sleeps it just sucks,
The life out of me,
And the money from my pocket.

‘Londinium’
Mark Roberts / Catatonia
© Brodyr Warner 1998

Ah, what a song. But is it a metaphor or… just a song?

The problem (as defined by me)

So. We all know Wales has some longstanding economic… issues. There has been a tendency by some – perhaps increasing – to blame our economic woes on the ‘noisy neighbours’, handily dovetailing with concerns about cultural and linguistic marginalisation over the centuries. It was the English what did it!

So far so defensible. Maybe? But this notion ignores the (resolutely English) single mother scraping by on Universal Credit in Newcastle. Welsh ‘economic exceptionalism’ wilts a little when you realise the UK is probably the most regionally unbalanced country in Europe. As I have previously argued there is something different about peripheral economies and Wales does seem to suffer from peripherality more than most, but the specific ‘Welshness’ of this needs unpacking. We might start with the more widely applicable notion that ‘development develops inequality’ through a process of unequal exchange. Markets are organised, and this is done by powerful firms, institutions and countries that are resolutely core – right in the middle of the nexus of relationships, geography, intellectual property and ownership that constitute political-economic power. Then, if the system allows such actors to exploit and extract critical natural and human resources that might emerge in the periphery, well… them’s the rules.

It is one thing to recognise and (as I do) accept this characterisation of the global economic system. Quite another to know what to do about it. As Joshua discovered in Wargames, sometimes the only winning move is not to play.

But that seems… impossible. So how do we play to win? Or at least lose less badly? How do we halt or at least reduce the flow of value out of our little part of the periphery, and capture more of it here?

Solution the First: Play their game better

Imagine Wales is a rusty old bucket. With a dragon on you say? OK, fill your boots. But try to fill the bucket with money – from the Westminster block grant to the Welsh Government, and out via procurement; or from Welsh residents’ wages or welfare payments; or from Wales-based company exports; and it all drains away through the holes in the bottom. Fill those holes and the money stays longer, adding more wages, profits, and wellbeing.

Plugging the holes – stopping the leaks can take many forms. And it is potentially powerful, because we start from a low base – this is, for example, an overwhelmingly farmed country that imports almost all its food. Nuts! My economic model suggests if we could shift these purchases so that just, say, 10% more of consumer spend was on Welsh food – so about 85% imported instead of 95% – we could add over £1 billion to Welsh output, £500m to value added, and create around 9,000 jobs. If, of course, we could find the land to grow the food people want, and at the price they could afford. More on which… later. Or perhaps in a future blog if my head starts hurting.

This form of localisation has of course more than purely economic benefits. The pandemic and subsequent supply shocks (Ukraine, that bloody boat) made it crystal clear that long supply chains are often vulnerable supply chains – the last thing you want for critical products (like, I dunno, medicine). Meanwhile, exchanging functionally identical products between countries may make economic sense (somehow) but is energy-and-climate bonkers.

It’s not just ‘stuff’ of course. The 16th Century Acts of Union welcomed Wales into England’s warm legal embrace, and the consequence, half a millennium later, is a suite of common EnglandandWales legal and professional structures. Not only judges, but planners, architects, and lawyers of all kinds can work (pretty much) seamlessly across the porous border. The result has definitively not been the hollowing out of the English professional class by expansionary Welsh firms 🙂.

This financial, professional, competence, and I would argue, ‘civic’ leakage has left us with an economy that is narrow and weak, and a cultural life lacking depth and reach. Is it any wonder that graduates from Welsh universities (along with those from the North) flock to the South East of the UK to work? Or that the UK Government, along with private companies simply can’t find an excuse to undertake R&D in Wales – in fact, anywhere outside the ‘Golden Triangle’? Or that Welsh companies are always the acquired, never the acquirer?

Plugging the leaks – playing this game better – means concentrated, nuanced engagement with a system that is stacked against the peripheral. It means, for example, going far beyond what Karel Williams characterises as the ‘postcode stock-take’ of current public procurement tracking, welcome though that is. On this side, things are now harder with the new(ish) UK Internal Market Act which ensures no regulation will “directly or indirectly discriminate against a service provider from another part of the UK”. So – no local sourcing for its own sake, any more than when Brussels was looking over our shoulder. This is the sort of ‘level playing field’ that ignores structural power and pre-existing financial ‘clout’. And works so well in sport of course.

For the public sector then, deep thought is needed to reshape procurement to genuinely demand ‘foundational economy’ and social (and perhaps cultural/linguistic) benefits in ways that will be naturally more deliverable by – and this is important – responsible, sustainable and embedded Welsh businesses. To ensure that the new Social Partnership Act comes to life in a way that, perhaps, the Future Generations Act initially struggled to. And critically, to be prepared to pay more for contracts that deliver a wider range of benefits, and which at least begin to change the structure of the Welsh economy. To (as Karel Williams and Kevin Morgan suggest) actually resource, develop and reward strategic procurement as a profession in Wales. To work to a situation where we procure locally, not out of the goodness of our public sector hearts, but because it delivers. Easy then.

Of course, localisation is not only about public procurement. The largest UK experiment in re-localisation so far was of a completely different sort. To illustrate, in England the ‘Preston’ model’ focused on the localisation of public procurement to deliver a claimed £40m improvement in the town and perhaps £200m across Lancashire as a whole. Excellent stuff. But Scotland meanwhile has undertaken the localisation – indeed, effective autarkisation – of its £10bn higher education system. Students don’t go in, students don’t come out! Around 85% of Scotland’s UK-resident students are Scottish, and the great majority stay there after graduation – with of course huge impacts on the economy. It’s like North Korea, but with worse weather and an unstable political system.

And this is the result of a deliberate and calculated decision by their regional government – right at the start of devolution – to treat Scots differently but only if they made an education decision seen as more widely beneficial. Could we do this in Wales? Well, there was clearly no appetite when tuition fees were last examined by Kirsty Williams in 2017, and perhaps our smaller sector makes it a bit more difficult to sell: eight universities compared to fifteen (as of today, Tuesday, but don’t hold me to that). But this is a sector that is about to undergo a significant cross-UK shake-out in any case, as international student numbers collapse and the business model goes with them. Here we have a real and urgent opportunity to re-localise. At the moment, there is little ‘extrinsic’ incentive for academics to set themselves the task of helping solve Wales’ problems over a sustained period; no large ongoing research pots, or ‘local impact weightings’ in career progression or hiring for example. Given the difficulties inherent in squeezing globally-recognised papers from studies of a small, data-poor regions, it is left to individual academics to undertake (often excellent) work through the hard yards of developing external stakeholder relationships, and bending large UK-level grants to Wales-appropriate ends.

Given the almost laughably low level of business and government R&D undertaken in Wales, can we really afford the vast majority of academic research in Wales not to be for Wales? If Universities are looking down the barrel of big reductions in the international student fees that currently subsidise research, a new funding model will be needed. And maybe, at the same time, some new objectives found.

What was that thing about never wasting a good crisis?

There are potentially other big localisations we can consider. For example, whilst the £10bn of local government pension funds under management by Hymans (checks the internet: no office in Wales) are doing well in terms of fossil disinvestment and climate risk, the proportion invested in Wales seems to be, as far as I can judge, £68m… Nought point seven percent. And look, I know this is complicated, I know there’s a primary fiduciary duty on trust managers, and perhaps Welsh investments are more risky but…. 0.7%? Really? And we’ve been talking about this for years, and getting nowhere. In 2018 the Institute for Welsh Affairs suggested that Welsh pensions weren’t invested in Wales due to the “cultural and behavioural decisions of pension fund trustees, boards and consultants/ investment managers”. Basically, London folks can’t be bothered with understanding, and carrying out due diligence, on such trivially small investments in this wonky little peninsular. And nobody makes them. Even though it’s our money.

This stuff, this £10bn, matters (especially in a context where our public sector can’t easily borrow against the future). If we don’t even invest our own money here… why would anyone else? This is not all down to the pension fund supply side however: If all that is on offer in Wales small yet politically toxic renewables, we will get nowhere in developing a more locally oriented investment model – in pensions or elsewhere. Joining up floating, responsible and patient funds with at-scale, commercially attractive investment opportunities in socially, climate and ecologically useful stuff is a priority. But I’m not sure we even really understand the key barriers, let alone have the will to address them. A similar argument might be made at the other end – for a more bespoke Welsh finance system better suited to the needs of our micro organisations. But the Interwebz reveal I first argued for a Cardiff stockmarket over a decade ago, and I do hate repeating myself 🙂.

Solution the second: Invent another game

So… it is perhaps possible to play this game better, by identifying where Wales is especially weak, where opportunities exist to lever greater local value, and then to focus on both big-ticket and long-grind interventions that might make a difference. But… we live in a world where the material prosperity we chase is fundamentally enabled by ecological destruction, climate chaos, huge flows of materiel and economic value, from the global south, and deeply unpleasant impacts on the poorest. Striving to be a slightly bigger dog in a dog-eat-dog world is in my view (and that of the Future Generations Act) a non-starter. The re-localisation of production – and even adding circularity – does nothing unless we also deal with the other half of the equation: our hyper-global, and hyper-problematic consumption.

Despite some measurement, governments talk much less about the radical changes to our consumption habits needed to secure a liveable future. The unsustainability of consumption is not unrelated to the remoteness of the consumer from where the goods are produced. We never see the emissions created as flowers are flown from Kenya to our local petrol station, just-in-time for 8pm on your anniversary. I have literally no idea which server is streaming my Netflix-Disney+-AppleTV-Paramount film at any given time, let alone how its powered, or whether any children were harmed in the production of the phone I’m watching on). And we pay almost none of the (horrific) environmental costs of all the food we eat. All a bit depressing I know. Think I need a few days in Ibiza to recover.

This, then is perhaps another emergency we can’t afford to waste? Wales has done really quite badly from the existing system of global capitalism. Surely a new, more sustainable system would be naturally (sic) more local, helping keep prosperity in Wales and wellbeing high?

Well, maybe. And maybe not.

The first point to make is that Wales is, really, a very unlocalised economy right now, for almost all our big purchases: Food, financial services, energy are just some of the biggest, most leaky examples. To switch these to regional supply to any meaningful extent not only requires a geographical transition but also a product transition, on both sides: for example, in both what we eat and what we grow. And the elephant in the room is that once we bring this stuff closer to home, it’s more costly – firstly because we lose out on all the cheap land and cheap labour and cheap energy that currently underpins our imports, and secondly because there’s only any point in doing this if we incorporate the costs of ‘externalities’ in production.

Escaping our history

I look to the future, it makes me cry (well not really, I couldn’t resist it). More seriously, this is… quite a difficult ask in a country where a fifth of children are already living in absolute poverty and where the public sector is currently undergoing decimation-by-Barnett. It is hard therefore to see how any substantive transformation towards locality could happen without significant income redistribution, a completely different regulatory and tax approach, and deep behaviour change on the part of consumers. That’s going to look great on the side of a 2026 election campaign bus.

In the absence of these frankly unlikely things, maybe we are left with just playing the existing game a bit better, taking small wins where we can, and hoping that this translates to a slightly less crap outcome. But remember, crises aren’t often obvious until they arrive. A decade ago, when I was writing about peak oil and feeling especially hopeless (but had more hair), I would be asked what would get the fossil-fuel addicted Welsh economy ‘off oil’ – given the same social and political constraints we face now…

My answer back then would be ‘the fall of the Saudi government and its replacement by an Al-Qaeda junta that turned off the taps’. That never happened, and Wales remains resolutely carbonised. But the point is not lost. Any one of a number of tipping points – ecological, climate, geopolitical or financial – could significantly reduce our ability to draw resources from across the globe. The signs are already there. Bankruptcy happens gradually, and then suddenly. Economic transformation and a higher reliance on our own resources is, I believe not a choice. Our choice is whether it is careful or chaotic. Just, or just exploitative. A more local, self-sufficient, resilient and fair Wales can and should be imagined – indeed, our Future Generations Act demands it. The good thing is that imagination costs nothing.

https://afallen.cymru/2024/06/13/must-everything-go-the-prospects-for-economic-re-localisation-in-wales/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales

This second guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here.

Header photo: courtesy of Jim Nix.

1. The problem (as defined by me)
2. Solution the First: play their game
3. Solution the Second: invent another game
4. Escaping our history

London never sleeps it just sucks,
The life out of me,
And the money from my pocket.

‘Londinium’
Mark Roberts / Catatonia
© Brodyr Warner 1998

Ah, what a song. But is it a metaphor or… just a song?

The problem (as defined by me)

So. We all know Wales has some longstanding economic… issues. There has been a tendency by some – perhaps increasing – to blame our economic woes on the ‘noisy neighbours’, handily dovetailing with concerns about cultural and linguistic marginalisation over the centuries. It was the English what did it!

So far so defensible. Maybe? But this notion ignores the (resolutely English) single mother scraping by on Universal Credit in Newcastle. Welsh ‘economic exceptionalism’ wilts a little when you realise the UK is probably the most regionally unbalanced country in Europe. As I have previously argued there is something different about peripheral economies and Wales does seem to suffer from peripherality more than most, but the specific ‘Welshness’ of this needs unpacking. We might start with the more widely applicable notion that ‘development develops inequality’ through a process of unequal exchange. Markets are organised, and this is done by powerful firms, institutions and countries that are resolutely core – right in the middle of the nexus of relationships, geography, intellectual property and ownership that constitute political-economic power. Then, if the system allows such actors to exploit and extract critical natural and human resources that might emerge in the periphery, well… them’s the rules.

It is one thing to recognise and (as I do) accept this characterisation of the global economic system. Quite another to know what to do about it. As Joshua discovered in Wargames, sometimes the only winning move is not to play.

But that seems… impossible. So how do we play to win? Or at least lose less badly? How do we halt or at least reduce the flow of value out of our little part of the periphery, and capture more of it here?

Solution the First: Play their game better

Imagine Wales is a rusty old bucket. With a dragon on you say? OK, fill your boots. But try to fill the bucket with money – from the Westminster block grant to the Welsh Government, and out via procurement; or from Welsh residents’ wages or welfare payments; or from Wales-based company exports; and it all drains away through the holes in the bottom. Fill those holes and the money stays longer, adding more wages, profits, and wellbeing.

Plugging the holes – stopping the leaks can take many forms. And it is potentially powerful, because we start from a low base – this is, for example, an overwhelmingly farmed country that imports almost all its food. Nuts! My economic model suggests if we could shift these purchases so that just, say, 10% more of consumer spend was on Welsh food – so about 85% imported instead of 95% – we could add over £1 billion to Welsh output, £500m to value added, and create around 9,000 jobs. If, of course, we could find the land to grow the food people want, and at the price they could afford. More on which… later. Or perhaps in a future blog if my head starts hurting.

This form of localisation has of course more than purely economic benefits. The pandemic and subsequent supply shocks (Ukraine, that bloody boat) made it crystal clear that long supply chains are often vulnerable supply chains – the last thing you want for critical products (like, I dunno, medicine). Meanwhile, exchanging functionally identical products between countries may make economic sense (somehow) but is energy-and-climate bonkers.

It’s not just ‘stuff’ of course. The 16th Century Acts of Union welcomed Wales into England’s warm legal embrace, and the consequence, half a millennium later, is a suite of common EnglandandWales legal and professional structures. Not only judges, but planners, architects, and lawyers of all kinds can work (pretty much) seamlessly across the porous border. The result has definitively not been the hollowing out of the English professional class by expansionary Welsh firms 🙂.

This financial, professional, competence, and I would argue, ‘civic’ leakage has left us with an economy that is narrow and weak, and a cultural life lacking depth and reach. Is it any wonder that graduates from Welsh universities (along with those from the North) flock to the South East of the UK to work? Or that the UK Government, along with private companies simply can’t find an excuse to undertake R&D in Wales – in fact, anywhere outside the ‘Golden Triangle’? Or that Welsh companies are always the acquired, never the acquirer?

Plugging the leaks – playing this game better – means concentrated, nuanced engagement with a system that is stacked against the peripheral. It means, for example, going far beyond what Karel Williams characterises as the ‘postcode stock-take’ of current public procurement tracking, welcome though that is. On this side, things are now harder with the new(ish) UK Internal Market Act which ensures no regulation will “directly or indirectly discriminate against a service provider from another part of the UK”. So – no local sourcing for its own sake, any more than when Brussels was looking over our shoulder. This is the sort of ‘level playing field’ that ignores structural power and pre-existing financial ‘clout’. And works so well in sport of course.

For the public sector then, deep thought is needed to reshape procurement to genuinely demand ‘foundational economy’ and social (and perhaps cultural/linguistic) benefits in ways that will be naturally more deliverable by – and this is important – responsible, sustainable and embedded Welsh businesses. To ensure that the new Social Partnership Act comes to life in a way that, perhaps, the Future Generations Act initially struggled to. And critically, to be prepared to pay more for contracts that deliver a wider range of benefits, and which at least begin to change the structure of the Welsh economy. To (as Karel Williams and Kevin Morgan suggest) actually resource, develop and reward strategic procurement as a profession in Wales. To work to a situation where we procure locally, not out of the goodness of our public sector hearts, but because it delivers. Easy then.

Of course, localisation is not only about public procurement. The largest UK experiment in re-localisation so far was of a completely different sort. To illustrate, in England the ‘Preston’ model’ focused on the localisation of public procurement to deliver a claimed £40m improvement in the town and perhaps £200m across Lancashire as a whole. Excellent stuff. But Scotland meanwhile has undertaken the localisation – indeed, effective autarkisation – of its £10bn higher education system. Students don’t go in, students don’t come out! Around 85% of Scotland’s UK-resident students are Scottish, and the great majority stay there after graduation – with of course huge impacts on the economy. It’s like North Korea, but with worse weather and an unstable political system.

And this is the result of a deliberate and calculated decision by their regional government – right at the start of devolution – to treat Scots differently but only if they made an education decision seen as more widely beneficial. Could we do this in Wales? Well, there was clearly no appetite when tuition fees were last examined by Kirsty Williams in 2017, and perhaps our smaller sector makes it a bit more difficult to sell: eight universities compared to fifteen (as of today, Tuesday, but don’t hold me to that). But this is a sector that is about to undergo a significant cross-UK shake-out in any case, as international student numbers collapse and the business model goes with them. Here we have a real and urgent opportunity to re-localise. At the moment, there is little ‘extrinsic’ incentive for academics to set themselves the task of helping solve Wales’ problems over a sustained period; no large ongoing research pots, or ‘local impact weightings’ in career progression or hiring for example. Given the difficulties inherent in squeezing globally-recognised papers from studies of a small, data-poor regions, it is left to individual academics to undertake (often excellent) work through the hard yards of developing external stakeholder relationships, and bending large UK-level grants to Wales-appropriate ends.

Given the almost laughably low level of business and government R&D undertaken in Wales, can we really afford the vast majority of academic research in Wales not to be for Wales? If Universities are looking down the barrel of big reductions in the international student fees that currently subsidise research, a new funding model will be needed. And maybe, at the same time, some new objectives found.

What was that thing about never wasting a good crisis?

There are potentially other big localisations we can consider. For example, whilst the £10bn of local government pension funds under management by Hymans (checks the internet: no office in Wales) are doing well in terms of fossil disinvestment and climate risk, the proportion invested in Wales seems to be, as far as I can judge, £68m… Nought point seven percent. And look, I know this is complicated, I know there’s a primary fiduciary duty on trust managers, and perhaps Welsh investments are more risky but…. 0.7%? Really? And we’ve been talking about this for years, and getting nowhere. In 2018 the Institute for Welsh Affairs suggested that Welsh pensions weren’t invested in Wales due to the “cultural and behavioural decisions of pension fund trustees, boards and consultants/ investment managers”. Basically, London folks can’t be bothered with understanding, and carrying out due diligence, on such trivially small investments in this wonky little peninsular. And nobody makes them. Even though it’s our money.

This stuff, this £10bn, matters (especially in a context where our public sector can’t easily borrow against the future). If we don’t even invest our own money here… why would anyone else? This is not all down to the pension fund supply side however: If all that is on offer in Wales small yet politically toxic renewables, we will get nowhere in developing a more locally oriented investment model – in pensions or elsewhere. Joining up floating, responsible and patient funds with at-scale, commercially attractive investment opportunities in socially, climate and ecologically useful stuff is a priority. But I’m not sure we even really understand the key barriers, let alone have the will to address them. A similar argument might be made at the other end – for a more bespoke Welsh finance system better suited to the needs of our micro organisations. But the Interwebz reveal I first argued for a Cardiff stockmarket over a decade ago, and I do hate repeating myself 🙂.

Solution the second: Invent another game

So… it is perhaps possible to play this game better, by identifying where Wales is especially weak, where opportunities exist to lever greater local value, and then to focus on both big-ticket and long-grind interventions that might make a difference. But… we live in a world where the material prosperity we chase is fundamentally enabled by ecological destruction, climate chaos, huge flows of materiel and economic value, from the global south, and deeply unpleasant impacts on the poorest. Striving to be a slightly bigger dog in a dog-eat-dog world is in my view (and that of the Future Generations Act) a non-starter. The re-localisation of production – and even adding circularity – does nothing unless we also deal with the other half of the equation: our hyper-global, and hyper-problematic consumption.

Despite some measurement, governments talk much less about the radical changes to our consumption habits needed to secure a liveable future. The unsustainability of consumption is not unrelated to the remoteness of the consumer from where the goods are produced. We never see the emissions created as flowers are flown from Kenya to our local petrol station, just-in-time for 8pm on your anniversary. I have literally no idea which server is streaming my Netflix-Disney+-AppleTV-Paramount film at any given time, let alone how its powered, or whether any children were harmed in the production of the phone I’m watching on). And we pay almost none of the (horrific) environmental costs of all the food we eat. All a bit depressing I know. Think I need a few days in Ibiza to recover.

This, then is perhaps another emergency we can’t afford to waste? Wales has done really quite badly from the existing system of global capitalism. Surely a new, more sustainable system would be naturally (sic) more local, helping keep prosperity in Wales and wellbeing high?

Well, maybe. And maybe not.

The first point to make is that Wales is, really, a very unlocalised economy right now, for almost all our big purchases: Food, financial services, energy are just some of the biggest, most leaky examples. To switch these to regional supply to any meaningful extent not only requires a geographical transition but also a product transition, on both sides: for example, in both what we eat and what we grow. And the elephant in the room is that once we bring this stuff closer to home, it’s more costly – firstly because we lose out on all the cheap land and cheap labour and cheap energy that currently underpins our imports, and secondly because there’s only any point in doing this if we incorporate the costs of ‘externalities’ in production.

Escaping our history

I look to the future, it makes me cry (well not really, I couldn’t resist it). More seriously, this is… quite a difficult ask in a country where a fifth of children are already living in absolute poverty and where the public sector is currently undergoing decimation-by-Barnett. It is hard therefore to see how any substantive transformation towards locality could happen without significant income redistribution, a completely different regulatory and tax approach, and deep behaviour change on the part of consumers. That’s going to look great on the side of a 2026 election campaign bus.

In the absence of these frankly unlikely things, maybe we are left with just playing the existing game a bit better, taking small wins where we can, and hoping that this translates to a slightly less crap outcome. But remember, crises aren’t often obvious until they arrive. A decade ago, when I was writing about peak oil and feeling especially hopeless (but had more hair), I would be asked what would get the fossil-fuel addicted Welsh economy ‘off oil’ – given the same social and political constraints we face now…

My answer back then would be ‘the fall of the Saudi government and its replacement by an Al-Qaeda junta that turned off the taps’. That never happened, and Wales remains resolutely carbonised. But the point is not lost. Any one of a number of tipping points – ecological, climate, geopolitical or financial – could significantly reduce our ability to draw resources from across the globe. The signs are already there. Bankruptcy happens gradually, and then suddenly. Economic transformation and a higher reliance on our own resources is, I believe not a choice. Our choice is whether it is careful or chaotic. Just, or just exploitative. A more local, self-sufficient, resilient and fair Wales can and should be imagined – indeed, our Future Generations Act demands it. The good thing is that imagination costs nothing.

https://afallen.cymru/2024/06/13/must-everything-go-the-prospects-for-economic-re-localisation-in-wales/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales

This second guest post by Professor Calvin Jones about Wales’ economy is part of Afallen’s objective of elevating the terms of the debate in Wales about how our economy operates – and what can be done to improve it. You can read Calvin’s first blog post here.

Header photo: courtesy of Jim Nix.

1. The problem (as defined by me)
2. Solution the First: play their game
3. Solution the Second: invent another game
4. Escaping our history

London never sleeps it just sucks,
The life out of me,
And the money from my pocket.

‘Londinium’
Mark Roberts / Catatonia
© Brodyr Warner 1998

Ah, what a song. But is it a metaphor or… just a song?

The problem (as defined by me)

So. We all know Wales has some longstanding economic… issues. There has been a tendency by some – perhaps increasing – to blame our economic woes on the ‘noisy neighbours’, handily dovetailing with concerns about cultural and linguistic marginalisation over the centuries. It was the English what did it!

So far so defensible. Maybe? But this notion ignores the (resolutely English) single mother scraping by on Universal Credit in Newcastle. Welsh ‘economic exceptionalism’ wilts a little when you realise the UK is probably the most regionally unbalanced country in Europe. As I have previously argued there is something different about peripheral economies and Wales does seem to suffer from peripherality more than most, but the specific ‘Welshness’ of this needs unpacking. We might start with the more widely applicable notion that ‘development develops inequality’ through a process of unequal exchange. Markets are organised, and this is done by powerful firms, institutions and countries that are resolutely core – right in the middle of the nexus of relationships, geography, intellectual property and ownership that constitute political-economic power. Then, if the system allows such actors to exploit and extract critical natural and human resources that might emerge in the periphery, well… them’s the rules.

It is one thing to recognise and (as I do) accept this characterisation of the global economic system. Quite another to know what to do about it. As Joshua discovered in Wargames, sometimes the only winning move is not to play.

But that seems… impossible. So how do we play to win? Or at least lose less badly? How do we halt or at least reduce the flow of value out of our little part of the periphery, and capture more of it here?

Solution the First: Play their game better

Imagine Wales is a rusty old bucket. With a dragon on you say? OK, fill your boots. But try to fill the bucket with money – from the Westminster block grant to the Welsh Government, and out via procurement; or from Welsh residents’ wages or welfare payments; or from Wales-based company exports; and it all drains away through the holes in the bottom. Fill those holes and the money stays longer, adding more wages, profits, and wellbeing.

Plugging the holes – stopping the leaks can take many forms. And it is potentially powerful, because we start from a low base – this is, for example, an overwhelmingly farmed country that imports almost all its food. Nuts! My economic model suggests if we could shift these purchases so that just, say, 10% more of consumer spend was on Welsh food – so about 85% imported instead of 95% – we could add over £1 billion to Welsh output, £500m to value added, and create around 9,000 jobs. If, of course, we could find the land to grow the food people want, and at the price they could afford. More on which… later. Or perhaps in a future blog if my head starts hurting.

This form of localisation has of course more than purely economic benefits. The pandemic and subsequent supply shocks (Ukraine, that bloody boat) made it crystal clear that long supply chains are often vulnerable supply chains – the last thing you want for critical products (like, I dunno, medicine). Meanwhile, exchanging functionally identical products between countries may make economic sense (somehow) but is energy-and-climate bonkers.

It’s not just ‘stuff’ of course. The 16th Century Acts of Union welcomed Wales into England’s warm legal embrace, and the consequence, half a millennium later, is a suite of common EnglandandWales legal and professional structures. Not only judges, but planners, architects, and lawyers of all kinds can work (pretty much) seamlessly across the porous border. The result has definitively not been the hollowing out of the English professional class by expansionary Welsh firms ?.

This financial, professional, competence, and I would argue, ‘civic’ leakage has left us with an economy that is narrow and weak, and a cultural life lacking depth and reach. Is it any wonder that graduates from Welsh universities (along with those from the North) flock to the South East of the UK to work? Or that the UK Government, along with private companies simply can’t find an excuse to undertake R&D in Wales – in fact, anywhere outside the ‘Golden Triangle’? Or that Welsh companies are always the acquired, never the acquirer?

Plugging the leaks – playing this game better – means concentrated, nuanced engagement with a system that is stacked against the peripheral. It means, for example, going far beyond what Karel Williams characterises as the ‘postcode stock-take’ of current public procurement tracking, welcome though that is. On this side, things are now harder with the new(ish) UK Internal Market Act which ensures no regulation will “directly or indirectly discriminate against a service provider from another part of the UK”. So – no local sourcing for its own sake, any more than when Brussels was looking over our shoulder. This is the sort of ‘level playing field’ that ignores structural power and pre-existing financial ‘clout’. And works so well in sport of course.

For the public sector then, deep thought is needed to reshape procurement to genuinely demand ‘foundational economy’ and social (and perhaps cultural/linguistic) benefits in ways that will be naturally more deliverable by – and this is important – responsible, sustainable and embedded Welsh businesses. To ensure that the new Social Partnership Act comes to life in a way that, perhaps, the Future Generations Act initially struggled to. And critically, to be prepared to pay more for contracts that deliver a wider range of benefits, and which at least begin to change the structure of the Welsh economy. To (as Karel Williams and Kevin Morgan suggest) actually resource, develop and reward strategic procurement as a profession in Wales. To work to a situation where we procure locally, not out of the goodness of our public sector hearts, but because it delivers. Easy then.

Of course, localisation is not only about public procurement. The largest UK experiment in re-localisation so far was of a completely different sort. To illustrate, in England the ‘Preston’ model’ focused on the localisation of public procurement to deliver a claimed £40m improvement in the town and perhaps £200m across Lancashire as a whole. Excellent stuff. But Scotland meanwhile has undertaken the localisation – indeed, effective autarkisation – of its £10bn higher education system. Students don’t go in, students don’t come out! Around 85% of Scotland’s UK-resident students are Scottish, and the great majority stay there after graduation – with of course huge impacts on the economy. It’s like North Korea, but with worse weather and an unstable political system.

And this is the result of a deliberate and calculated decision by their regional government – right at the start of devolution – to treat Scots differently but only if they made an education decision seen as more widely beneficial. Could we do this in Wales? Well, there was clearly no appetite when tuition fees were last examined by Kirsty Williams in 2017, and perhaps our smaller sector makes it a bit more difficult to sell: eight universities compared to fifteen (as of today, Tuesday, but don’t hold me to that). But this is a sector that is about to undergo a significant cross-UK shake-out in any case, as international student numbers collapse and the business model goes with them. Here we have a real and urgent opportunity to re-localise. At the moment, there is little ‘extrinsic’ incentive for academics to set themselves the task of helping solve Wales’ problems over a sustained period; no large ongoing research pots, or ‘local impact weightings’ in career progression or hiring for example. Given the difficulties inherent in squeezing globally-recognised papers from studies of a small, data-poor regions, it is left to individual academics to undertake (often excellent) work through the hard yards of developing external stakeholder relationships, and bending large UK-level grants to Wales-appropriate ends.

Given the almost laughably low level of business and government R&D undertaken in Wales, can we really afford the vast majority of academic research in Wales not to be for Wales? If Universities are looking down the barrel of big reductions in the international student fees that currently subsidise research, a new funding model will be needed. And maybe, at the same time, some new objectives found.

What was that thing about never wasting a good crisis?

There are potentially other big localisations we can consider. For example, whilst the £10bn of local government pension funds under management by Hymans (checks the internet: no office in Wales) are doing well in terms of fossil disinvestment and climate risk, the proportion invested in Wales seems to be, as far as I can judge, £68m… Nought point seven percent. And look, I know this is complicated, I know there’s a primary fiduciary duty on trust managers, and perhaps Welsh investments are more risky but…. 0.7%? Really? And we’ve been talking about this for years, and getting nowhere. In 2018 the Institute for Welsh Affairs suggested that Welsh pensions weren’t invested in Wales due to the “cultural and behavioural decisions of pension fund trustees, boards and consultants/ investment managers”. Basically, London folks can’t be bothered with understanding, and carrying out due diligence, on such trivially small investments in this wonky little peninsular. And nobody makes them. Even though it’s our money.

This stuff, this £10bn, matters (especially in a context where our public sector can’t easily borrow against the future). If we don’t even invest our own money here… why would anyone else? This is not all down to the pension fund supply side however: If all that is on offer in Wales small yet politically toxic renewables, we will get nowhere in developing a more locally oriented investment model – in pensions or elsewhere. Joining up floating, responsible and patient funds with at-scale, commercially attractive investment opportunities in socially, climate and ecologically useful stuff is a priority. But I’m not sure we even really understand the key barriers, let alone have the will to address them. A similar argument might be made at the other end – for a more bespoke Welsh finance system better suited to the needs of our micro organisations. But the Interwebz reveal I first argued for a Cardiff stockmarket over a decade ago, and I do hate repeating myself ?.

Solution the second: Invent another game

So… it is perhaps possible to play this game better, by identifying where Wales is especially weak, where opportunities exist to lever greater local value, and then to focus on both big-ticket and long-grind interventions that might make a difference. But… we live in a world where the material prosperity we chase is fundamentally enabled by ecological destruction, climate chaos, huge flows of materiel and economic value, from the global south, and deeply unpleasant impacts on the poorest. Striving to be a slightly bigger dog in a dog-eat-dog world is in my view (and that of the Future Generations Act) a non-starter. The re-localisation of production – and even adding circularity – does nothing unless we also deal with the other half of the equation: our hyper-global, and hyper-problematic consumption.

Despite some measurement, governments talk much less about the radical changes to our consumption habits needed to secure a liveable future. The unsustainability of consumption is not unrelated to the remoteness of the consumer from where the goods are produced. We never see the emissions created as flowers are flown from Kenya to our local petrol station, just-in-time for 8pm on your anniversary. I have literally no idea which server is streaming my Netflix-Disney+-AppleTV-Paramount film at any given time, let alone how its powered, or whether any children were harmed in the production of the phone I’m watching on). And we pay almost none of the (horrific) environmental costs of all the food we eat. All a bit depressing I know. Think I need a few days in Ibiza to recover.

This, then is perhaps another emergency we can’t afford to waste? Wales has done really quite badly from the existing system of global capitalism. Surely a new, more sustainable system would be naturally (sic) more local, helping keep prosperity in Wales and wellbeing high?

Well, maybe. And maybe not.

The first point to make is that Wales is, really, a very unlocalised economy right now, for almost all our big purchases: Food, financial services, energy are just some of the biggest, most leaky examples. To switch these to regional supply to any meaningful extent not only requires a geographical transition but also a product transition, on both sides: for example, in both what we eat and what we grow. And the elephant in the room is that once we bring this stuff closer to home, it’s more costly – firstly because we lose out on all the cheap land and cheap labour and cheap energy that currently underpins our imports, and secondly because there’s only any point in doing this if we incorporate the costs of ‘externalities’ in production.

Escaping our history

I look to the future, it makes me cry (well not really, I couldn’t resist it). More seriously, this is… quite a difficult ask in a country where a fifth of children are already living in absolute poverty and where the public sector is currently undergoing decimation-by-Barnett. It is hard therefore to see how any substantive transformation towards locality could happen without significant income redistribution, a completely different regulatory and tax approach, and deep behaviour change on the part of consumers. That’s going to look great on the side of a 2026 election campaign bus.

In the absence of these frankly unlikely things, maybe we are left with just playing the existing game a bit better, taking small wins where we can, and hoping that this translates to a slightly less crap outcome. But remember, crises aren’t often obvious until they arrive. A decade ago, when I was writing about peak oil and feeling especially hopeless (but had more hair), I would be asked what would get the fossil-fuel addicted Welsh economy ‘off oil’ – given the same social and political constraints we face now…

My answer back then would be ‘the fall of the Saudi government and its replacement by an Al-Qaeda junta that turned off the taps’. That never happened, and Wales remains resolutely carbonised. But the point is not lost. Any one of a number of tipping points – ecological, climate, geopolitical or financial – could significantly reduce our ability to draw resources from across the globe. The signs are already there. Bankruptcy happens gradually, and then suddenly. Economic transformation and a higher reliance on our own resources is, I believe not a choice. Our choice is whether it is careful or chaotic. Just, or just exploitative. A more local, self-sufficient, resilient and fair Wales can and should be imagined – indeed, our Future Generations Act demands it. The good thing is that imagination costs nothing.

https://afallen.cymru/2024/06/13/must-everything-go-the-prospects-for-economic-re-localisation-in-wales/

#CalvinJones #Cymru #Economics #Prosperity #Taxation #Wales