United Kingdom: Causes of Economic Failure
Written by Rocky John M. Tayaban on 05:51
Before the end of World War II, United Kingdom is on top of every other country in terms of economy and military might. United States of America was just then a flourishing economy, which to date is the world's most powerful country. At present, if you try to review statistical data regarding economic status, military ranking etc., United Kingdom is lagging behind Japan and Germany, countries that were both torn by the Second World War but have managed to out beat UK in as short as four decades.
What happened to United Kingdom's performance? This has been the topic of my research and today, I wish to summarise my findings and let other people know through my blog.
United Kingdom, for the record, has established the largest empire throughout the course of history. Not even Kublai Khan or Alexander the great can match the territory that UK has once conquered. United Kingdom's colonial and imperial power can be felt to at least one country in every known continent. Due to the vast territory that UK has conquered, UK managed to exploit these countries' resources for their own benefit. India for example has been the source of gems and minerals for United Kingdom. Aside from enslaving African people and treating them like commodities (Slaves were commonly traded in UK before), African people suffered tremendously from UK's harsh economic, social (Apartheid system) and political policies towards their colonies. China wasn't excused from the abusive power of UK at that time. The British government started trading with Chinese people, particularly in southern China (Guangdong Province), before the Great War (WWI) commenced. After several incidences of corruption by the British officials, the Chinese Empire thought that trade relations between UK and China is bound to favour UK alone, so as a reaction, China announced its withdrawal from the trade agreement. In response, UK waged a belligerent move known as the Opium war aimed at threatening China if the trading relationship is not restored. Apparently, the British government is earning so much money from selling opium to the Chinese people and the end of the trade agreement will definitely result to tremendous losses on their part. To put an end to the Opium war, Hong Kong was handed down to UK for a period of time to serve as a colony. This move was intended to secure China from not being further invaded by UK. UK stopped the the war but its illicit opium trade continued using Hong Kong as the gateway to mainland market.
Indeed, UK was then invincible. UK was the superpower in all aspects of society. UK was at the pedestal. However, there were mistakes that UK wasn't able to manage well. From the Great War to the Second World War, UK invested so much of their resources to secure peace and order within the region… within the world. Out of their efforts and sacrifices to secure world peace and order resulted to compromising their own economy. UK's budget was dominated by funding allocated to finance the on-going-war. The worsening economic condition of UK was further aggravated by the surfacing of a great number of people from their colonies demanding for their independence. This will undeniably translate to UK's economic paralysis. It was inevitable however that UK's colony should be reduced in order to conform to the global trend and global demand for freedom.
Gradually, United Kingdom lost grip of its resources. UK was left with its own land to cultivate and to extract resources from, which apparently is barren. In short, UK is a country with dearth resources and only became wealthy out of the resources they extracted from their colonies. After granting independence to most of its colonies, where will UK get its resources to continue its businesses and to finance its operations? The answer is obvious, UK was compelled to let go of its major industries. What’s worse? UK went bankrupt and even requested for financial aid just after WWII to initiate reconstruction of its war affected country. Furthermore, UK is confronted with a huge debt from the United States of America for the Marshall Plan, a reconstructing project instituted by USA (Gen. George Marshall) aimed at rebuilding war torn Europe right after the Second World War. With a balance of payment containing enormous trade deficit, it was expected that UK’s economy is about to turn sluggish/lethargic... until eventually, UK gave way for USA, Japan and Germany.
Recently, United Kingdom is ranked 21st in the world in terms of population with 60.27 million people residing there in mid 2006. According to data obtained from UNDP HD Indicators, national growth rate in UK during the 1975-2002 was 0.3%. This was much lower than the high-income countries' growth of 0.6 %.
A member of OECD, UK has the fourth largest economy in the world, with Gross National income of $ 1680.6 billions (2003). In terms of purchasing power parity, Per capita GNI in 2003 was US $ 27,460. Average annual growth rate of GDP was 2.2 % during 2003. If we look at the expenditure method for calculating national income in UK, we find that almost 70% of GDP in the UK is accounted for by private consumption. Among the other indicators of economy, the level of inflation as measured by Consumer price index was 1.6% in Dec 2005. All of which mentioned proving UK's continuing deterioration.
Out of my research, I came up with a hypothesis which is most likely to occur. That is the gradual economic weakening of USA and the emergence of China as the next superpower. It will take a century at most for this to materialise.
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16 comments: Responses to “ United Kingdom: Causes of Economic Failure ”
By Anonymous on 25 February 2007 05:10
You're bloody right about it mate! But you forgot that UK's been busy with football too.
By Anonymous on 25 February 2007 05:12
How come you know about this stuff? I think UK is the 2nd best performing economy.
By Mojo on 25 February 2007 12:09
Well, this guy contends that economic status is what makes you a super power and I disagree with this. USSR had never been an economic powerhouse, but was still a superpower for half a century. I buy into the philosophy that any country who has a dominiate Navy is a superpower. These countries have the ability to control the seas and therefor can control commerce and can bring war to hostile nations instead of fighting wars at home.
If you look at the colonial empires throughout history the first thing you see is that these contries had superior navies. This is just an opinion which can be wrong though.
By Henry on 25 February 2007 12:09
It places too much emphasis on natural resources. In economics, what is important is not who controls resources, but how cheaply they can get hold of them. All countries could buy natural resources from the british empire at the same price that Britain bought them, so the empire was not very important in terms of natural resources.
More important than resources, i.e. who you could buy things from, was markets, i.e. who you could sell things to. Particularity during the 1930s, when the world split into competing trade blocks.
The empire gave Britain a market it could sell things to, and which could not raise tariffs against it, during a time of economic protectionism.
However, the USA had already overtaken Britain in terms of industry and technology in the years leading up to the 1st world war. This is very visible in the 1930s when cars became very common in the USA, whilst Britain had to wait for the 1960s for cars to become as common in Britain.
Britain did badly in the 1st half of the 20th Century because its economy was stuck in old, outdated industries like cotton textiles, using out dated machinery from the industrial revolution. It was the first industrial country, but its early advantages did not last, so today Britain has a fairly ordinary economy compared with other industrialised countries.
By Fishball on 25 February 2007 12:10
The nation with the MOST POWERFUL fleet of AIRCRAFT CARRIERS rules the world. And we all know which country is that... Lesotho (just kidding).
Aircraft carriers project air power great distances without having to depend on local bases for land-based aircraft.
The US navy treat aircraft carriers as the capital ship of the fleet, a role previously played by the battleship - no longer. Superior range, flexibility and effectiveness of carrier-launched aircraft keep the US as the most powerful nation on earth. Economically it still is despite the current doom-&-gloom domestically. (Why does the economies of the rest of the world suffer when the US go into a slump?)
The UK was one of the most powerful countries, certainly not "the most powerful" economically, or otherwise.
By Rocky John M. Tayaban on 25 February 2007 12:17
Anonymour 2:
UK is not the 2nd best performing economy.
Mojo and Henry:
Have you forgotten that USSR was producing tremendous amount of OIL. Surely, USSR was an economic superpower. Economic standing determines your over-all rank in the world. The most powerful countries in the world are economically stable. Military might is an insufficient gauge of power. USA became powerful in military because they first became economically successful.
By Lorne on 26 February 2007 05:31
It is an interesting article but whilst it tackles a lot of the issues in the relative decline of Britain as a World power it has an obvious agenda that is determined to portray Britain in a certain way.
For instance the subject of Slavery - it seems to be saying the British invented this. This is not the case. Slavery was an African institution before any European traders ventured there. The fact of the matter was the Africans enslaved the Africans - then traded their slaves on the coast to the Europeans.
In fact it should be remembered that Britain was the first country to make this illegal and what is more it used the Royal Navy to enforce this.
The British Empire was primarily a Trading Empire - it has got to be remembered that Britain's 'conquest' of India was originally conquest by Trading Company - the East India Company which was then taken over by the British state.
I think what really finished it for the British Empire which is not the same as Britain itself was the Second World War - at the end of it Britain had the highest external debt in history some £800 million which we paid off just last year.
It was also the fact that places like India had suffered so much during the war they felt they deserved the right to govern themselves. It was also a legacy in places like India of the measures the British took to protect themselves. In 1944 there was a rising in India which was bloodily put down - this was a result of the destruction of the infrastructure of India which was destroyed to stop the Japanese getting a foothold there. It also caused a famine that killed at least 3 million Indians.
India was the jewel in the crown and also the keystone of the British Empire. The rest of the Empire was untenable without it.
On the whole though this was an interesting article which was well researched - it made some huge leaps in time and space though.
By thestrand_@hotmail.com on 26 February 2007 05:35
I'm British.
The author of this blog does not make a lot of sense. He jumps from
some well known facts about the size and scale of the old British
empire to the modern UK (a small island off the coast of Europe) and
concludes one day China will be a superpower. The facts and figures
which he quotes on the UK economy are wrong (I think) and in terms of
the per capita (per person) wealth of the UK it is close, if not
superior, to that of Germany. The UK has a smaller economy than
Germany largely because Germany has a larger population - 80m
compared to our own 60m. And the German economy is much less dynamic
than ours with very high unemployment (over 10% compared to 5% in the
UK). Japan has over 100 million people and higher per capita income
than the UK but I would still prefer to live in the UK in terms of
space, quality of life and so on. Overall the UK is the 4th largest
economy in the world with 60 million people - this is quite an
achievement.
I can't comment on China's future as a superpower. Maybe / maybe
not. But I can comment on the rise and fall of the British Empire.
In keeping with other world empires, it rose and fell. Arguably the
UK passed on its legacy as a world power to the United States, a
country which has grown from the loins of my own country and even now
in its language, legal system, political system and foreign policy is
closely alligned to my nation. The UK is not unique in this respect,
but unusual, in that the country has managed to move from being a
global empire to being a small country while remaining wealthy and
closely aligned to the new global power with whom we share a common
language, shared culture and so on.
My little island shaped the modern world in thousands of ways of
which you may be unaware - from technical inventions such as the
telephone, the television, the personal computer and so on, to
popularising ideas about personal freedom and democracy, to banning
slavery across the Empire (the first country to do so), to
popularising leisure activities such as seaside resorts, sunbathing,
football, golf, rugby and so on…
I'm very proud of my little island because of its profound impact on
the modern world.
By mud P on 26 February 2007 15:08
England is a total failure true
By britsaregreat on 26 February 2007 15:09
The UK's failure to keep the British Empire boiled down to a couple of main factors:
1) Money it costs to run an empire with ever increasing infrasture investment costs and decreasing resource production
2) National Indentity in colonies. Nations such as India and Kenya developing a sense of national identity and subsequently declaring independence.
The author's point is not made in my opinion or it's made in a confusing way.
The very fact that the UK has not only survived a loss of it's colonies but has remained number 6 in terms of global economy, has a reasonable inflation rate, has one of the strongest global currencies and is vested in almost every emerging economy in the world is a testament to our ability to weather any storm.
By Timo_10 on 26 February 2007 15:10
Great Britian is a failure.
Empire - lost
Jobs - gone
Queen - still have one
Prime Minister - good man
By Anonymous on 26 February 2007 15:11
Shoddy argument based on half truths. You moron asian monkey!
By Rocky John M. Tayaban on 26 February 2007 15:17
For the anonymous who posted a comment about my shoddy argument and called me a moronic asian monkey:
I don't mean to destroy UK's image. If you want a thorough sample of my research, I'll send you. In that way, you'll know that my claims aren't baseless. The fact is, I love UK. I'm studying in Durham University.
By Lord Bloodhound on 01 March 2007 03:13
What were you thinking? China is a bloody 'munist... I sure trade my soul before they become the worldsuperpower.
By Anonymous on 01 March 2007 03:14
hooray.
By TheChessG... on 03 March 2007 07:46
He is correct on that part. Look at America today, were spending more going out of the country than in. The result, our entire society is deteriorating. Our schools, our churches, our neighborhoods, bridges, roads, airlines, trains, cities and towns is all falling apart. No money for American needs, sorry pal we have to help them poor other worlds people, because we are a generous nation, except when it comes to our own people. In fact their debating on how to legalize 14 million illegal aliens so we can take care of them. Why? Cause their cheap labor for the rich ruling corporations that run America today. The voice of the people will not be heard, only money speaks in America today. Money is corruption in the hands of politicians.