In yesterday's comments, Dreamingspire asked a question that's currently on many minds - given our krunched economy, where on earth will all the new jobs come from?
Unfortunately, the honest answer is that we have no idea. We will only know once they have arrived.
All we can say - as Dreaming himself said - is that the sharp fall in sterling should be good for jobs in export and import competing industries (just like it was during the thirties).
It's interesting to look back at how we got out of the last hole Labour left us in.
At the end of the 70s, we were the sick man of Europe, and the jobs outlook was grim. Callaghan's beleaguered government latched onto the new technology of microchips, betting that we could become world leaders and generate millions of new jobs. He poured hundreds of millions into a raft of companies which would become the winners of the future - Inmos, ICL, Cambridge Instruments, NEXOS all got our cash.
Yet none became the world beaters we were promised, and none provided the jobs the country needed (see this blog).
Despite that, over the next thirty years, our economy somehow managed to generate nearly 6 million additional jobs. And that was despite an eye-watering 4 million slump in manufacturing jobs.
Well, jobs in health, education, and public administration increased by over 2 million. But even more important, jobs in finance increased by a whopping 4 million. And unlike the public sector jobs, they didn't have to be funded by taxpayers.
Here's the complete picture (click on image to enlarge):
So can we look forward to a similar miracle of deliverance over the next thirty years?
Tyler is optimistic. He believes that despite the current problems, the markets will find a way.
But there are a couple of necessary conditions.
First, however tempting, the government should not try to "pick winners" like Callaghan did. All that will do is to burn even more of our money.
Second, the government should bust a gut to reduce taxes, especially corporate taxes, and to deregulate - just like you know who did during the 80s.
This is the only way we know to stimulate sustainable growth and employment.