During 1980 a small group was formed to act under the aegis of Michael Grylls, MP, who was then the Chairman of the back bench Industry Committee in the House of Commons.
The Grylls group consisted of:
– Michael Grylls, MP
• Bill Poeton, Chairman of the Union of Independent Companies
• Barry Baldwin, partner in Price Waterhouse
• and myself
The group was chaired at key times by Lord King, who led the discussions (for example) when we met on two occasions at 11 Downing Street to discuss these issues with Nigel Lawson and with Geoffrey Howe and their Treasury teams.
On budget day 1982 I had been led to believe that the Grylls Group proposals were likely to be accepted and I was waiting with Will Hutton in a BBC interview room and hoping that the Thatcher Government would implement the recommendations of the Grylls Report.
As a member of the Grylls Group, I thought we were going to succeed in our objectives of helping to begin to reverse UK economic decline by making modest but significant changes to the British banking system. My colleagues shared that enthusiasm but were perhaps more measured about the prospects of our success.
I remember I was in the television studios as Sir Geoffrey Howe rose to speak in his Budget Day speech of 9 March 1982.
I was ready to comment on that speech, if the Grylls Group proposals were mentioned. These proposals were only mentioned by the Chancellor in order to be disregarded. Sir Geoffrey said that the government “were not persuaded that they [ie the proposals] offer the best solutions to the problems they are designed to solve.” Sir Geoffrey also said there were other ways that these issues could be addressed, but the fact is that no other ways seem to exist.
This book, which deals with the history of the economic bomb, was published on 17 December 2014 at: http://www.lulu.com/shop/george-tait-edwards/lucky-bastards-of-the-20th-century/paperback/product-21913362.html. It was first written in 1993, and largely focuses upon the events from 1972 to 1990. I want to tell you what it’s about, so this brief article gives you the cover summary and the Prologue.
Here’s the cover summary of what it’s all about:
“This book sets out the creation and spread of the new economic technology of explosive economic development from its beginnings in Frank Delano Roosevelt’s USA from 1938-1944 and its subsequent adoption by Japan from 1946-1985 and its spread to the China sea economies of South Korea, Taiwan and China. The book also covers the reaction of British politicians, businessmen and bankers to this new development and the circumstances around the adoption of the neoclassical economics which is resulting in the continual relative failure of the Western economies. This book sets out a more useful economics which is currently being practiced by all of the China Sea economies.”
That new macroeconomic technology is of course Shimomuran economics.
And here’s the Prologue:
“The time has now come for the economists, also, to know sin, for this is the story of the economic bomb. There has been a new force loose on the earth, and it is just as well we should now try to understand it. This is the story of the development and spread of the new knowledge of how to make an economy grow with explosive force.
This is the story of how I found out how the economic bomb was made, and how I tried to interest British politicians, industrialists, businessmen, economists, journalists and bankers in these findings. And this is the story of what happened then, what is happening now, and what is likely to happen next.
This is a Heisenberg story, for I can either tell you who I met, or what they said, but not both in a linked sequence. I wrote four books on economics”Š-“Štwo with the economist John Carrington and two on my own. I co-authored, with the late, great Lord Lever, articles on financing industry in the central pages of the Sunday Times from November 1980. I met many politicians. For example, I (and others) met Nigel Lawson (now Lord Lawson of Blaby) and Sir Geoffrey Howe (now Lord Howe of Aberavon) when each of these men were Chancellors of the Exchequer in 11 Downing Street. On these occasions I was working with industrialists lobbying Downing Street and parliament. Much of what was said to me”Š-“Šperhaps most of what was said to me”Š-“Šwas said in confidence, in the natural expectation that I would not report private conversations by quoting the speakers. But I want you to understand why Britain’s economy is failing, so I will tell you my edited recollection of what was said, and sometimes who I met, but not usually who said what.
The economic bomb was first exploded in the United States of America during the second world war. During six brief years -from 1938 to 1944″Š-“ŠAmerican industrial output grew on average at over 20 percent a year. The next economic explosion happened in Japan, where industrial output exploded at over 20 percent a year throughout the 1950s and 1960s. Then Japan’s neighbours”Š-“Šthe so-called Asian tigers of South Korea, Taiwan, and Hong Kong”Š-“Šlearned how to grow explosively during the 1960s and 1970s. Then, during the mid 1970s, China learned!
The new knowledge of how to make an economy grow with explosive force is not only a new understanding but also a new and transferable financial-industrial technology.
It began with American know-how, with the politicians and economists of the USA knowing how to arrange matters in their financial-industrial system to produce the goods to win the war. The technology of how to create an economic explosion was never made an American state secret, in the way the atomic technology was.
In my view the Japanese (particularly Dr Osamu Shimomura) studied how the USA had done this new thing, and copied that process, creating a continuous economic explosion in Japan from 1946 onwards. Japan’s near neighbours”Š-“ŠKorea first, then Taiwan, and Hong Kong”Š-“Šlearned from the Japanese. China under Deng also learned from the Japanese example.
About twenty percent of the human race lives in China, in an economy which is growing at over 10% a year, as it has been since the early 1980s. Thatcher said she would reverse Britain’s economic decline and she did not; Deng promised he would begin the process of ensuring China’s economic ascendancy, and he did. These events condition our present and may determine our future.
The oldest culture on the planet”Š-“Šneo-capitalist post-Mao imperial China”Š-“Šis about to collide with Egypto-Graeco-Romano-Western Christendom. There is no sign as yet of a productive outcome of that collision. It may be the business of the future to be dangerous, but that danger may be lessened if more people understand the position. Or so I hope.
More than a quarter of the human race are now in economies where a continuous economic explosion is regarded as normal. The next century will see growth rates soar all over the world, as this new method of economic acceleration spreads further. The secrets of the economic bomb are spreading as industrialisation once did, from the demonstration country (in this case Japan) to its neighbours and to their neighbours. The next countries which may be in line for an economic explosion seem to be Malaysia and Indonesia. Beyond that, I believe the USA may again grow very rapidly.
One key message of this book is that the Asian economies are using a superior understanding of economics to produce very high rates of growth.
Industrialisation spread from Britain in all directions, first to the USA and to all the British colonies, then to the nations of mainland Europe. At first, industrialisation looked as if it was an English-speaking phenomenon, in much the same way as this new knowledge of how to create an economic explosion now appears to be an Asian phenomenon. Yet the first economic explosion was in wartime America, which may grow rapidly again because it only needs to remember rather than learn.
When the first hydrogen bomb was exploded, Edward Teller was asked if the technology could be kept secret. He replied “What nature tells one man, she tells all men in time.” The same is true of the technology of an economic explosion.
This new knowledge will not banish poverty, but it will create a greater amount of prosperity over more of the globe. More people in more countries will have better living and working conditions and more secure living standards. The last ten years [prior to 1993] have seen the greatest average increase in living standards ever, largely due to the high economic growth of China (at about 10% per capita pa) and the moderate economic growth of India (at about 3% per capita pa). The first great world-wide industrial revolution is gathering speed, with several of the Asian economies growing at high rates compared to their historical growth trends.
By the middle of the 21st century, half the population of the world will be in high-growth economies; by the end of the next century, perhaps three-quarters of the world’s population will be similarly blessed. These proportions may be revised, but the trend is already well established.
As always in history, there is no end to history. Everything is still developing, the work of the world unfolding in patterns which, when considered afresh, are new and surprising in every moment.
The British economy is  still, according to official exchange rates, the sixth largest economy in the world, and is smaller than the economy of the USA, Japan, Germany, France and Italy. If the size of the Chinese economy is revalued to reflect the real purchasing power of its people, China would become the third largest economy and Britain would fall one place to the seventh largest economy.
Britain could still renew itself through this new economic understanding. Its people could become more prosperous much faster. Trillions of pounds are at stake.
The economy of the United States of America has been losing ground for decades to the economies around the Sea of China. That need not continue to happen. Trillions of dollars are at stake. Economic understanding may be the most valuable understanding available.
The Anglo-Saxon economies in general”Š-“Šnot only the UK and USA but also Australia, Canada, and New Zealand, and those ex-colonial economies which have inherited the Anglo-Saxon tradition of clearing banks remote from industry”Š-“Šare all growth laggards. That need not continue.
The underdeveloped economies of the developing world could emulate China’s example, growing rapidly from a position of great underdevelopment into highly developed economies within a couple of generations. Of course, some countries may lack the culture or commitment to produce that result.
If there is a lack of understanding of what is possible, then sights may be set too low. The attempt to increase the rate of a country’s economic development may not always be crowned with success, but a lack of effort and economic understanding is certain to result in continuing economic inadequacy. Trying may not succeed, but nothing fails with more certainty than the absence of effort.
The matter of prosperity is the most important issue facing the politicians and the people of the world today. All of our futures and our children’s futures hang from this nail.
There may not be much choice for the politicians of any country in considering whether to grow rapidly or not. Nearly all people wish rapid economic growth, because they naturally wish to become richer faster. In most revolutions, the devil will take the hindmost. This new technology for creating an economic explosion is no exception.
This is the prologue to the rest of history. The power of nations for good or evil is determined by their economic strength, which is in turn dependent on their level of economic understanding.
The new economic imperative is identical to Britain’s challenge to other nations when industrialisation was invented:
‘Understand this new technology”Š-“Šor be dominated by these who do!’
I can hardly wait to see which choices will be made, as the future explodes towards us.”
The currently available copy of this book is a first edition. I will update and correct it where necessary and as soon as possible. Minor changes have been made to this prologue.”
Happy reading and the compliments of the season to all my readers.
© George Tait Edwards 2016
Note: Another book with is relevant to this issue is “Shimomuran Economics” at: http://www.lulu.com/shop/george-tait-edwards/shimomuran-economics/paperback/product-21688864.html This book, “Lucky Bastards of the 20th Century- The Story of the Economic Bomb” can be found at: http://www.lulu.com/shop/george-tait-edwards/lucky-bastards-of-the-20th-century/paperback/product-21913362.htmlTags: Domestic (UK)
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This post was written by George Tait Edwards