We have long thought about “Industrial Strategy”, and whether or not it was the correct way forward in an environment where liberalisation has time and time again showed innovative and competitive advantages are normally best left to the firms pursuing them.
Arguably, however, we are at a tipping point… Philosophers and political scientists have for decades argued about the nature of change, and the consensus is that change itself has accelerated… This is why now perhaps revisiting industrial strategy may well be the smart move.
Let us start with possibly a less intuitive position: I am not particularly in favor of electric vehicles. I believe that they are a transition technology, and little more… Not noted for his economics’ or political science credentials, the comedian Rowan Atkinson, recently pointed out in a series of articles, how simply using our existing car stock for longer is almost certainly more environmentally friendly than the intensive resource depletion of rare earth metals, in the production of millions of new car batteries… And this is not to mention the rest of the materials that go into the making of a car… Not least the fact that these batteries themselves have a life expectation of 10 years, and therefore represent built-in obsolescence.
Rather, and perhaps we may expand on these in a series of articles to come, now is the time to consider consistent, rigorous and stable Government supported policies to promote incentives in capital development in areas of applied AI. At MBC I personally would argue a focus for support on the next iteration of generative AI, and its potential productivity gains across the services sector. Secondly, quantum computing, which is in its infancy and whose potential has been discussed for years – yet it remains in a form of ‘investment nursery’. The UK is a world leader in life sciences, so arguably matching quantum computing to the development of necessary and new antibiotics in humanities fight against antibiotic resistance, would be a phenomenal application of a targeted industrial strategy.
And last in this immediate tranche of sectors ripe for strategic support, the greatest of all: our climate crisis. The fracturing of European wide academic and scientific relations, post Brexit, needs to be resolved with a sense of urgency. This is quite simply a future bet we cannot get wrong, which requires international cooperation. Again the UK has a reputation for excellence in the geophysical sciences, and areas such as carbon sequestration need to be scaled up and made viable – and implementable – not least in the developing world, as it seeks to leapfrog up the value chain. Yes, renewable energy is the way forward, yet there are many countries in emerging markets still building more traditional power generation, than renewable.
As we can see at a time of monetary tightening and institutional interest rate rises, there is little spare to fund Government largesse… But that is not what is needed – rather simple, clear, consistent and robust tax and investment incentive strategies to help enhance our already existing competitive advantage in these areas. I for one feel the productive gains that are possible from AI could represent a developmental step change… Ushering in all kinds of societal responses, including the possibility of a universal basic income for those workers displaced. In order to ride this wave, not least to possibly help direct it, we need to be sitting on its crest.
MERCIAR BUSINESS CONSULTING 