The New Working Class by Claire Ainsley is unashamedly wonkish in nature. Ainsley comes from the left of the political establishment. She is an executive director of the Joseph Rowntree Foundation. She had previously worked for Unite and as a government advisor.
Ainsley posits that the Labour Party is out of touch of who the working class are and what they care about. Deindustrialisaton and immigration has changed the nature of what working class means. They might have lower middle class incomes working in the services sector. Traditional blue collar roles declined to represent about 14 percent of the British population.
Ainsley’s The New Working Class is a testimony to how out of touch policy makers and advisers with the society that they claim to represent. This also makes wonder about the usefulness, and or, the attention paid to polling and research done by political parties in the UK. The Conservatives understanding of hard-working families shows at least some understanding at a high level of who the new working class are.
What struck me about the book is that much of the ‘new’ working class isn’t actually that new at all. The struggle to make ends meet is one that Orwell would have recognised the best part of a century earlier. The challenge of unemployment is one that haunted much of the 1970s and 1980s.
Family is still important and while society is secular, working class communities have been more socially conservative. That doesn’t mean that they hate gays or immigrants, they take a common sense approach to fairness but they will be concerned about family. The rate of change in society and the desire for working opportunities has been more of a driver over immigration than outright racism back to the rise of Enoch Powell.
I had thought I would gain new consumer insights in the same way that I have had in the past, reading books by like likes of American pollster Mark Penn, but this wasn’t the case with Ms Ainsley’s book. Ms Ainsley has clearly written for a different audience. Instead of the ‘new new’ insight, her work is a 101 guide for politicos to the society that the profess to live in and represent. That scared the hell out of me. More on the book here. You can find more book reviews here.
In Deep Geek through his Middle Earth playlist goes in depth into the world that JRR Tolkien built around The Hobbit and The Lord of The Rings. Christopher Tolkien added to the world through his work compiling and editing his father’s manuscripts. Keeping track of it all is a huge undertaking and Tolkien fans often disagree over nuances. Hence, the Middle Earth playlist acts as a sort of audio CliffsNotes analogue to all things Tolkien-related.
Ahascragh races
The Ahascragh of my memories is a one-road town with a petrol station slash local garage and tractor repair workshop, pub and one or two general stores. It was the local market town closest to the farm where my Dad grew up in Galway. By comparison it barely merits the name of town compared to the local urban centre Ballinasloe. This TV news section is from 1977. This seems to be encouraging child jockeys and raising money for the local GAA club.
Big Trouble In Little China
Big Trouble In Little China has a number of problematic aspects to it, but is saved by its efforts to honour the Chinese and Hong Kong cinema that went on before. It’s one of my guilty pleasures as I am a big John Carpenter fan.
Cadbury Lunch bars
Cadbury South Africa promoted their Lunch Bar using a character called Tumi who is the ultimate side hustler.
According to Dan Parmenter who was the creative director on the project
So, we created the story of Tumi, a streetwise hustler who has a couple of different vocations and even owns his own small business. His streetwise nature means that even though he’s managed to snag a part as an extra in a war film, he’s still not shy of a bit of his own shameless self-promotion.
Using StableDiffusion algorithm to create a video that explore our past, present and future. It has a charm to it that reminds me of old stop motion animation.
Alan Dulles
Alan Dulles talks about the role of intelligence and regime change in foreign states in this old film. It is interesting that the film starts off with a modern Soviet tank that the CIA managed to acquire through theft. Dulles was the head of the CIA during the early cold war. He was responsible for coups in Iran and Guatemala. His career finished with the Bay of Pigs.
What now for the working class? Following president Trump’s election and the British plebiscite on European Union membership there has been lots of hand wringing about workers who traditionally participated in legacy industries being outside society. Here is what we have to deal with:
The ‘traditional’ jobs aren’t coming back
Middle-class roles are already being disrupted
There is a declining return on investment in further education, yet lifelong learning is a compulsory requirement
Globalisation is working at an aggregate level, but isn’t working at a local level
Western society has fractured. It will become more fractious once the realisation takes hold that:
It can’t be resolved by simple measures, populists might listen – but can’t solve anything. Jobs are governed by a multiple factors that affect both cost and demand considerations
It can’t be solved in a relatively short time frame. You can’t build the necessary eco-system and supporting industries to bring the jobs back; even if the economics made sense
Governments don’t have their hands on the levers of control, the best governments can do is actively manage decline. Technological disruption puts the levers of control with a smaller group of people
There is a lack of willingness by those with the money and the power to solve it – primarily due to the pressures that drive their behaviour
Existing social welfare safety nets aren’t sustainable
The realisation that populism doesn’t deliver is likely to cause a further visible outburst of anger. Which should be good news for the private security industry. This could result in civil or international conflict. It has already happened. Factors that contributed to the Arab spring and the Syrian civil war included a large under-employed population living in stagnant economic conditions with no hope in sight. This probably sounds familiar.
I am ruling out some sort of positive ‘black swan’ event which changes the game completely and provides meaningful work with great wages across societal boundaries. If I could reliably predict these, I would be writing this from my private Airbus A380.
Instead I can see four broad categories of outcomes, all of which are ugly:
Carry on – carrying on isn’t likely to be sustainable as societal pressures go to breaking point
Managed decline – from a rational point-of-view the most ‘possible’ solution. Unpalatable from a voter perspective. It begs the question at what point would the UK economy bottom out? Managed decline makes the most sense as an interim measure whilst a country works out what its new place in the world is and charts a path towards it based on careful strategic investments with limited capital
Massive investment – presents a number of challenges that make it nearly impossible for western countries. It would require a long term view – unlikely without consensus driven politics with a high level of comity, huge access to credit – again unlikely with highly indebted economy and a slowly declining credit rating like the UK. Would take too long to satisfy angry voters
Massive disruption – the dice is thrown in the air as society tears itself apart and the strong gain control – think China’s Cultural Revolution. Wages and worker rights may drop to make them more cost competitive for low skilled manufacturing allowing for an employed but disgruntled workforce. Power is unlikely to shift too much, the corresponding upheaval in population numbers may provide some supply side pressure on wages when its all over. In all likelihood, it would just reduce pressure for change, increased willingness to work together on a longer term solution, but not provide much medium term economic benefit
Disruption
Here is a chart of numerous successful business, some of them are over a century old. AT&T and Verizon can trace their history back to 1877 and the Bell Telephone Company set up by Alexander Graham Bell’s father-in-law. General Electric goes back to work by Thomas Edison in 1880. These companies took from 117 – 137 years to become $200 billion businesses. Facebook took ten years requiring only 3% of the people AT&T needed.
It would be reasonable to assume that the future is going to create less jobs with given investments rather than more.
Company
#Employees
Year its market capitalisation became US$200 billion
Facebook
9,199
2014
Microsoft
27,000
1998
Apple
46,600
2010
Alphabet (Google)
46,600
2012
Amazon
165,000
2015
Verizon
176,800
2014
General Electric
239,000
1997
AT&T
302,000
2007
So large private enterprises will:
Employ less people which means less ancillary demand for services in the locale. Less restaurants, shops, artisanal coffee shops, micro breweries, nail bars, car valets, hotels and hair salons
Employ even less unskilled people – what unskilled labour is required will be employed on a flexible basis. Their roles will be competing on ‘total price’ with a global workforce and robotics
This hypothesis is supported by data from the MIT Technology review which showed that modern US manufacturing managed to increase productivity by 250% whilst reducing staff numbers by over 40%.
Win-Win to Winner Takes All
Technological progress and globalisation has resulted in a decline in the middle class in western countries. Pew Research claims that the US middle class declined from 61 per cent of the population in 1970 to 50 per cent by 2015.
Corresponding average ‘real wages’ for US ‘good producing’ workers peaked by the mid-1970s and have been broadly stagnant since. A pattern mirrored in other developed economies. Hong Kong saw a similar peak from 1967 riots through to the early 1990s until factories moved across the border.
Manufacturing productivity had grown steadily over that time. You can argue over the data points but the overall trend seems to hold true.
Owners of capital have enjoyed increased returns versus the providers of labour. Knowledge work, a key part of middle class roles could be easier to export than production lines. A classic example is the bank back office roles that have been exported to India.
Supply chain
At the moment UK manufacturing jobs operate as part of a complex supply chain that primarily addresses the European Union as a market. The supply chain is built around a number of factors:
The value of the product
The weight of the product
The volume of the product
The cost of shipping versus the cost of production
How well the product travels
Distribution of product demand
Proximity to suppliers
Proximity to talent
This is why companies may package a product in one country and manufacturer in others. Washing powder is a classic example of this. Chocolate travels well, so Cadbury could move production lines of internationally popular products to Poland. There is a greater incentive to move low skilled work out of areas that aren’t geographically central to a given supply chain. European freedom of movement may have kept jobs in the UK by allowing low and semi-skilled workers to move rather than the factories. This would be of little consolation to UK workers, but would benefit UK tax coffers.
This complex formula is the reason why jobs move in and out of the UK.
Cutting the UK out of this supply chain with a hard Brexit ensures that suppliers have to make complex choices. BMW will probably be wondering what UK presence it needs to maintain in order to keep the Mini brand values. It may decide its easier to evolve the quirky Britishness out of the brand over time and just keep it quirky. The Audi TT hasn’t been harmed by actually being assembled in Hungary.
The majority of components in the supply chain for the Mini production line is based in Germany.
A post-Brexit UK could be in the position of importing more rather than less products once companies take into account the bigger picture of the supply chains and the EU single market. This will lead to a net loss of working class livelihoods.
Role of eco-systems
Richard Florida is a Canadian professor who has spent much of his time looking at urban studies from the perspective of prosperity. He is known for is work around the creative class and urban regeneration (or gentrification). His work is controversial. One key concept he has of relevance to working-class communities is one of ‘clusters’ where eco-systems exist. When you apply it to traditional working class industries one can see how the jobs aren’t just going to come back. The UK has a series of traditional clusters that are in overall decline, this is best illustrated by the state of chemical, oil refinery and coal sectors which underpin a wide range of manufacturing industries.
Where new clusters spring up (Silicon Roundabout and the FinTech businesses within the Square Mile) they create employment that much of the UK population is ill-equipped to fulfil.
Let’s look in greater depth at traditional manufacturing industries that have provided the working class with good playing jobs.
Factories build on suppliers, who build on raw materials processors, who build on utilities and extractive industries. Take for example industrial revolution era Stoke-on-Trent which was close to high quality clay pits and coal that could be cheaply shipped in from mines in Lancashire or South Yorkshire. All of which required semi-skilled and unskilled jobs that gave the working class their livelihoods.
Unfortunately for Stoke-on-Trent; clay is readily available around the world, opening up the possibility of production in areas with cheap labour. Automation raised the quality of production and fashion can quickly dictate whether an ‘area’ brand is in demand.
If we look at the industrial landscape of the United Kingdom, the manufacturing industry has been hollowed away during the 1980s and 1990s. The UK lost 18% of its manufacturing capacity in the space of 18 months during the conservative government of Margaret Thatcher.
There has been a corresponding (likely terminal) decline in the necessary facilities to support an industrial economy. Now let’s look in-depth at three essential types of facilities that underpin manufacturing:
Oil refineries
Coal mines
Chemical plants
This base of the UK industrial eco-system is running on ‘life support’ in critical areas.
I was fortunate to have a great science teacher at school, he once said to me that you could measure the size and health of an industrial economy by the amount of sulphuric and hydrochloric acid it manufactured and consumed. In order to manufacture hydrochloric acid you need a chlorine gas plant – neither chemical is something you want to transport over long distances. The side effects of a leak would be catastrophic.
The UK currently has one plant to make chlorine gas that is government subsidised because there isn’t a sufficiently large industrial base to support continued profitable production. What industrial capacity is in the UK is perilously close to being snuffed out.
What is left of the UK chemical industry has consolidated in the North East of England Process Industry Cluster (NEEPIC). Some of the products created are intermediary chemicals for use elsewhere in the European Union. Brexit is likely to have a disruptive effect on some of these manufacturers. The cluster is a key reason why Nissan decided to build a manufacturing plant in Sunderland. NEEPIC is dependent on oil refining capacity for key chemical building blocks (feedstock).
Oil refineries
Oil refineries are considered by the public as providers of petrol (gasoline), diesel and jet fuel. The reality is that they provide feedstock (chemical building blocks) for most things in everyday life:
Foods
Medicines (or we can go back to leeches and blood letting)
Paints (containers, large manufactured goods, civil engineering)
Dyes to colour fabrics, plastics and other materials
Plastics (the modern world as we know it) – structural plastics, coatings, fibres including clothing textiles
As I write this is, it is easier to look around my desk and count the products that don’t have an oil-derived input – one item, the desk itself which is unpainted. Though I would put good money on it that the trees it was made from were felled with petrol chain saw and transported on a diesel-powered lorry to the saw mill.
Yet the UK has lost a huge amount of oil refining capacity. From 1974 – 2012 refining capacity almost halved from 148 million tonnes to 77 million tonnes (Energy Institute). This decline happened despite start of UK North sea oil production in 1975.
Peak production on North Sea oil occurring in 1985 and 1999 (two peaks due to technological innovation). There were 22 active oil refineries in 1974, at the time of writing there are now seven.
Part of this was driven by changing energy consumption such as the decline of home heating oil and more fuel efficient cars. But a good deal would be due to reduced ability to compete against foreign petro-chemical feedstocks and reduced industrial capacity.
Oil refining capacity has moved to closer to where the industry is.
Belgium and the Netherlands have oil refining capacity beyond their internal needs because of their ease of access to continental European markets. Germany as Europe’s industrial powerhouse has the largest refining capacity in the European Union – which matches its industrial economy.
Much of the capacity to provide chemical feedstocks for industrial use has moved to the Far East; notably Singapore, Japan, Korea, Jamnagar in India and China. Overall industrial production has moved to East and Southeast Asia.
Coal production
The working class found coal production as a source of working class jobs. Even coal production in the UK is roughly 10 percent of what it was in 1980. There are no deep coal mines active in the UK, only a handful of open cast mines. Coal is not only useful as a fuel but also a alternative supplier of feedstock for a diverse range of products including fertilisers, plastics and medicines. Even if coal comes back to prominence as oil reserves run out it would take a lot of effort to get UK production going again – perhaps too much effort.
Managed decline of traditional working class areas
The purpose of managed decline would be to concentrate efforts where they can make the most impact. London would draw in more people from the hinterlands. Cities like Liverpool would continue to decline in population. Low quality housing (think trailer parks or shanty towns) would cater for the internally displaced workers and there would be a likely increase in casual or gig economy roles in place of many working class roles.
So what would managed decline of working class areas look like? We have a clue from government discussions after the 1981 Toxteth riots. Lord Geoffrey Howe wrote a letter which was considered too controversial at the time
“I fear that Merseyside is going to be much the hardest nut to crack,”
“We do not want to find ourselves concentrating all the limited cash that may have to be made available into Liverpool and having nothing left for possibly more promising areas such as the West Midlands or, even, the North East.
“It would be even more regrettable if some of the brighter ideas for renewing economic activity were to be sown only on relatively stony ground on the banks of the Mersey.”
“I cannot help feeling that the option of managed decline is one which we should not forget altogether. We must not expend all our limited resources in trying to make water flow uphill.”
Howe realised that even discussing the concept at the time would be explosive.
Retrenchment to focus economically
In practical terms, it would mean:
Re-centralising government departments
Not spending on infrastructure beyond critical maintenance
Rationalising government support infrastructure: police, hospitals, social services
Re-zoning areas from a planning perspective to encourage development only in future clusters
Allowing local government to go into bankruptcy protection and under go US-style emergency management
Once population decline hits a critical mass, turning off the last services, rather like the city of Detroit has done
Focus infrastructure investment on ‘clusters’
Connecting benefits to re-location
This process would then give time for western countries; in particular the UK, to re-invent themselves and think about their economic purpose in the world beyond consumption.
The Chinese government have already started on this process whilst their economy is still in a high state of growth – looking to move up the manufacturing value chain, moving into the professional and financial services sectors that the west currently occupy. On the flip side they have not flinched from closing down excess capacity in the steel industry and low value industries. This is causing economic hardship amongst unskilled workers in Guongzhou and the steel towns of Hubei province.
Former clothing factories are being bulldozed to make way for corporate campuses. Small electronics factories in Shenzhen are making way for a financial services centre including a stock exchange.
If one thinks about the Chinese experience and their migration to higher value work, where would the UK go next and what does mean for the future of the British working class?
Back in the mid-1990s, middleware was a way of describing how layers of software were connected together in enterprises to provide functions and tailored outcomes.
At around the same time, Microsoft was at its most dominant and almost missed out on the web as a nascent platform. In fact the first edition of The Road Ahead that Bill Gates wrote alongside Nathan Myhrvold and Peter Rinearson saw the Internet as one of the “important precursors of the information highway…suggestive of [its] future” (p. 89); he noted that the “popularity of the Internet is the most important single development in the world of computing since the IBM PC was introduced in 1981” (p. 91) but “today’s Internet is not the information highway I imagine, although you can think of it as the beginning of the highway“, the information highway he envisioned would be as different from the Internet as the Oregon Trail was to Interstate 84.
One reviewer noted that
World Wide Web receives just four index citations and is treated as a functional appendage of the Internet (rather than its driving force)
And for a while Netscape had a clear run at the browser market, building up to one of the largest IPOs ever. One of the things that made Netscape so dangerous was that the browser became the gateway to applications like sales orders, email or looking up a database, it was an app facilitator and the browser became an operating system substitute. It no longer mattered so much if you had a Mac or a PC. The browser and web effectively became middleware.
I realised last year that messaging services like KakaoTalk, WeChat and LINE were moving beyond messaging to becoming something more. By becoming platforms they could provide a richer experience to users, the integrate:
Gaming
A blogging-type platform
Payments
Social commerce
Travel information
This looks eerily close to Netscape’s web of middleware positioning in the mid-1990s. Ted Livingston, CEO of Kik outlined just this scenario in an article on the messaging landscape for Techcrunch last week.
Where this gets interesting is when think about what this means for the likes of Google’s Android operating system or Microsoft Windows phone, where the raison d’être of these operating systems is as a gateway to web services (and an audience for mobile advertising). The more functionality that happens inside the messaging application, the less opportunity there is for the likes of Google and Microsoft to direct the consumer towards their advertising inventory.
It corrodes the very reach Google tried to achieve by having its own smartphone operating system and competing with Apple. Google is already under assault in the operating system itself as Chinese vendors like Xiaomi and Oppo alongside Amazon have customised their own operating systems based on Android. Google services are not provides on a third of Android devices sold already, messaging applications as a platform exasperate the situation further.
I was prompted to think about the working class thanks to an interesting opinion piece The Great Divide by James Delingpole in the Sunday Times Style magazine (February 5, 2006) about a division in the middle classes between the haves and the have-nots. The haves stay in Tuscany and go on ski-ing holidays.
My own thoughts on this is that the working class haven’t gone away, they just slave away with a phone, the laptop and the Blackberry. The have-nots referred to in the article are the normal working class folk of yore. They are the infantry of the knowledge economy. In place of soot-covered waste coats or donkey-jackets it’s suits-and-ties or media casual.
I have no problem calling myself working-class. I learned my trade as a PR person by working with great people in the same way that I served my time as an apprentice in the chemical industry in my early 20s.
They have the same fears as the working class of past decades with the fear of their jobs being exported to India or China rather than seeing their factory closed down by foreign competition. Self-service online and IT-driven business process management in banks has replaced robots and automation on the factory floor.
I found it particularly interesting that Delingpole assigned education and politeness with middle class society. The working class neighbourhood I grew up in was not full of cavemen: respect for yourself and others was something that was drilled into me. Indeed, I still occasionally have that uniquely Irish refrain from my mother asking me ‘not to disgrace the family-name’ ringing in my ears.I worked in many jobs from managing a tightly knit production team, to working on a factory line, being a cleaner, being part of a call-centre hive, banking and working in PR. It was in the middle-class environs of the PR agency life where I saw the most morally repugnant mistreatment of fellow colleagues and peers practiced.
With regards education, there has been a long tradition of a well-read working class, indeed some of the ‘new’ universities sprang out of mechanics institutes and other places of working-class education. The things that stood me in good stead for working in the knowledge economy were:
The wide range of reading that I did whilst working shifts in the oil industry and have carried on since
The work ethic that my gaffer taught me as an apprentice
A practical approach to problem solving that I picked up working in the chemical industry
The typing tutor software on the mini-computers that we used in the oil refinery and other places that I worked at
My university degree just got me in the door at my first ‘graduate’ roles. The under-class of today are the dispossessed bypassed by the knowledge economy, rather like the farm workers left by land reforms and the industrial age. The working-class education is now a combination of the state education system, public libraries and the worldwide web were institutions like MIT Open Courseware and Wikipedia which equate to the mechanics institute of today. It will be interesting to see if or how these new working-classes get organised. If you would like to read more consumer behaviour related content, you can find it here.
