In Dublin, Ireland, where I have lived in recent years, many observers view East Asian economics as a remote issue of little interest in Western Europe. As I discovered the other day, it is an attitude shared even by some of Ireland’s most prominent and widely travelled politicians.
Yet it is so misguided. The truth is that for decades now, East Asian economic policies have deeply influenced Western Europe.
Take, for instance, Japan’s role in the troubles in Northern Ireland. You can be forgiven your ignorance if you are not aware of such a role: as in many other aspects of the East Asian economic phenomenon, the English-language press has been asleep at the switch on this story.
Japanese industrial policy began to influence Northern Ireland as far back as the 1950s. And Northern Ireland has come off consistently the worse from the encounter.
The truth is that soon after Japan began its post-war recovery it “targeted” shipbuilding. Targeting in this sense is a highly controversial technique that was effectively a death sentence for most of the UK shipbuilding industry, not least the once-huge Harland & Wolff shipyard in Belfast.
More about targeting in a moment. First let’s consider the wider context. Harland & Wolff had emerged from World War II at the top of its game, having contributed disproportionately to the Allies’ victory as the builder of more than half of British aircraft carriers. The shipyard had long been Northern Ireland’s largest employer and as late as the 1950s, its direct workforce alone totaled more than 30,000 workers. Various associated businesses in the Belfast area moreover provided perhaps as many as 10,000 further jobs. This made the shipyard by far the largest employer on the island of Ireland (it towered over even the famous Guinness brewing business in Dublin).
Harland & Wolff was in fact one of the UK’s most successful exporters — no small statement given that at that time the UK still dominated many world markets (as late as the early 1950s the UK was the world’s largest exporter of cars, for instance). By virtue of its export success, Harland & Wolff was the cornerstone of Northern Ireland’s then remarkable prosperity.
The impact of Japanese targeting, however, was soon felt. By the late 1960s, the company was struggling and by the mid-1970s it was already a dead man walking. And soon things were to get even worse as the Koreans, using similar tactics to the Japanese and accessing much of Japan’s manufacturing knowhow, began making serious inroads in the world shipbuilding industry.
The most obvious consequence in Northern Ireland was that tens of thousands of once proud upper working class Loyalist workers found themselves permanently on the dole. Many of them sought a purpose in life by participating in increasingly vicious tit-for-tat terrorism. This was all a remarkable contrast to an earlier period of IRA provocation in the 1950s. Most Loyalists then were gainfully employed and were happy to leave it to the established forces to round up IRA discontents. With no resentful unemployed Loyalists to be provoked, the troubles of the 1950s soon petered out.
Harland & Wolff launched its last ship as far back as 2003. But still today the gaping hole left by the company’s collapse has not been filled. It is hard to exaggerate the consequences. With no major industries left and no world-beating shipyard to keep the Admiralty interested, Northern Ireland’s days as a constituent nation of the United Kingdom seem numbered. This is clearly implicit in UK Prime Minister Boris Johnson’s take-it-or-leave-it attitude to the Democratic Unionists on Brexit. He evidently is confident of considerable support on the British mainland. After all, it has long been no secret that the Northern Ireland economy has been a major drain on the British Exchequer.
The mainland is increasingly signalling it has had enough. A fair guess is that by the 2050s, if not before, London will have thrown Northern Ireland overboard . The consequences for the Irish Republic, and for the Irish taxpayer in particular, are not clear. Neither are the prospects for continuing peace on the island of Ireland.
What does Japanese “targeting” mean? The term refers to a pattern for the Japanese state to make common cause with Japanese corporations in a no-holds-barred effort to seize leadership in important global industries. Some tactics are more covert than others and not infrequently they are completely unethical. But we needn’t dwell on this as in reality one of the most effective Japanese tactics was the relatively mentionable one of keeping the yen massively undervalued. To that end Japanese officials organised cast-of-thousands pantomimes aimed at convincing visiting foreigners that Japan was a Third World country and thus posed no threat to the advanced industries on which the West’s economic success was based. Thus although worker productivity in the Japanese shipbuilding industry was broadly on a par with the UK industry, London acquiesced in a hugely undervalued yen. This meant that the wage bills Japanese shipbuilders had to pay were little more than half of UK levels. With a cost advantage on that scale, the Japanese soon had the entire UK shipbuilding industry on the run. Cities like Newcastle, Glasgow, and Liverpool soon felt the impact but nowhere were the consequences more lamentable than in Belfast.
Yet no one in London lifted a finger. The pound was kept permanently overvalued in a manoeuvre that suited a callous and blinkered City of London. Meanwhile London elites rejoiced in the fact that an overvalued pound meant their money went further when they travelled abroad on holiday.
It is worth considering the might-have-beens. Had successive British governments stood up to Japanese targeting, the outcome could have been very different. Just how different is apparent from a look at the trajectories of Harland & Wolff’s once puny Japanese challengers. Take, for instance, Mitsubishi Heavy Industries (MHI). In the 1950s it was broadly as advanced as Harland & Wolff. Today it is a manufacturing colossus that leads the world in a host of super-advanced industries. MHI’s products include space launch vehicles, missiles, aircraft, machine tools, hydraulic equipment, and aerospace components (it is a major supplier to Boeing of components so advanced that Boeing can’t make them for itself).
MHI’s achievement can be summed up in one number: it recently employed more than 81,000 workers. As for Harland & Wolff, the yard that built the Titanic survives, sort of, doing marine engineering odd jobs. According to Wikipedia, at last count it employed just 79 workers — little more than, say, a successful suburban car servicing workshop.