I can’t quite believe I’m writing a blog in defence of the pharmaceutical industry. I nearly titled it ‘A plan for growth: industrial policy’, which is really what it is, but then I know there’s no chance anyone would have read it.
Like for many internationally minded liberals ‘Big Pharma’ conjures images of AIDs stricken Africans dying because they (or their government) can’t afford the anti-retroviral drugs needed to prolong their lives. At least pharmaceuticals are controversial; industrial policy is just plain boring.
Industrial policy – stimulating research or development in particular industries or sectors in order to promote and grow them – is an area that is completely ignored by the coalition and only flickered onto Labour’s radar when when the credit crunch had taken hold. Mandleson started his drive for ‘industrial activism’ in 2008 but by that point it was too late and the writing was on the wall for Labour. However, it’s easy to see that with the burgeoning finance and service sectors, industrial policy was not at the top of the government’s priorities during the last decade.
But with growth figures still in the doldrums you might have thought it was number one on the Coalition’s list. But no, there’s not been a peep from the Department for Business, Innovation and Skills on the issue. Either they find it too boring or it poses too much of an ideological problem. Industrial policy involves picking winners; it means the government choosing an industry, be it pharmaceuticals, mobile phones or green technology and saying Britain is going to be the best at this it can possibly be. It means pouring tons of public money behind innovations that may or may not succeed. It’s a massive gamble and there’s no guarantee it will pay off. For free market economists who are committed to stripping back regulation it’s a leap that in this age of ‘stagflation’ the Coalition has chosen not to take.
Fair enough, one might think. But why was the 2011 Budget called the ‘Budget for Growth’ if the Chancellor intended to do nothing about growth? Why declare Britain ‘open for business’ if he isn’t going to support the businesses struggling their way through these straightened times? I personally think he was doing ‘a Humphrey’ – if you’ve watched Yes Minister you’ll know what I’m talking about.
Humphrey, the most senior civil servant in the series says of drafting legislation:
“you always dispose of the difficult bit in the title. It does less harm than in the statute books. It is the law of Inverse Relevance: the less you intend to do about something, the more you have to keep talking about it.”
By sticking the word ‘growth’ in the title the government hoped no one would notice that they weren’t doing anything substantive about it. But a return to growth requires a strategic plan and I think backing our pharmaceutical industries would be a good place to start. Everyone needs drugs and everyone will need new and more drugs as we become resistant to old ones and live longer. But closures of pharmaceutical plants are becoming a regular occurrence and the closure of the Pfizer plant in Kent with the loss of 2400 jobs is the latest embarrassment for the government in this regard.
In a country with a world class education system, turning out highly skilled graduates, the pharmaceutical industry is just the kind of industry we should be promoting. It creates the highly skilled, well paid jobs this country needs. It creates real products, not financial ones that rely on the re-parceling of debt. And it creates something we can export so we can start to deal with our massive trade deficit.
I recently attended a seminar at the think tank IPPR on whether Britain needs an industrial policy. One of my favourite economists, Ha Joon Chang, was speaking and said that 60% of his PhD students went on to work in finance. What’s the point of paying to train all these people up if there are no jobs for them to go to afterwards where they’ll be innovating, creating growth, and ultimately, more jobs?
Suddenly supporting the pharmaceutical industry seems like a fairly good bet rather than an interventionists’ stab in the dark. Less of a bitter pill to swallow and more of the medicine this economy needs to get growing again.