Bad Debts – From coach hire to the (political) madness

In a time of recession it is tempting to believe that job losses are a bad thing. Whilst a loss of a job is a personal trajedy for the individual involved it is not per se a bad thing from an economic standpoint. As we at Momentum were recently criticised by a fellow coach hire industry participant of ‘costing the industry jobs’ it is worthwhile looking at the causes of job losses.

Job losses in the coach hire industry are no different. Job losses stem from one of four general causes: T

1. The contraction of an industry caused by macro economic contractions (a recessionary decrease in demand)

Contraction of an industry caused by macroeconomic factors is of course something to lament – when resources are wasted as opposed to reallocated – such as the UK has experienced in 2008/2009. This type of job loss is unique in the sense that the job losses outlined below are driven by consumer choices. Job losses due to reductions in macro economic demand are something to lament as the represent a one off loss of productive resources to an economy.

2. An industry specific reduction in demand (caused by the structural decline of a product/service);

We lament the decline of the Post Office whilst marvelling at the immediacy of email. We cant simultaneouly enjoy the use of our mobile phones whilst lamenting the decline of BT’s headcount as its fixed line business withers.

Does the coach hire industry still blame the uk holiday maker that in the late 70’s for job losses – when he decided to get on a plane to Benidorm as opposed to a bus to Blackpool.

3. The regional decline of an industry

Jobs being moved offshore when industries decline on a local level is fundmentally driven by the consumer looking for cheaper goods, a greater range of products or ultimately superior returns on our pension funds.

Do so few people not understand the irony of the clamour for lower bank charges/ free current accounts whilst simultanously ‘bitching’ about offshoring call centres to India. Do so few people not understand the hypocracy of lamenting job losses in the UK toy industry whilst marvelling at the look on little Johnnies face when he opens all the Christmas presents which have been bought so cheaply.

Do we really think the quality of cars on our roads today would be so high if British Leyland was the sole supplier to the market.

4. The Automation/Restructuring of an Industry

The agrarian and industrial revoloutions ensured that we are not all ploughing our smallholding with our single Oxen. It is seldom considered a bad thing that 87% of the population no longer work in agriculture. We no longer have ‘runners’ in the city of London whose job was to run from bank to bank with messages – but surely only the hardcore ludites reject the merits of email, faxes, mobile phones and the internet. What about the insurance salesmen who collected his premiums door to door – do we lament his decline or do we merely thank the meercats for our declining costs of car insurance.

However, some – vested interests – consider the modernisation of the coach industry to be a bad thing. They consider offering the customer lower prices, greater range of options and localised supply to be a bad thing.

Progress is driven by vested interests competing in an economic Darwinian model. The role of government is to ensure that an enviroment exists – through training/retraining/education/tax policies – which ensures more quality jobs are created than lost.

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