Worries for Mr. Wilson

When the Board of Trade announced on February 12 that Britain's trade deficit widened again in January, despite the 15% surcharge, the news was received with a kind of quiet desperation. The pound weakened. Government officials rushed to reassure the country. Economic experts predicted the government's moment of truth would arrive by the end of the summer. The currency crisis is only one symptom of a more serious malady. It reflects the restrictive practices of British labour and the resistance of British businessmen to innovation; it dramatizes the backwardness of British industry.

Even government officials admit that industrial inefficiency, combined with high wages and labor feather-bedding, has driven costs of production up, pricing British goods out to foreign markets. As inflation at home makes British products less competitive abroad, receipts from exports keep falling behind spending on imports. Gold moves from the vaults of London to the capitals of Europe. And as those vaults are drained, world confidence in the pound declines. The exchange rate drops. And the crisis continues.

No matter how effectively the U.S. and the International Monetary Fund join to prevent the pound's short-term collapse, the long-term problem of rising prices can be solved only by the British themselves. Insulated by high tariffs, British businessmen have failed to modernize their industrial plant. Clinging to small scale industry, they have resisted mechanization. Their disdain for impersonal management techniques has stifled efficiency. And their scorn for money-grubbing, aggressive salesmanship has inhibited their ability to expand new markets.

The British Iron and Steel Board now estimates that output per unit of labor in British steel in "probably only 50% of the U.S. level." In the port of London, there are 444 different employers of dockworkers--each one is too small to use large scale machinery, each one refuses to merge with the others. The British refer to their salesmen as "spivs," "bagmen", or "touts" and their salesmanship often reflects this disdain. Auto companies tell of suppliers who refuse business because added orders might "upset stability" of production. And the Economist describes a visit to a British plant in which "you will be taken aside to see the real pride of the firm, some ghastly Edwardian relic which, it is explained, is now miraculously working almost as well as in 1905, except that two men have to be kept constantly at work to redust it."

Of course, the blame for inefficiency and rising prices does not belong entirely to businessmen. Labor as contributed to excessive costs and inflation by demanding higher wages, opposing automation, and restricting entry by younger workers. Roughly two-thirds of all dockworkers are now over 40. Their whole system of payment is geared to heavy wages for overtime and much lower pay for normal hours. By "welting"--taking shifts at the local pub on company time--workers are able to prolong work until the weekend when they will receive higher rates. Some companies are so "dispirited" by these costly delays, says Sir William McFalzean, chairman of the British National Exports Council, "that they give up the struggle in export markets."

The surcharge on imports--lowered last week from 15% to 10%--has enfuriated Britain's partners in the European Free Trade Association, but has failed to improve her balance of payments. The wage and price review boards which the government proposed last week will depend on voluntary compliance, and no one pretends they can end inflation. The rise in the bank rate from 5% to 7% has helped to keep capital inside Britain, but has also inhibited investment. And the program of increased government spending, designed to stimulate the economy, must be followed by broader measures.

According to experts in Britain, these measures must include: stricter wage price controls, more tax and credit concessions to exporters, reorganization of the dock industry and, in some cases, like steel, immediate nationalization. To eliminate the deficit, Lord Cromer warned last week, Britain must revitalize her entire economy. The three billion dollar rescue that saved the pound in November "no more guarantees our future than Dunkirk presages swift victory in 1940."