Chapter 4 Politics Time Allocation: 2 periods Focal Points: the importance of general elections; the Conservative Party and the Labour Party. Introduction to Party Systems A political party system consists of all the parties in a particular nation and the laws and customs that govern their behavior. There are three types of party systems: (1) multiparty systems, (2) two-party systems, and (3) one-party systems. Multiparty systems are the most common type of party system. Parliamentary governments often develop multiparty systems. In this type of electoral arrangement, the number of legislative seats held by any party depends on the proportion of votes they received in the most recent election. When no party gains a majority of the legislative seats in a parliamentary multiparty system, several parties may join forces to form a coalition government. In a two-party system, control of government power shifts between two dominant parties. In such a system, it makes sense for smaller parties to combine into larger ones or to drop out altogether. A single-party system is one in which one party nominates all candidates for office. Thus there is no competition for elected offices. The only choices left to voters are to decide whether or not to vote and to vote “yes” or “no” for the certain candidate. Politics in both the United Kingdom and the United States are based on the two-party system. The Conservative Party and the Labor Party in the United Kingdom and the Democratic Party and Republican Party in the United States. General Elections --- Why are the General Elections important? The election is seen as an opportunity in influence future government policy—or, less positively, that whatever else the failings of the political system, at least the election provides the opportunity to “kick the rascals out”! (P44.paragraph 1) What’s more, in the UK, the citizen’s right to vote for the candidate of their choice to represent them in parliament is a right that has been struggled for over the past two hundred years. --- When do Elections Occur? The General Elections are held every five years. But the Prime Minister can call an election sooner than five years on the following condition: if the Government is defeated in the Commons on the issue; if the Prime Minister wants to. A government cannot stand for longer than five years except in exceptional circumstances (it has happened twice this century, when elections were delayed until the end of the First and Second World Wars). --- Who can stand for election as an MP? Any citizen can become a candidate for election to the House of Commons. But, (1) certain classes of people are forbidden to sit in the House. These include (a) judges, (b) civil servants, (c) members of the regular armed forces, (d) full-time police officers, and (e) members of many public boards and commissions (共同事业委员会). (2) He or she must get 10 electors in the constituency. He or she must pay a deposit (押金，保证金) of ￡150, which he loses if he fails to get one-eight (1/8) of the votes at the election. --- What happens in an election? The voter receives a voting card telling him the exact time and place to vote; The political parties are campaigning; (P 45. last paragraph) Advertisement in newspapers Door-to-door campaigning Postal deliveries of leaflets “Party electoral broadcasts” on the television The voter votes on the election day; (P46. paragraph 3) Teams of volunteers check the voting cards and count the votes; The result is announced through television stations. Now, the House of Commons is constitutionally the dominant House. The representative is also known as a Member of Parliament, or MP. A House of Commons is chosen as a whole at a general election. The general election normally takes place every five years. But it will be held before the fixed date (1) if the Government is defeated in the Commons on the issue. In this case, the Prime Minister either resigns or asks the Monarch to dissolve the parliament. (2) if the Prime Minister wants to. The Prime Minister can decide on a general election before the legal time limit at the time favorable to the victory of his or her party. By this way the Prime Minister may continue to stay in power. The Party that won the majority of seats in the House of Commons will form the Government. Members of the House of Commons are elected from geographical constituencies. The voting age for British subjects was lowered to 18 in 1969. Those not eligible for election to the Commons include members of the House of Lords, selected clergy, government contractors, sheriffs (郡治安官), and certain designated election officials. The basis of representation depends on the total number of seats agreed on by a process unique to the House of Commons and on the total population of the nation. In Great Britain, each constituency approximates a population of 60,000. In Northern Ireland, with 17 representatives, the population base is somewhat larger. Total membership of the Commons now numbers 659. In the general election, each voter can vote for only one candidate. The votes are counted in the presence of the candidates. And the candidate who receives the largest number of votes is elected even if they are less than half of the total. A person may be a candidate in any constituency, even if he has no connection with the place. So if a member of the House of Commons loses his seat by being defeated at a general election, he can later try to be elected for another place. The general election is held on the same day all over the country, but voting is not compulsory. As soon as the results of the general election are published, everybody knows which party will govern Britain for the next few years. If the Government wins a majority of the seats in Parliament, there is no need to make changes. If it fails to win a majority, the Prime Minister concedes his party’s defeat and resigns at once. The Queen then automatically appoints the leader of the new majority party Prime Minister and empowers him to organize a new government for the next five years. The former Government has to assume the role of the Opposition Party, which can only form its “shadow cabinet”. II. The Political Parties In the United Kingdom politics is controlled by political parties. That’s to say its politics is party politics. The political party system, dating from the 17th century, is an essential element in the working constitution. There are a number of political parties in the United Kingdom and, theoretically, they are granted equal treatment by the law. But in practice, politics in Britain is based on the two-party system. We know nationwide general elections are held every five years for voters to elect Members of Parliament. The majority party forms His or Her Majesty’s Government, and the second party is officially recognized as His or Her Majesty’s Own Loyal Opposition. The opposition leader is paid a salary from public funds for that role. Since the end of World War I (1914-1918), the Conservative Party and the Labor Party have been dominant. Or we can say, a two-party system has existed in the United Kingdom since the late 17th century, though it is occasionally threatened by a third party. The Conservative Party and the Labor Party are the dominant parties of the modern era. (In the early 20th century, Labor displaced the Liberals as one of the two dominant parties.) Small parties are usually called minor parties. Minor parties in the early 1990s included the Scottish Nationalist, Welsh Nationalist, Ulster Unionist, Social Democratic, Communist, and Green parties. The Liberal Party, which provided governments periodically for decades, lost electoral support and merged with dissidents from Labor and the Conservatives to form the Liberal Democrat Party. In the general election of 1992, minor parties won 44 seats from the total of 651 in the House of Commons. British parties developed in the 17th century. By 1679 there were two groups: Tories and Whigs. In 1660, Charles I’s son became the English king known as Charles II. But political struggles and religious dispute were still tense. In his old age, Charles II, fearing that his young son would be unable to control the situation, made arrangements for James, his brother (the Duke of York), to succeed him, some people opposed the king’s plan on the ground that James was pro-Catholicism. These opponents, who favored Protestantism, were derisively (嘲笑的) called the “Whigs,” a nickname once given to the rebel Scottish drovers (家畜贩子). The Tories represented the interests of the smaller landed gentry and tradesmen—forefathers of the middle class, while the Whigs represented the interests of the landed aristocracy and big merchants of the towns. The Whigs wanted Parliament to have more power than the Crown, and played an important part in the “Glorious Revolution” of 1688-1689. They were in power from 1714 to 1760. The Tories became the party of the Anglican Church and of country landowners, while the Whigs were supported by Nonconformists and by the trading classes. Towards the middle of the 19th century, the Whigs took the name ‘Liberal’ and became the Liberal Party. Then the Tories got a new name and became the Conservative Party. Later the Liberal Party split into two halves and lost its place to the Labor Party. After 1922 the Labor Party became one of the two major parties in Britain. The Liberal Party now is the third largest political party in Britain. Now let’s see the two major parties: The Conservative Party The Labor Party Development: From Tories by Unionists, liberals, socialists (a political group which appeared under King Charles II) and the Fabian Society Time: the middle of 19th century (old) in 1900 (young) Characteristics: Right wing party Left wing party They stand for private enterprise and They stand for national and freedom from state control communal growth Supporters: middle and upper-middle class Working class and common people People of higher position relatively poor or underprivileged Organization: more democratic but looser The main support of the Conservative Party comes from the middle and upper-middle class. For this reason it is sometimes called the “Right”, although the label is misleading. According to election returns, a majority of the middle class vote for the Conservative in national elections. Nearly all the voters of the upper-middle class give their votes to the Conservatives. Many of the well-to-do workers also support Conservative candidates. It can be said that the higher one goes up in social and economic class, the more likely he is to vote the Conservative ticket. That’s why some people labeled the Conservatives as the party of the rich. The Labor Party was founded in 1906 by unionists, liberals, socialists and the Fabian Society. At first, it was known as the Labor Representation Committee, which was then changed into the Labor Party. The basic doctrine of the Labor Party is to promote national and communal growth. They believe that socialism should lead to the growth of society, not the uprising of a class. They advocate class co-operation so as to achieve social and economic equality. (They support nationalization of big enterprises. They are more inclined to support reduction of military expenditures and the expansion of the social welfare program. Many of the Labor leaders are from the working-class families, but it is not a proletarian party. Actually, it represents the interests of confusing class elements. Taking all its basic doctrine into consideration, we may say that the Labor Party’s chance to win a general election largely depends on the economic situation in Britain. If economy develops healthily and the situation is stable, the Labor Party would have less chance to win. If economic recessions and social problems are serious and many people demand reform as a way out, the Labor Party would have a bigger chance to win. In 1924, the first Labor government came to power. By 1929, it had replaced Liberals as one of tow major parties. In 1945 General Election, it gained spectacular victory, and its government introduced several important social reforms: National health service (NHS), social security system, mass education, nationalization of several leading industries. It won power under Wilson from 1964 to 1970 and in office again from 1974 to 1979. Then it spent majority of time in opposition until 1997. In organization the Labor Party is more democratic but looser than the Conservative. The Liberal Democrats is the third important party. It is a merger of the old Liberal Party and the Social Democratic Party. The Social Democratic Party is a break away group from Labor Party, formed in 1981. The Liberal Democrats advocates policies based on freedom of the individuals. It remains a minority party, which draws support from voters dissatisfied with Tory or Labor. Thus, this is a party of protest rather than a real alternative for government. It is an image of party moderate and appeals predominantly to middle-class people, often in rural areas. Now, the party in power is the Labor Party. The Labor Party won the general election in 1997 because of its policies. On June 7, 2001 Tony Blair once again led the Labor Party to a second successive victory in the General Election, winning by another landslide (山崩). III. Recent Political Trends During the 20th century, the government has become involved in the economy through introduction of social welfare policies and laws to regulate industrial relations. In 1945 to ensure full employment, labor government began to nationalize key industries such as coal, steel and transport. The economist, William Beveridage, planned the British Welfare State during the Second World War. The labor Government of 1945-1950 passed laws giving the country almost everything for which Beveridge asked. Then the Conservative Government also accepted the Beveridge’s Plan and made no changes. So now it is widely accepted in Britain that the State should ensure that nobody should be without the means for the minimum necessities of life because of unemployment, old age, sickness, or over-large families. Like many other countries, Britain spends, each year, large sums of money on the building and maintenance of roads, police, hospitals, schools, libraries (in Britain, every town has a free public library), national defense and so on. But besides these, Britain also spends more than 40% of the government’s total expenditure on social welfare program. The English social welfare program includes mainly the following items, and nearly everyone in Britain is entitled to the welfare in certain aspects. 1. The National Health Service The National Health Service provides medical care for almost all the people. It provides medical treatment both in hospital and outside. It covers sickness of mind as well as ordinary sickness, and it includes the treatment of teeth, sight and hearing and other expensive items like wheelchairs, artificial limbs, etc. This program is based on the belief that the government should be responsible for improvement in the health of the people. The program requires employers and employees to contribute some money to the program, but about 90% of the cost of the health services is paid by the government. Of course, like the situation in our country, people are not obliged to use the service. They can go to some private doctors. According to the requirements of the National Health Service, people should go to certain hospitals, which are within the health service for their free medical treatment. Normally, a person must be registered on a general practitioner’s list, and if he needs medical attention, he should first of all make an appointment with his practitioner arranging to go to see him or to have the practitioner come to see him. The task of a general practitioner is to give medical treatment, to prescribe medicine, or to arrange for the patient to go to hospitals. After the doctor’s treatment, the patient should take the prescription to a chemist’s shop to get the medicine. From 1948, the patient paid nothing for medicine, but in 1951 a small payment was necessary. The payment was abolished in 1964 by the Labor Government, but then restored by it in 1968. The Health Service funds pay for the cost of each prescription above the patient’s contribution, but for small children and people with low incomes there is no charge. So patients pay minimal charges for prescriptions, adult dental treatment, eyeglasses and dentures (假牙), and some locally administered services, such as vaccinations (接种疫苗). Each person is free to choose a general practitioner in the area where he lives. If he is away from his home, he may go to any doctor. Each general practitioner receives a fixed “capitation”(按人头计算) payments from the health service funds of about ￡1 per year for each patient on his list. If he cares for a pregnant woman, he gets a fixed additional sum. The general practitioner also receives payment for treating people not on the list, because when people go away from home for their holidays, they can see any doctor. So the general practitioners may have chances to treat visitors from other parts of the country. Besides the payments mentioned above, the general practitioner could also have private patients. Now, there are about 20,000 general practitioners in the National Health Service and about 1,000 outside it. The average doctor has a little over 2,000 people on his list. The maximum is around 3,500. But the general practitioner should provide a waiting room and a consulting room for his patients, a car and a secretary. In towns, it is usual for 3 or 4 general practitioners to join together. In this way, they can help each other and take care of each other’s patients during holidays. If a patient under the Health Service needs specialists or hospital treatment, his general practitioner will send him to a hospital. In the hospital, all treatment is entirely free both for outpatients and in-patients. The patient may have the best possible treatment. But the disadvantages are 1) he will be put in a large room with other patients. 2) He will not be able to choose a particular surgeon for any operation; 3) in a busy outpatient’s clinic, some patients may have to wait for an hour or so like the situation in China. Dental treatment is also provided under the Health Service. At first, the Health Service paid all. But now the patients should pay a little. Similarly any patient may have his eyes treated free of charge, yet he must pay part of the cost of the spectacles provided. The doctors in hospitals are in several grades. The “housemen” or “residents” (住院医生) are the lowest while the consultants (会诊医生) are the highest. The housemen are usually new doctors who spend a year or two living in hospitals gaining experience. Their treatments of patients are under supervision. The consultants may choose to work in the hospital either for the whole of their time or for part of their time, because they are allowed to take private work. Under the Health Service, doctors can earn reasonable incomes, but not large amounts. The promotion to the higher posts in hospitals is slow. That’s why many trained doctors emigrated to the U.S. or Canada so that they can earn more money. Usually, medical students obtain their qualifications at universities. The basic qualification is a bachelor’s degree or its equivalent. The length of the medical training is six years. When a student completes his course, he spends a year or more as a resident in a hospital, and must soon decide whether he wants to be a general practitioner or to specialize and work for higher specialist qualifications. Besides doctors in the Health Service, there are also many private doctors, and private and financially independent hospitals called ‘nursing homes’. People may go to these hospitals to get what they think better treatment. As a matter of fact, many people, especially rich people prefer to go to the private doctors, because they can enjoy some privileges. They don’t have to wait for their turns in the hospitals. They don’t have to share room with other patients when they are in-patients, and they can choose certain specialist or surgeon if they are seriously ill or need an operation. The National Health Service is financed through general taxation, with National Insurance payments contributing some 14 percent of the total cost, and patients’ fees contributing 4 percent. 2. Social Security Program 1) Sickness benefits If a person becomes unable to work because of sickness, he receives payments from the insurance fund. If a person becomes unable to work as a result of accidental injury at work, or of sickness caused by the conditions of his work, he is entitled to a special type of benefit at a higher rate. 2) Unemployment benefits If a person becomes unemployed, he receives payments from the insurance fund. The amount varies from ￡5 for a single man to more than ￡10 for a married man with three children to support. The amount of time for which a person is entitled to receive this benefit depends on the length of time for which he has already been paying contributions into the insurance fund. Thus, a man may get such benefit for a period between 5 and 19 months. 3) Retirement Pension The retirement pension is given to any man from the age of 65 and any woman from 60 if he or she has made his weekly contributions to the fund. A man may continue to work full time after he is 65 and in that case he gets no pension at first, but when he is over 70, he gets a bigger pension whether he works or not. If he has some earnings from part-time job, his pension is reduced. Of course, the reduction is less than his earnings. In 1974, the normal rate of pension was about ￡40 per month for a man or a woman alone, and ￡70 for a married couple. Some people can get additional pensions by paying higher contributions while they are working. Besides the pensions, the state also provides for the old residential homes (老人院). 4) Family Allowances Every mother who has more than one child may receive payment through the Post Office. Usually, she gets 90 pence a week for her second child and ￡1 for each following child until they leave school. That’s to say, a mother with three children may receive ￡1,90 a week. If she has four children, she will get ￡2,90. 5) Widow’s benefits These are special payments for widows who have children. They are paid for six months after the husband’s death and continue afterwards if the widow is over 50 or has children to support. 6) Maternity Grants These are payments for women in pregnancy, or in giving birth to children. ---But how can the British government pay for all these? The money for social welfare mainly comes from three sources: 1. The System of National Insurance Everybody, who is working, either for himself or for an employer, is obliged to contribute a fixed amount each week to the National Insurance fund. The contribution id deducted (take away 扣除) from salary by the employer. Generally, the employer holds a card for each of his employees. On this card, he has to stick National Insurance Stamps bought from the Post Office. Usually, the employer has to pay some money for his employees, because the stamps actually cost more than the amount paid by the employees. Self-employed persons should also buy their stamps. Income Tax Besides the deductions for National Insurance, many people also have to pay income tax. The amount for payment varies according to salary and domestic circumstances. The income tax is a tax on high salaries. The higher your salary is the heavier the taxation. But if you have a wife and children, you may pay less. The taxation on really high salaries is extremely heavy, a rich business man earning ￡10,000 a year ahs to pay about ￡5,000 to the government in tax. If you earn ￡30,000, you should have to pay about ￡23,000. That’s to say, you can only have ￡7,000 for yourself. The advantage of income tax is that money is obtained from the rich people. Yet, it also discourages people from working hard or developing their business. Some people say that income tax can be regarded as a tax on hard work. The above two kinds of contributions and taxes are levied by the central government. Local authorities also levy a tax. That is Local rates. Local Rates Local rates refer to the payment to the local authorities by the occupiers of land or buildings in the local authority area. Or they are taxes on property, land, buildings paid to local authorities (地方征收之财产税). The occupier is not necessarily the owner. That’s to say if you hire a house, you will not pay for the rates. But if another person hires your house, he would not pay but you pay. The finer the house the higher the rates. The 1970s were a decade of problems in the UK. The economy did badly, with high inflation and low growth. Because of the policy of nationalization of private enterprises of the Labor Party, big private companies started to go bankrupt, and the nationalized industries were seen as inefficient. (P. 48 the last paragraph) There were widespread strikes. Some American economists argued that Britain’s sickness stemmed from excessive “socialism” and its from-cradle-to-grave welfare program. Their argument was based on the fact that Britain nationalized some one-fourth of production and service industries after the Second World War. Some of the state-owned companies made thin profits or even ran at a loss. Total expenditures on social welfare programs have amounted to about 20% of the gross domestic product. The National Health Service, for example, costs the English government $33.4 billion each year, or some $600 for each person. Because of the economic recession, the Labor government lost a vote of confidence in the parliament, causing a general election. Then the Conservative Party under the leadership of Margaret Thatcher won the election. Thatcher, Margaret Hilda, was born in 1925. She is a British politician and the first woman to hold the office of prime minister of the United Kingdom. The winner of three consecutive general elections, Thatcher served as prime minister from 1979 to 1990. She was the longest-serving British prime minister of the 20th century.  In 1979 Thatcher led her party to an election victory against the Labor Party government of James Callaghan. During the election campaign, Thatcher vowed to reverse the United Kingdom’s economic decline and to reduce the size of government. (P.49 paragraph 2) --- Why did Labor win 1997 Election? On May 12, 1994, the leader of the Labor Party, John Smith, died of a heart attack. British lawyer Tony Blair became the leader of the British Labor Party. After Blair became the leader, he worked extensively to reorganize the party and to increase its popularity. In the national elections of May 1997, the party was swept into power in a landslide victory over the Conservatives, gathering almost 45 percent of the vote and coming away with 419 seats and a 179-seat majority in the 659-seat House of Commons. The Conservatives had their worst showing in over 150 years, receiving only 33 percent of the vote and finishing with 165 seats, barely half of their original total. At age 43, Tony Blair became the youngest prime minister in 185 years. His government immediately put forward an ambitious package of reforms, which included: (1) the banning of handguns, (2) reforms to the welfare and health-care systems, (3) the establishment of separate parliaments for Scotland and Wales. In Labor’s first year, it succeeded in putting through many of these reforms. Its first budget cut business taxes and imposed new taxes on liquor, tobacco, and gasoline. The Chancellor of the Exchequer, Gordon Brown, gave the Bank of England the right to modify interest rates, giving it more control over the British economy. The government’s welfare-to-work program placed many unemployed workers in jobs. The Labor government instituted a number of important constitutional reforms during its first year. Scotland and Wales passed referendums (请示书) to establish legislatures in their regions—a parliament in Scotland and an assembly in Wales. Voters in London also passed a referendum that would allow them to elect a mayor and assembly to govern the city, which had been without a mayor since 1986. In the June 2001 national elections, the Labor Party achieved its second consecutive landslide victory over the Conservatives. It emerged from the elections with 413 seats in the House of Commons and a 167-seat majority. Under Blair, who won a second term as prime minister, the party campaigned mainly on a pledge to improve the quality of public services, including health, education, and transportation. For example, it promises to retain: long-term economic stability, a rising living standards for all the people, an expanded higher education, a full employment in every region, opportunity for all children, security (保证金) for all pensioners a healthier nation a modern criminal justice system strong and accountable local government Although victory was achieved with the smallest number of votes polled by a winning party at a general election since 1929, the result reflected what voters saw as Labor’s successful handling of the economy. The Conservatives’ decision to campaign largely on the issue of a single European currency, to the exclusion (除外) of core issues such as health and education, led them to lose much of the center ground to Labor. Labor’s second term was largely dominated by foreign policy issues. After the terrorist attacks on the United States in September 2001, Blair gave enthusiastic support to the so-called “war on terrorism” of U.S. president George W. Bush. Blair’s decision to support Bush in the U.S.-led invasion of Iraq in March 2003 did not gain widespread support in the British Parliament. More than 100 Labor members of Parliament refused to back a war that was not officially sanctioned (认可) by the United Nations. In the general election of May 2005, Blair led the Labor Party to its first-ever third consecutive victory. The party won 356 seats in the 646-seat House of Commons, giving it a strong, but substantially reduced, majority. Opposition parties attacked Blair’s decision to go to war in Iraq and questioned his personal integrity (廉正) in the matter, but public discontent with the issue apparently did not outweigh general satisfaction with Labor’s management of the economy. Chapter 5 The UK Economy Time Allocation: 2 periods Focal Points: The characteristics of the UK economy, the main sectors of the UK economy I. General Survey Britain was the first country to start the industrial revolution in the 18th century. Britain is a capitalist country. The characteristic of the economic system of capitalism is that it protects private enterprise. Britain began its market economy about 300 years ago. (China started its market economy in 1992.) It is now one of the major market economies in the world. It has become a member state of the European Community. Britain is a trading nation. --Why do we say that Britain is a trading nation? --How do we understand that Britain is a trading nation? --Why does Britain rely much on foreign trade? In Britain, the domestic market is limited. So, it has to find more markets outside the country. It has to find more markets in the world. Each year Britain exports some one-third of its gross domestic product. It is the fourth largest exporter in the world. Its exports account for about 5% of the world’s total trade volume. Britain is also one of the world’s largest importers. Since Britain is the first country to undergo the Industrial Revolution, many of its mineral resources have been nearly exhausted. Because Britain lacks raw materials, or we may say its home supply of raw materials is inadequate, Britain has to buy up a large proportion of the raw materials sold in the world market. Britain’s major trading partners are industrialized countries. --What were the characteristics of Britain’s foreign trade? Since Britain relies much on its foreign trade, we should be clear about the characteristic of Britain’s foreign trade. The pattern of Britain’s foreign trade was characterized in the past, after the Second World War, by a deficit on visible trade and a surplus on invisible trade. Visible trade refers to (transactions) trade of visible or concrete commodities, e.g. the trade of goods, machines, oil, and agricultural products. Invisible trade refers to activities like shipping, banking and other services. --What is the situation of the foreign trade in Britain now? Its foreign trade began to be balanced after oil and natural gas were discovered and explored from the North Sea in 1975. Prime Minister Margaret Thatcher’s privatization program and pragmatism (实用主义) helped to increase the competitiveness of British products in the world market. Britain joined the European Community (Now called European Union) in 1973. The European Community consists of 3 communities set up by treaties—the European Coal and Steel Community (ECSC), the European Economic Community (EEC), and the European Atomic Community (Euratom). The community is to promote economic expansion by means of a common market. The form of industrial organization and the pattern of ownership are varied in Britain. They include three categories: unincorporated sector (small), corporate sector (big), public sector enterprises. ---British economy is called corporate economy. Why? Like American corporations, British companies are very big. These big companies, including both the public and state-owned companies, account for about 60 percent of the gross domestic product. Britain has a number of state-run enterprises. These state-run enterprises are mainly concerned with public transportation, water supply, production of coal, steel oil and electricity. They make up about 1/4 of the Britain’s gross domestic product (GDP). Britain’s private business, no matter big and small, accounts for some 3/4 of the gross domestic product. Private business is mainly concerned with agricultural, manufacturing, financial and service industries. Britain has about 2,000,000 small (unincorporated) businesses and more than 700,000 corporate enterprises. Britain’s economy can be classified as belonging to the market economy. That’s to say its economic ups and downs are heavily influenced by the demand of the market. Trend towards corporate monopolies has always been strong in Britain as in other capitalist countries. Big corporations tend to monopolize production and the market so as to achieve maximum profit by eliminating competition. So in order to prevent monopolies from distorting the role of the market, the English government has passed laws to restrict the development of monopolies. Absolute Decline and Relative Decline Britain was the first country in the world to start the industrial revolution. It took the lead in the development of economy in the world in the 19th century. But by 1900, it was overtaken by both the US and Germany. At the beginning of the 20th century, a series of crisis occurred. The First World War started in July 1914 and ended in November 1918. As a result, the British and their allies won the war. But although Britain got more colonies from the Germans in Africa and the Pacific, the war was disastrous to Britain. To some extent, Britain was also a loser. The lose of the sea power Before 1914, Britain had been the world’s leading shipping nation, transporting not only her own imports and exports, but also those of many other countries. During the war, Britain lost about 2,700,000 casualties, which were more than a hundred times the loss in the Napoleonic Wars. It had also lost 70% of her merchant ships. In the meanwhile, shipping building developed very fast in America and Japan. Thus, Britain lost her sea power, which she had dominated for more than 100 years. The decline of the foreign trade The total volume of world trade declined following the Great War. Because nations traded less with each other, unemployment grew. Moreover, during the war, American and Japanese manufacturers seized the opportunity to capture the markets, which had been British preserves. After the war, Britain felt it difficult to recapture the markets. As a result, Britain’s foreign trade decreased 50% as compared with that before the First World War. A debtor from a creditor When the war was over, Britain had lost 10,000,000 people and had spent all her wealth. She had borrowed 1,000 million dollars from the United States during the war. This caused Britain to become a debtor nation. The city of London had lost its prestige as the world’s leading banker. London was consequently replaced by New York as the world’s leading banking center. The independence of British colonies After the First World War, British government had taken over the former German’s colonies and the former Turkish Empire’s territories such as Iraq, Palestine. Yet, the colonial peoples, who were encouraged by the Russian revolution of 1917, became awakened and carried heroic struggle to win their independence. Colonial national liberation movement was on upsurge in the British Empire. Britain’s economy was greatly influenced by the two world wars although it is one of the winner states. Yet, the period between 1945 and now has been a period of steady economic growth and rapidly increasing living standards. (P55, the first paragraph) After the Second World War, Britain was confronted with tense competition in overseas markets. It had to reorganize its production industries to meet the challenge. A number of industries such as aerospace, chemicals, oil, gas and electronics have gained strength while traditional industries such as textiles, steel and ship-building contracted. Britain’s rate of economic growth has been low in comparison with that of most other industrialized countries. Thus, after the Second World War, Britain was in an unfavorable position as far as its economy is concerned.(P55, the second paragraph. Reasons for saying that the UK was declining.) Being in debt; The end of the empire; Large military spending; A catching-up by Germany and Japan; Lack of a close relationship between industry and banks. A Characteristic of the UK economy----A low rate of domestic industrial investment coupled with a very high rate of overseas investment. (P57, paragraph 1) Britain’s slow growth of productivity, soaring inflation, and large unemployment gave birth to the mocking term “British Disease”. In 1979, Margaret Thatcher became Britain’s first-ever woman Prime Minister. She prescribed a dose of new medicine to cure the “British Disease” and carried out an extensive program of privatization. The new doctrine advocated reduction of taxes so as to stimulate investment and consumption. Thatcher’s economic policy achieved remarkable success. Inflation fell to about 4 percent. Britain achieved an average 3 percent increase in its economic growth. The worker’s take-home pay increased by 20 percent. Profitability of industrial companies was high. Yet, Thatcher’s policy was like a coin with two sides: 1) Widened gap between the poor and the rich; High Unemployment; High crime rates; Unsatisfactory social services. The Current UK Economy National economies can be broken down into three main areas: 1) “Primary” industries “Secondary” industries Tertiary industries (Read P58 the third paragraph) 1. Agriculture Britain is not very large, but nearly 80% of its land area can be used for agriculture. Agriculture accounts for less than 2 % of the GNP and employs some 2 % of the workforce. So compared with most other major countries, Great Britain devotes a relatively small portion of its labor force (in the early 1990s about 2 percent of the employed population) to agriculture, forestry, and fishing. Farming is highly mechanized, though farms are not extremely large, and is dominated by the raising of sheep and cattle. Pastures cover about 1/2 of the land. Arable land is limited to less than 1/3 of the nation's land area. In the early 1990s approximately 27 % of the total land area of Great Britain was devoted to crops, and about 46 % to permanent pasture and rough grazing. So the United Kingdom is not agriculturally self-sufficient. It must import more than 3/5 of the food supply for its large population. Chief crops include barley, wheat, sugar beets (甜菜), potatoes and oats. A variety of fruits and vegetables are also grown. Livestock in the same period included about 11.8 million cattle, 44 million sheep, 7.6 million pigs, and 136 million poultry. In the Highland Zone, there are many tracts of grassland. Some of the grassland is green all the year round because of the mild climate and abundant rainfall. So Britain’s animal husbandry remains an important part of agriculture. People rely much on milk. Income from livestock and dairy products is about three times that from crops. So in Britain, rounds men or milkmen are professional. Britain’s beef is also famous throughout the world. 2. Forestry and Fishing Of the approximately 2.2 million hectares (about 5.4 million acres) of woodlands in Great Britain, about 40 % are in England, 49 % in Scotland, and 11 % in Wales. The most common trees are oak (橡树), beech (山毛榉), and elm (榆树). Pine and birch (桦树) predominate in Scotland. However, Great Britain still imports about 90 percent of its timber. The deep-sea fishing industry has declined since the 1960s, in part because of restrictions legislated by the European Community; it remains most important to the economy of Scotland and is a major source of employment in certain fishing ports. 3. Heavy and Light Industries Great Britain is primarily an industrial and commercial nation. Major industries, such as transportation, communications, steel, petroleum, coal, gas, and electricity, which had been nationalized by Labor governments, were sold to private investors by the Conservative government in the 1980s. Now it has a developed mixed private- and public-enterprise economy that is largely based on services, especially international trade, and manufacturing. The government controls the production of coal, steel, and ships; it also runs certain utilities, the railways, and most civil aviation. Coal Britain has an abundant home supply of coal, which can still last many years to come. Britain was once the largest coal producer in the world, and coal played a very important role in the industrialization of Britain. Now, Britain produces about 130,000,000 tons of coal each year. 60% of coal is used to generate electricity. The United Kingdom's coal industry, despite its steady decline since the early 1950s, remains one of the largest and most technologically advanced in Europe. The government controls the production of coal through the National Coal Board; private operators are allowed to operate certain small mines. A public corporation also controls the production of iron and steel, which has been heavily subsidized by the government and the European Coal and Steel Community. 2) Oil The mineral industry accounts for approximately 6% of the GNP but employs less than 1% of the workforce. Production from oil fields in the North Sea has allowed the United Kingdom to become virtually self-sufficient in petroleum. That’s to say, after the discovery of oil and natural gas from the North Sea in 1975; Britain became a self-sufficient country in oil from a great importer of oil. The British National Oil Corporation, established by the government in 1975, is active in the production and marketing of petroleum. 3) Manufacturing Britain’s traditional economic strength has been based on manufacturing which accounts for some 25% of the gross domestic product. Britain’s largest manufacturing industry is the iron and steel industry, and Britain remains one of the world’s major steel-producing nations. Major manufactures include motor vehicles, aerospace equipment, electronic data processing and telecommunication equipment, metal goods, precision instruments, petrochemicals, and other chemicals. Nuclear Britain built its first nuclear power station in 1956. There are about 15 nuclear power stations now. Britain was a pioneer in the development of nuclear plants for the production of electricity. By the early 1990s nuclear power supplied about 16 percent of Great Britain’s electricity production. About one-fifth of electricity comes from nuclear power. Textile The textile industry used to be the most important of all the light industries. From the 12th to 19th century, the woolen industry was of vital importance. During this period, farmers were driven out of their homeland. Farmland became the land for breeding sheep. So this time is called a time when “sheep devour men.” Now the woolen industry is still important, though Britain’s textile industry has passed its prime. 4. Transportation and Communication 1) Transportation In the 15th century the English government began improving natural waterways and constructing canals. By the early 1990s Great Britain had about 5,600 km (about 3500 mi) of canals and navigable rivers. The most important canal is the Manchester Ship Canal. Railroads began to replace canals in the 19th century, and the first important railroad line in the world was opened between Liverpool and Manchester in 1825. In the late 19th century work was begun on a tunnel beneath the English Channel. The project was later abandoned, and then revived in 1957. Work began again but was halted in 1973 by Great Britain due to the immense cost of the project. In 1987, however, work again began and the English Channel Tunnel, owned by both Great Britain and France, was completed in 1993. It is 52 km (32.2 mi) long and runs between England and France. The tunnel, which cost more than $15 billion, runs 130 m (426.5 ft) below sea level, and is composed of three parallel tunnels, one for freight exclusively and two for the transportation of passengers, cars, and freight. Freight trains can travel through the tunnel at speeds of up to 300 km/h (186 mph), resulting in a crossing time of about 90 minutes. On May 6, 1994, Queen Elizabeth of Great Britain and President of France rode through the tunnel as part of its inaugural ceremonies. British Airways was formed in 1972 by combining the two state-run airlines, British Overseas Airways Company and British European Airways. Privatized in 1987, British Airways operates one of the largest route networks in the world, traveling to some 170 destinations in 77 countries. The most popular means of travel is by car. 2) Communications Britain has a highly developed communication network. Its communication network is the fourth largest in the world. In Britain, time is money. People usually have many things done through communication services rather than in person. And communication network plays a very important part in the development of the nation’s economy. The Post Office, founded in 1635, maintains about 20,000 branch offices throughout Great Britain and administers a postal savings system. In 1870 the government acquired the British telegraph systems, and in 1892 it began buying the private telephone companies. Telecommunications are administered by British Telecom (known as BT since 1991), founded as a state corporation but privatized in the 1980s. Some 26.3 million telephone lines were in use in the early 1990s, giving Britain one of the world’s largest telecommunications systems. Exercises: Why do we say that Britain is a trading nation? Because Britain has a limited domestic market and its home supply of raw materials is inadequate. So Britain has to rely heavily on foreign markets. Now, Britain is the fourth largest exporter in the world and also one of the world’s largest importer of agricultural products and other raw materials. Each year Britain exports about 1/3 of its gross domestic product, a higher proportion than any other industrial country of comparable size. What is Britain’s largest employers’ organization? What is the significance of having such an organization? Britain’s largest employers’ organization is the Confederation of British Industry (CBI). This organization represents some 300,000 British Companies. It serves as a channel for consultation between government and employers. It tries to influence government policy by making government aware of the needs, intentions and problems of the employers. It also acts on behalf of its member companies in international activities. 3. When did Britain build its first nuclear power station? (In 1956) 4. What is Britain’s largest manufacturing industry? (Iron and steel industry) 5. What are the main agricultural products in Britain? They are wheat, barley, potatoes, sugar-beets and oats. 6. When did Britain build its first railway or the first railway in the world? (In 1825) 7. What is the most popular means of travel? (car)