Tag: hard Brexit

Free trade – whatever the cost?

Free trade and a hard Brexit are all but synonymous. There’s an obsessive quality about free traders, men on a mission, who feel their time has come: seize the moment, lest it slip away.

Daniel Hannan and Boris Johnson recently helped launch the Institute of Free Trade, arguably duplicating the work of the long-established Institute of Economic Affairs. I’ve always had a sense of vast lacunae between argument and reality among free traders, and I turned to an article on the IEA website, by its chief economist, Julian Jessop, to check out whether this judgement was justified. For the full article see:  https://iea.org.uk/whos-afraid-of-free-trade/

Jessop expresses puzzlement as to why ‘the economics commentariat’ (i.e. most economists) had given a ‘sceptical, with some downright hostile’ response to two papers advocating a policy a free trade once the UK leaves the EU, by Professors Kevin Dowd and Patrick Minford.

It may be unfair to quote passages and not reproduce the whole article, but to my mind they do speak for themselves.

‘… it has been suggested that Prof Minford’s analysis shouldn’t be taken too seriously because his forecasts of the economic and market impacts of the vote itself were inaccurate. As it happens I don’t know what Prof Minford was forecasting in 2016. But nor, frankly, do I care….’

‘Professor Minford’s current and past work in this area has been challenged for using what some regard as a simplistic and out-dated model of world trade. But the ‘gravity models’ favoured by many of his critics also have their flaws. Even if Professor Minford’s numbers are only as good as his models (which is always the case) …’

The phrase, ‘the underlying principles are as sound as any’, is key: there is a millenarianist belief in free trade as a universal panacea, the UK’s adoption of which will open the eyes of the rest of the world, as Britain did once before, in the early 19th century. ‘Gravity models’ refers to the long-established and incontrovertible pattern of a much heavier weighting toward trade with one’s neighbours, than with more distant countries.

Nonetheless, whatever the correct interpretation here, these legal points do not weaken the more important economic argument that the UK would be better off lowering its own trade barriers regardless of how the rest of the EU responds.

Free trade it seems works because it works, regardless of circumstance. In what sense better off – who would be better off?

‘… of course, there would be some losers from free trade among consumers as well as producers …

‘….there would be some losers..’ The reality is that the disruption would be extraordinary.

Others have suggested that trade can never be fully ‘free’, because of non-tariff barriers. But this is tedious semantics. Even if unilateral free trade only results in freer trade, relative to the status quo, that would be an improvement.

‘…tedious semantics’? There’s an impatience here, a touch of the Gadarene swine.

What then about things that we do produce ourselves but where other countries have a genuine comparative advantage? Why should we subsidise domestic producers if consumers can buy better or cheaper products elsewhere?

A few suggestions as to why… Easily disrupted supply chains, sourcing expensively at long distance, security implications, quite apart from the disruption to urban and rural landscapes as industries close and new ones – we would hope – spring up elsewhere. But in the chaos, and the economic disruption, what certainty is there that new industries, competitive on the world stage, would rise up?

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Read the whole article: you may find you’re on his side, not mine.

Conservatism – selling out to the new right

I began this blog eight years ago in a mood of optimism. Obama’s ‘yes we can’. Maybe we could find common ground across the political divide, enough to take agendas of enterprise, economic growth, internationalism and social justice forward together. We knew of the new right’s machinations, but didn’t foresee how their path to power might work out. And how conservatism would be re-interpreted, and buy into the politics and the moral neutrality of post-truth. To take a few examples:

# Referenda: the idea seems to be abroad in some circles that referenda results are for all time. Referenda if used at all, and they are too easily manipulated (by money and media) to have any significant role in any serious democracy, must be reversible, in the way that parliamentary legislation is reversible. It is extraordinary and irrational to think otherwise. And against conservative tradition…

# Conservative vs radical: it is no less remarkable how the Tory party has moved so far right without realising it, mirroring the Barclay brothers Daily Telegraph agenda and adopting the manners and demeanour of the Paul Dacre Daily Mail. We could indict the Conservatives under the trade descriptions act. (Tory – from the old Gaelic toraidhe, meaning outlaw. Altogether a better description.) The old Tory party, going back to Macmillan, Heath, even Thatcher, believed in the great British unwritten constitution, the wheels turned slowly, radical change and revolution were disdained. We have now arguably the biggest leap in the dark outside of wartime in two hundred years.

I am now the conservative. I’m not sure I like my new role too much – there’s too much in the world to be radical about.

# Economic forecasts from outlier economists such as Patrick Minford, given press and media coverage as if mainstream. Compare the wiser counsels of the FT and the Economist. Curious now how many rely on the Telegraph City pages: that’s a subject in itself.

# Assumptions that post-Brexit we will dispense with the ECJ – the European Court of Justice – and still achieve some kind of trade deal. Set up a separate quasi-judicial body? Are the EU for a moment likely to acquiesce in that?

# ‘Recent’ poll data suggesting wide support for a hard Brexit – quoted as fact in the media (including The Week) – when the data dates back to April and has been wilfully misinterpreted.

# Finally – diversion away from the issues which should be engaging us. Not least the tragedy (see recent reporting in The Times, and all power to them ) almost on our doorstep in Libya. 700,000 migrants camped and waiting. This is a crisis for all Europeans, and one so far which the EU, 28 countries with clamorous electorates, has simply failed to come to terms with.

Here in the UK we are obsessed by Brexit, preferring to close our borders physically, morally and politically. Rather, we should be in there, facing up to the crisis, putting forward proposals. Advocates within Europe, within the EU.

Suggestions, for example, for a wall across southern Libya, or funding repatriations… maybe or maybe not viable … but where are we?

Sidelined, irrelevant.