Wednesday, January 07, 2009

More of the free trade myth

Over on The Telegraph they've jumped on the Gordon Brown "Blame the USA" bandwagon.

'Buy USA' push may see America slip from free trade church.

Hans Redeker, currency chief at BNP Paribas, says the US risks setting off a collapse in discipline across the world. "The US has a leading role so this could set off a huge response in other countries," he said. "There is already talk of a €100bn (£91bn) fund in Germany to save its industry from being sold off cheap."

French president Nicolas Sarkozy has proposed a "strategic investment fund" to fend off "predators" – a euphemism for sovereign wealth funds from Asia and Russia – hoping to snap up France's crown jewels. "We will intervene massively whenever a strategic enterprise needs our money," he said.

So there you go - it's OK for Germany and France to take such measures but if the USA do then that is "dangerous".

Maybe it's just me, but I wasn't even aware there was a "free trade church", but if there is then they are worshipping a myth - just like the new religion of anthropogenic global warming - because there is no such thing as free trade between nation states.

I'd go further and argue that, unless you are a fan of globalisation, trans-nationalism and supra-nationalism then free trade between nations isn't even desirable. It is, of course, essential to have free markets and free trade within a nation - or as free as possible, but when it comes to trading with other nations it is far less desirable.

The notion of "free trade" is based on the belief that no nation should impose tariffs or restrictions on other nations selling their produce to them - but this is not "free" trade because there exist imbalances in national production of items for trade. A nation such as Britain, which has strict employment rules, regulations for working conditions and minimum wages can not compete in the market with nations like China which have few such restrictions. When one nation has such a competitive advantage then the trade is far from free.

Instead, a sensible nation balances its trade dependent on what it needs and what it produces. For instance, if a nation needs wheat, then it makes little sense to impose restrictions on wheat imports - but if a nation produces wheat then what is the point of importing it?

Because it can be produced cheaper by a different nation?

That is very short term thinking because, eventually, it won't be and if, by importing the wheat from cheaper sources abroad, you have ruined your own wheat production industry then you have made your nation dependent on others.

And that is the one thing any nation should try to avoid. It should be the goal of any nation - and their government - to make themselves as self-reliant as possible. Of course, ever since we've had governments we've had governments who make decisions based on short term gain without regard to the longer term implications - but never as much as we've had in the last half century.

The really annoying thing, as far as I'm concerned, is that while British governments have bought into this "interdependency" thing through the EU most other EU nations have not - so while Britain has played fair by the rules virtually every other EU nation has bent and twisted those rules to suit its own national agenda.

That's why we don't have a car industry anymore. Of course British car manufacture was blighted by poor management and trade union intransigence but so was the rest of Europe at the time (and in some countries it still is!) - but while we played by the rules the other car producing nations of Europe went to extraordinary lengths to ensure they protected theirs. Our manufacturers went belly up or were bought up by foreign companies - theirs thrived at our expense.

Same with our fishing industry, agriculture, steel, power, armaments and so on. Well, it's about time we stopped playing fair and started protecting ourselves and our nation and this recession provides the perfect excuse and opportunity to do it.

Unfortunately, with our political scene dominated by left wing supra-national Marxists that is not very likely to happen.

4 comments:

TheFatBigot said...

We are seeing the same pattern at every level. Individuals are having decisions about how they live taken from them and made by the State. At first it's dressed up as "advice" or "guidance" and within a short period it becomes mandatory - for our own good, of course.

Many decisions which should be taken at local level are now dictated by Whitehall. It's dressed up as "efficiency" and "ensuring equality", but it's nothing of the sort it's dictation by a weak government scared of anyone challenging its decisions. If a council must do what the government requires no one can say "but the way Essex does it works better than the way Lancashire does it", the choice is the government's way or the government's way and no empirical evidence can be generated to question its wisdom.

At national level we are limited in our decisions by diktats from the EU.

At every stage real power is removed further and further from the people who are affected and our ability to challenge decisions and debate their efficacy is weakened.

Now we are entering a phase of attempted world government by an unelected clique at the UN. The great global warming / climate change fraud is the smokescreen for dictation of both national and international policy. "You can't do that, it's bad for the climate" is heard more and more. It is the excuse for dictating how we generate power, how much power we use, how we travel, what we make, what we farm, what we eat and much more besides.

No checks, no balances, no means of reversing disastrous policies that have already cost countless lives in the third world and will soon take their toll here too.

Not a happy picture, especially because the new President has appointed dedicated eco-fascists to senior posts.

tapsearcher said...

First of all, Free Trade is not trade as historically practiced or defined. Free Trade is primarily based on moving production from place to place anywhere in the world for the sake of cheaper labor. This means that workers and labor are the real commodities being traded in the process.

Trade with tariffs or without never was based on these the devaluation of a value asset like workers and labor are. It is self-defeating to think you can grow an global economy by continously discounting labor. It doesn't work because consumerism supports the global economy and if you keep cutting the value of what workers make , you keep cutting their ability to afford even cheaper imports.
Explore the lost worlds in the globalist free trader Flat World at http://tapearch.com/flatworld and http://www.bizarrepolitics.com

Anonymous said...

So you think it is more intelligent to divert resources to produce more expensive goods nationally than sourcing them cheaper abroad?

Think about what you are saying.

I was directed to this blog via LFAT, I have no idea why it would link to such an idiotic post.

Oh, by the way, the reason the UK is not producing cars anymore (although there are quite a lot of car factories in the UK, but we let that pass), is because you produced shite that not even the brits would buy. You can hardly say that german workers have less rights or worse conditions than here, still Germany trade surplus is larger than China (with a stronger currency to boot) so that puts paid to the devaluation of workers.

Morons.

Stan said...

Anonymous - think about what you are saying. Why are goods produced abroad cheaper? What happens when they aren't cheap anymore, but because you don't produce those goods anymore you have no choice but to carry on importing them?

As for cars - we assemble cars here for foreign companies. That is not the same as having our own car manufacturing industry. You say we produced cars that were shite - not true. We produced some shite cars, but then again so did everybody else back then too. The problems with British manufactured cars were mainly to do with outdated practices and poor quality control which the unions refused to allow the management to address - the same problem that saw the demise of Rover not so long ago.

As for Germany - I never said they had less rights or worse conditions than British workers, but they do not permit foreign ownership of their car manufacturers - but those car companies are now starting to move their operations to cheaper countries (much to the annoyance of their workers).

Like a lot of people, you understand the cost of everything and the value of nothing. You can not see things beyond the short term or past the direct effects. You can not see the problems that will overtake a nation which is reliant on others for its produce, but I can assure you that those problems exist. Some of them are already happening - lack of opportunity for graduates, ill-equipped armed forces, energy supply problems, crumbling infrastructure due to insufficient expertise of our own to repair and update it - while some of them - such as food supply - will only become apparent in the future, but WILL become apparent at some point.

Then what?