Friday, March 20, 2009

Play the game

Over on The Times they ponder the fact that Gordon Brown's hopes of saving the world are fading fast.

Gordon Brown’s hopes of leading the world out of recession at next month’s pivotal summit in London were undermined yesterday when European leaders flatly rejected calls for a further massive stimulus package.

I have a certain sympathy with the various EU leaders who are saying that they shouldn't go spending more money until they know whether the last stimulus has worked yet. It won't - but I have a certain sympathy with them. If it's any consolation, any other proposed stimulus from Brown won't work either.

The problem for Brown is that his belief in "interdependency" has left Britain almost wholly dependent on what others do - particularly in the EU. Consequently he knows that if he can't get the other EU nations to spend big to stimulate their economies the outlook for Britain is even more bleak.

You also have to admire the sheer chutzpah of the EU as well - with this.

They will also agree to fight against protectionism. Behind the consensus, though, lie deep fears among smaller countries that larger economies such as France and Germany will prioritise their industries over support for the principles of the EU’s internal market.

They are already agreeing to make up the difference in workers wages who are losing out due to the downturn. If that is not protectionist - what is? The EU is partly designed as a "protectionist" system. This is why we have the Common Agricultural Policy (CAP) - to protect French farmers and rural communities. There is no other reason. Germany, meanwhile, still (as far as I'm aware) retain laws prohibiting foreign ownership of their key industries - such as car manufacturing.

This is something which so many commentators forget - or choose to ignore - the fact that most countries still retain substantial forms of protectionism. It's just that rather than being simple, transparent protectionist measures such as trade barriers and tariffs, they use hidden structures which - apart from anything else - cost a fortune to implement.

Britain is one of the few countries which doesn't have protectionism - and that is why we have such a dependency on other nations and why we are predicted to suffer in this "recession" more than any other developed nation. Either we learn to "play the game" the way the French, Germans and US do or we pick up our ball and go home. That's the choice we have - until we make that choice we'll always be the losers.

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