Over on Devil's Kitchen I've been following a discussion about economics - along with the occasional comment of my own. (Globally fucked - Sunday, April 5th).
It amazes me that I still hear (or see, rather) apparently sane , intelligent people who think they can ignore the basic fundamental principle of market economics - supply and demand. Basically, the argument stems around the Libertarian Party of the UK (LPUK) policy of free trade in a global market.
As many people rightly point out, this leads to lower prices - good for consumers, eh? Well - yeah, up to a point - but that depends on those consumers having the money to spend on the produce.
What they seem to forget is that wages and jobs are as prone to market fluctuations as prices and produce. In a free trade, globalised market it is not only lower prices we get - it is lower wages. This has to happen - and it is happening right now. Right before our eyes.
There is no getting away from this simple, basic, market economic fact. In a globalised market we are competing for jobs against people all over the world - and with 6 billion people to compete against, it is impossible for us to maintain the high wage, high living standard economy we are used to.
Forget comparative advantage. That depends on you having an asset which gives you an advantage - and we don't have one. Financial competence? Ha! Don't make me laugh. Oil? Yeah - we have a bit, but how much longer will that last. Coal? Yeah - we have a thousands years worth, but so does the rest of the world.
Nope - sorry, everybody - it can't be done. In a globalised free market your wages have to be comparable to everybody else's - just like your prices. You can't expect to enjoy low price imports and keep your high wage jobs. It can not happen - the law of the market says so.
LPUK is not the first political party to think it can ignore the basic principle of market economics - and it certainly won't be the last - but they are deluding themselves. There isn't a pot of gold at the rainbows end - just a bloody great puddle.