Wednesday, April 08, 2009

Chasing rainbows

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.


William Gruff said...

Free trade benefits the trader and the banker - the mercantile class in effect - but it leads to lower incomes, longer working hours, loss of autonomy and ultimately bankruptcies and penury. It's a long while since I took O-level history but I'm sure I recall that as well as a dramatic fall in the price of bread the repeal of the Corn Law resulted in an agricultural slump that brought unemployment, foreclosures and evictions, all of which threw an additional burden on the parish and necessitated an increase in the poor rate; an early example of the tax payer subsidising the businessman.

The way to foster a general increase in prosperity and the essential industrial renaissance is to reduce taxes, increase the minimum wage and impose import tariffs on everything we can produce for ourselves. That, of course, is the opinion of an illiberal ignoramus (I know that I am because I've taken the ridiculous test at the LPUK web site).

Stan said...

LOL - well, I haven't tried the test, but I expect I'd be something similar.

bernard said...

"the racist nationalism of the BNP - Britain was a nationalist country for hundreds of years without ever resorting to that kind of ethnic nationalism". accept that Britain has always been a nationalist country, but not with racial overtones.
That's a bit rich.
There are quite a few examples (16th/17th century) of the government of those days militating against the Jews and Huguenots when their numbers started to rise above a level which they deemed a threat. It's all to do with numbers.

You can't have your cake and eat it Stan. If an electorate decides it wants nationalistic governance then it will inevitably plumb for its own people first, especially if it is a working class movement, which the BNP is. After all it's THEIR jobs on the line, not the bankers or the political classes.
As I said, you can't have your cake AND eat it.

William Gruff said...

Bernard wrote:

' ... accept that Britain has always been a nationalist country, but not with racial overtones.
That's a bit rich.
There are quite a few examples (16th/17th century)
... '

I can't find that quote in the piece cited. A reference would be useful, and considered a courtesy.

That notwithstanding there was no 'Br*tain' in the 16/17Cc.

William Gruff said...

PS: 'Plumb' should be spelled plump.

Stan said...

bernard's quote came from a comment I left over on DK, WG - but you are quite right, Britain didn't exist in the 16th/17th century as a political entity which is why I said Britain - not England.

In truth, though, I was referring to the relatively modern period of history from the Enlightenment onwards.

As far as the electorate are concerned - I don't believe they ever stopped being nationalist or having a preference for nationalist governance. The vast majority of British people still labour under the assumption that the government they elect will put British interest and British people first. That view is changing with the furore that followed Brown's "British jobs for British workers" gaffe. For the first time that I can remember we had a situation where British workers were actually told (Peter Mandelson) that they don't come first anymore.

The electorate hasn't changed much - it is still socially conservative, patriotic and proud of this nation. It was the parties that changed. I think the people are finally waking up to that fact and aren't liking what they see.

BTW, I don't consider the Huguenots to be a different race either - any more than the Scots, Welsh or Irish are.

I don't see how I'm expecting to have my cake and eat it, bernard. If you are saying that I can't have nationalist government without ethnic overtones then you are wrong. Virtually every government we had in the 20th century up until around the first Wilson term was nationalist and utterly indifferent on issues of race. No doubt some will say they were racist by today's standards, but it certainly was not a deliberate policy - which is why we stood up against overtly racist nationalist nations during WW2.

So, can we have a nationalist government which is not-racist? Of course we can! We always did in the past and we can again in the future.

And I'm afraid it is the jobs of the bankers and the political class on the line. Thousands of bank jobs have already gone and thousands more will go. As for the (current) political class - the clock is ticking on their time.