Sunday, 8 May 2016

An idiot's guide to why we should leave the EU (Pt 2) - Trade

Trade. Yeah that's ever so much to do with government. All government - local, regional, national, supra-national, world - does is prevent trade. The rules and regulation, controls and restrictions, barriers and prohibitions - everything (bar geography) that prevents trade has been imposed by government. So when those fans of the EU tell you that being a member of this bureaucratic, unaccountable, undemocratic club is 'good for trade' they are lying. No government of any sort, anywhere has been 'good for trade'. It's not what governments do. Governments find reason to stop trade. And then negotiate so-called "trade agreements" to pretend that somehow government is promoting or encouraging trade.

Trade is essential and fundamental to our humanity. It's not some sort of capitalist invention but the way by which we share, by which we add to the sum of human happiness, how we add value. The idea of free exchange - I swap my surplus goat for your excess corn - is what has raised us to the condition we are in today. Absolutely nothing at all to do with government, let alone the EU.

So when the folk that like the EU tell us that it would affect Britain's trade what they're giving you is a threat. The EU - a powerful government - will stop ordinary people who make ornate left-handed widgets or provide the horoscopes of Wu from selling said goods and services in the EU. Why would that powerful government do that? Mostly because it wants to protect the interests of widget makers and horoscope vendors who've employed besuited lobbyists to buy those unaccountable EU decision-makers food and wine in expensive Brussels restaurants.

Who loses out here (assuming that there has been a fix to protect those widget-maker or horoscope-crafter interests)? The EU consumer - they're poorer for that fix, they don't have high quality English made widgets or Welsh horoscopes. Forget about the numbers that EU fans peddle - they're nonsense. Ask a sensible question - why on earth would people in France, Germany, Spain or Poland not want to carry on buying those lovely left-handed widgets and Wu-ist horoscopes? The idea that, if we left the EU, customers in Slovakia and Austria would stop buying our stuff is plainly nonsense. Yet that's what they're scaring you with.

British companies trade everywhere - America, Africa, India, China, Japan - without there being the need for an EU equivalent. Yes it's difficult (this is why the directors of international trading companies get paid so well) but that's as much about culture, language and local knowledge as it is about dealing with the endless barriers that stupid governments put in the way of doing business. These companies don't need permission from government to do that trading, they just get on with it.

Ignore the macro-economic projections - this is just sympathetic magic not real science - and look at the truth. Trade is about the exchange between individual people and their businesses not the so-called deals of governments. Those deals are about monopolies, control and power which is why the grandees of big business and the their paid servants in 'public affairs' companies spend so much of their marketing budgets on getting regulations changed.

Look instead at Singapore, at Hong Kong, at Taiwan and ask why these places - rejected places - are among the richest places in the world. Their success is down to trade - no deals, no fear-mongering about economic blocs, no fixes. Just doing good business, making and selling things that people the world over want to buy. Do you really believe that somewhere as enterprising, creative, original and intelligent as Britain can't do the same? That the only way we can succeed in trade is through a fix, through protection and through the special deal?

Trade made Britain rich. And it will maintain our riches. But only if we see it as something done between free people rather than some favour of government. The EU - just consider the Transatlantic Trade and Investment Partnership (TTIP) - sees trade as something negotiated between rulers not as you or I buying things that we want from wherever in the world they're from. This isn't 'trade' it's the antithesis of trade, it's deciding where the boundaries of special interest and protectionism are placed. It makes the world poorer and the rent-seeker richer.

So when EU fans tell you it's about trade they mislead. What they mean is that the EU will make European consumers poorer so as to protect the interests of businesses who've paid - through their besuited lobbyists - to have their interests placed above yours and mine. It's not about trade. It never was about trade. It's about stopping trade, controlling trade and, in doing so, making you and I just that little bit poorer.



Iain Roberts said...

Very difficult to take you seriously when you make statements like this:

"All government - local, regional, national, supra-national, world - does is prevent trade."

A legal system to resolve commercial disputes? Currency as a medium of exchange? Standardisation of weights and measures? A police force to stop bandits and thieves? All of these enable trade, and governments have been doing them since ancient Mesopotamia.

Surprisingly enough, a modern economy requires laws and treaties a little more complicated than they had in the Bronze Age. Of course it sometimes gets out of hand, but it's ridiculous to dismiss government as serving no useful purpose in facilitating trade.

Will Robinson said...

While I always enjoy your comments on the In/Out debate, there seems to be a distinct lack of any mention of tariffs which come with trade. We currently pay HMRC for any goods imported from areas such as China (and this is usually reciprocated by those governments). Given roughly 50% of our exports are to the EU, wouldn't being out risk our goods / services being slapped with a levy from EU countries? Thus making us more expensive?

Almost certainly not as disastrous as the In campaign would make us feel, but surely relevant to the debate?

Iain Roberts said...

@Will Robinson: If I'm not mistaken, Simon is talking about tariffs when he says:

"So when the folk that like the EU tell us that it would affect Britain's trade what they're giving you is a threat."

Specifically, a threat of putting tariffs in place where none existed before.

A post-Brexit UK could negotiate to join the EEA (along with Norway and Iceland) and gain tariff-free access to EU markets. Then again, it might choose to go it alone, and make a trade deal which stopped short of full access to the single market (as Canada did recently).

During those negotiations, it would be in both sides' interest to have tariffs in place. This gives them a carrot (agree with me, and I drop tariffs on X) as well as a stick (agree with me, or else I introduce tariffs on Y). So regardless of Simon's preferences, Brexit would mean tariffs between the UK and EU -- at least for several years, and maybe indefinitely.

Henry Kaye said...

As has been pointed out on several occasions by several respondents, the EU countries export more to us than us to them. If they imposed tariffs on our exports to them, then clearly we would do the same on their exports to us and it would hurt them more than us. It is most unlikely that Brexit would result in a tariff war.

Ian Patterson said...

Its not just about tariffs though, its also about common standards, testing regimes etc, and ability to simply send people to go to sell.

If you make a widget in UK and it passes UK standards & tests today, you can sell it across the EU. The US etc don't automatically get the same right, unless we've recognised their standards and test regime. Outside the EU, would we need a UK standard and tests, then an EU test too? Thats expensive for businesses

Under free movement, UK salesman on UK contracts can go selling across Europe without restriction. Outside EU its possible you'd need Visas etc to do so.

If you argue that we could still do the above outside the EU, then where would we get a say in setting the standards, agreeing tests and the like? And at what price?

Whilst the above doesn't mean 'can't sell', it increases costs, duplicates red tape and helps no one.

Simon Cooke said...


On the standards thing - most of these are set globally (UNECE, WHO, etc.) and all the EU does is process them. Right now our 'place at the table' is taken by a EU representative. If we leave, we get our own seat.

On the issue of salesmen travelling around and so forth, I don't see it. Why would they want to impose an expensive visa system?

Finally the really important thing with trade is what we buy not what we sell - it's buying all those lovely BMWs, bottles of prosecco, Spanish holidays and mature rochefort that is the benefit of trade isn't it?