The thing about trade is nearly everyone is wrong...

It is imports that matter and tariffs are just a tax on imports (meaning people are less well of):

When highly visible and politically influential producers believe themselves to lose sales because of some foreign-government’s trade practice, they complain to their home government, which then confronts the foreign government. The home government acts like a combined consigliere and hit-man for the complaining producers. But this hit-man’s immediate targets are home-country consumers and politically invisible home-country producers. That is, this hit-man – by raising tariffs – inflicts hurt on his and the complaining-producers’ fellow citizens. And this hit-man promises to ramp-up the hurt that he inflicts on his fellow citizens until the foreign government stops inflicting identical hurt on its citizens.

Of course it would be nice if foreign places stopped taxing their citizens for having the audacity to buy foreign products but it really is less important than us stopping taxing our citizens for buying stuff not made in the UK. Don Boudreaux's analogy above is a good one but a better one is here.

We are stuck in a world - that of David Cameron's "Global race" - where trade is seen as a zero sum game and where, if we don;t do these things to ourselves, some other country will "win". Worse still, trade is seen as something that is gifted to us by a benign government rather than a right removed from us by the powerful. This is the language of the "trade deal" where two or more governments agree not to interfere quite so much in the private arrangements of their citizens on a equal basis ("we won't make our people more poor if you agree not to make your people more poor").

Government's job isn't to manage the process of trade but rather to ensure that it is conducted fairly, that contracts are honoured and goods are safe. And the place to start (we can start doing this in the UK on 30th March) is by abolishing all the unnecessary tariffs - those taxes on the private choices of our citizens.


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Why you can't buy French cheese in Norway (a case study in pro-EU ignorance)

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Some readers will recall the Great Norwegian Butter Crisis:

With the sense of national crisis deepening, the national daily Aftenposten ran a two-page spread with instructions on how to make your own butter. It's all a big disappointment for the domestic goddesses of the north for whom butter is a standard Christmas staple.

"I need butter today to make my lussekatt buns and my Christmas biscuits," grumbled one elderly Norwegian. "I brought up my four children under German occupation but this is nothing like that."

And the readers who got beyond having a great old laugh at the Norwegians will have learned that the reason for the butter crisis is Norway's deranged (this is genuinely the only way to describe them) agricultural protection policies:

"The problem is more to do with a lack of competition in the market," he said. "Tine is a monopolist in the market as a result of outdated postwar regulatory regimes in a concentrated market with high entry barriers."

Put simply Norway requires its milk producers to sell to one producer of dairy products and then slaps a complicated bunch of quotas, limited, controls and regulations of the industry. All this before lumping on a huge tariff on imports.

Hence the abject ignorance and stupidity of this remark (from the Director of Britain Stronger In Europe):




For, had Will Straw known about the Great Norwegian Butter Crisis, he would have been a little slower in suggesting that the lack of Camembert in Oslo was down to the French not wanting to sell the stuff to Norwegians:

Cheese imports from the EU that were hit by the tariff, including Gouda and cheddar, became almost three times more expensive when the tariffs took effect January 1, driving many brands out of the Norwegian market. EU politicians claim the punitive tariffs have damaged trade and not least Norwegian consumers, and kept European cheeses out of the Norwegian market at a time when Europe needs all the trade it can get because of its economic crisis.

So there you have it - the problem was caused by the decisions of idiot politicians in Norway rather than idiot politicians in Brussels. And, if Will Straw wants to make the case for staying in the EU, then he really ought to get his facts straight.

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A reminder of the effect of protectionism...

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Amidst all the nannying fussbucketry about sugar, I stumbled on a consequence of making the evil white stuff more expensive:

In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. 

Bans, tariffs, price-fixes - all the things so beloved by the fussbuckets - are just a recipe for cheats and criminals to thrive.

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In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. - See more at: http://marginalrevolution.com/marginalrevolution/2014/01/is-the-sugar-quota-justified.html#sthash.FHa9wuS7.dpuf