Unilateral free trade

The point being that it needs to be the whole shebang.

For two reasons.

Economic – comparative advantage won’t play out properly if we’ve a protected sector (s). Protection will mean that the reorganisation to efficiency won’t happen properly.

Political – give one group privileges at he expense of all others and all will be calling for privileges.

It doesn’t have to be overnight though. It can be, possibly should, a process. Straight line (ie, from base year, not each year) 25% off import duties each year for four years. Double quotas each year. In year five, no duties nor quotas at all.

47 comments on “Unilateral free trade

  1. Would this preclude proportional regulation, where new entrants to a market get an easy ride and then the regs get tougher the bigger they get?

    I appreciate there would be gaming of it, with corps splitting themselves to avoid hard regs, but how else to prevent incumbents lobbying for regs to prevent startups and stifle competition?

  2. Do you imagine Tim that Dress Up –The Pretend Prime Minister and friend of little shackled Vietnamese girls has the slightest idea about any of the points you make? Or would care if she was even capable of understanding?

    Treachery seems to be a fairly low IQ game.

  3. What is all this bollocks about comparative advantage? The only substantial advantage is if you have comparatively cheap labour and loads of machinery. Why was cotton grown in the slave states of the American South and spun in Lancashire (which supported the Confederacy BTW ).Now Trump is squealing that the American economy is being raped by China.
    Having induced the country to jump off the Brexit cliff saying we can hold hands with Trump and get American trade instead , which is not going to happen( see above) , the ruling class continues by spreading fantasies from Dimwit Economics now it its all going wrong.
    If there is any treachery it comes from our up themselves elite
    which has constructed an orthodox Economics which only holds together because it is a members-only group wank.

  4. Rave on Reedy.

    The only Rambler here is you and your brain went AWOL long ago.

    Even Santa can’t get it back for you. And your latest 12 months of support for every rotten leftist cliche in existence means that he isn’t going to try.

  5. Steady on Mr Ecks,
    DBC Reed is surely correct here. Saucy too, the old fox.

    What is all this bollocks about comparative advantage?The only substantial advantage is if you have comparatively cheap labour and loads of machinery

    Look at the US, and you’ll see he’s right.

    California: has machines, but expensive labour. This is why you see so many beggars there, particularly at this time of year.

    Simply put, high wages = inability to compete

  6. Economic – comparative advantage won’t play out properly if we’ve a protected sector (s). Protection will mean that the reorganisation to efficiency won’t happen properly.

    Maintaining basic WTO tariffs mutually each way, or waiving them mutually, is “protection”? Sorry, I don’t buy it.

    Unilateral free trade is potentially giving your competitors (other countries) an advantage (or financial discount) for absolutely nothing in return. Sometimes, in some sectors, that might make us richer, In others, it could make us poorer. Surely we chase what makes us richer, not what makes us poorer?

    Use exagerated tariffs to make it more obvious. Assume WTO tariffs are 100% for everything. If you unilaterally waive yours, and let your competitors keep theirs, in some sectors that might not be too clever? Forget the text book / theory; just use a calculator?

    Political – give one group privileges at he expense of all others and all will be calling for privileges.

    Ecks would be able to provide a far more articulate response to that than I could. OK, I’ll try – just tell them to fuck off? I think even I could manage that?

    It doesn’t have to be overnight though.

    Obviously makes sense. And once we’ve got Ecks dealing with the politicians and lobbyists, can’t we phase this by sector as well, or whatver else works best to our maximum benefit?

    As I said in the other thread, why not chase the wins?

  7. “Unilateral free trade is potentially giving your competitors (other countries) an advantage (or financial discount) for absolutely nothing in return. Sometimes, in some sectors, that might make us richer, In others, it could make us poorer. Surely we chase what makes us richer, not what makes us poorer?”

    Who richer or poorer? The aim of an economy is to make consumers as well off as we can. So, charging them a large import tariff, deliberately making what they want to buy more expensive, makes them better off how?

  8. So, charging them a large import tariff, deliberately making what they want to buy more expensive, makes them better off how?

    If the UK government tax take is going to be neutral, you simply refund the tariff to the consumer. Not better off, but not worse off. But the car employees (also consumers) will clearly be better off.

    Ie, re the earlier thread on cars, standard WTO import tariff on cars is 9.8%. Say that that generates extra tax revenue per annum of £2 billion (whatever the number is). Knock £2 billion off petrol duty. Tax is net neutral. Buy a Seat you are slightly out of pocket. Buy a Qashqai, you are slightly up,

    That’s as close as I can get to “directly giving the consumer the money back” (perhaps you can improve on it targeting the Seat driver specifically, but frankly that’s a detail?), whilst also “encouraging” inward investment, rather than telling it we don’t care any more?

    The higher the tariff, you really don’t want to be doing it unilaterally if it might hurt? Froggy wine – 38% – no problem, we can’t produce it, waive the tariff (or knock the existing duty down pro-rata, job done); but where we currently have loads of “consumers” who are also employed by the “Nissan UK”s et al, perhaps let’s try an approach that makes our consumers (in total) better off?

  9. Ah, tariffs as revenue raisers. But they’re a horribly inefficient manner of gaining tax revenue. It makes us poorer trying to get our tax that way instead of taxing consumption or even incomes.

  10. Slightly better than petrol duty – waive existing VED tax on the specific cars coming in, exactly pro-rata? That absolutely targetd at those consumers that might otherwise pay more?

    I prefer petrol duty because that’ll wind all the greenies up!

  11. Tim,

    It’s not a revenue raiser because we give it straight back – it’s net nil!

    All we are trying to do is “encourage” inward investment, rather than give the Nissans an ever better reason to leave (because due to our generosity, there would be now less cost to them to be in the Ruhr and export into the UK, than before).

    At 100% tariffs (or 200%), all manufacture would migrate to the country of sale. We are net importers of cars. At 100%, you would never do what you are proposing unilaterally?

  12. ( And you say better to tax consumption. This is not relevant – because it is net nil anyway – but buying a car is consumption. )

  13. Economic – comparative advantage won’t play out properly if we’ve a protected sector (s). Protection will mean that the reorganisation to efficiency won’t happen properly.

    WTO rules are not “protection”. You are committing the fallacy of equivocation there. On a level, WTO, playing field, comparative advantage will play out just fine. Also, you can have WTO rules in some sectors but unilateral free trade in others. Comparative advantage, by Ricardo’s definition, is concerned with particular products and groups of products: it’s not comparative-advantage-in-general.

    Political – give one group privileges at he expense of all others and all will be calling for privileges.

    But we wouldn’t be giving one group privileges: we would be taking away the privileges of WTO rules for some sectors (eg agriculture) but not others (eg car manufacturing). Not the same thing at all; and taking away privileges from some groups is politically a lot easier than either giving some groups privileges or phasing out everyone’s privileges.

    Straight line (ie, from base year, not each year) 25% off import duties each year for four years. Double quotas each year. In year five, no duties nor quotas at all.

    To which there would be massive cross-party opposition – from the CBI, the TUC and all backbench MPs with an exporter in their constituency.

  14. Ain’t going to happen unfortunately.
    Although the benefits of trade are divided between producers and consumers near enough equally there are far more consumers to share the benefits than there are producers. I.e. the production benefits are concentrated in the hands of a few producers, whereas the consumption benefits are spread thinly amongst many consumers. Therefor the producers will make more fuss and can afford the lobbying to promote their interest. I seriously doubt that May can see that, she’s no Maggie, so expect deals that favour producers.

  15. Jack C;

    “Steady on Mr Ecks,
    DBC Reed is surely correct here. Saucy too, the old fox.

    What is all this bollocks about comparative advantage?The only substantial advantage is if you have comparatively cheap labour and loads of machinery

    Look at the US, and you’ll see he’s right.”

    Would you care to re-examine the text you quoted?

  16. Ducky,
    You must be one of those neoliberals, blinded by Thatcherism.

    As DBC Reed has said, comparative advantage can only come from comparatively cheap labour and loads of machinery.

    California has a relatively (very) high labour cost per unit, thus it fails to compete. This explains the number of homeless people there.

    It also explains the huge number of tourists from lower wage, therefore more successful economies, all stood around gawping at and photographing California’s endless collection of traditional peasant mansions.

    Stands to reason surely.

  17. Tim, unilateral free trade sounds good on paper, but in reality the EU can still use regulatory barriers to shaft us if we go that route.

  18. “If the UK government tax take is going to be neutral, you simply refund the tariff to the consumer. Not better off, but not worse off. But the car employees (also consumers) will clearly be better off.”

    Worse off, because you’re not including the goods that *would* have been sold on a level playing field. You’re only giving back the money on those goods imported *despite* the tariff.

    Imagine there are two shops selling a particular good. Shop A sells them at £10 each, and shop B at £1 each. Shop A complains about the competition leading to a loss of jobs, and so the government imposes a tariff on shop B of £10 per item. Most people buy all their goods from shop A at £10 instead of shop B who are now charging £11. The few people who still get their goods from shop B contribute £10 each to the general pot, which is given back to the consumers in the form of government services, but there’s only a small fraction of those – like one sale in twenty – so you only actually get about 50p off per item. Instead of paying £1 per item as you could, you’re paying either £9.50 or £10.50. And that’s not including the costs of administering and policing it.

    If the tariff succeeds in protecting the more expensive manufacturers from competition, then by definition we’re paying more on average. Shop A (who are themselves consumers) gains on those goods for which they receive protection, but loses on all the many thousands of other goods subject to protection being sold by other local shops.

  19. NiV

    Your point suddenly makes it clear to me that the VED refund (exact matching) does not work but the petrol duty refund does. Because, yes, we do want to incentivise Seat to move some of its production to the UK, and not make it a cheaper cost option for Qashquai to relocate all of its production to the Ruhr.

    I’m all for the level playing field, but across each country…

    FWIW, I couldn’t work your analogy out. Are shops countries or producers. If countries, then there are consumers associated with the shops? If producers, then – because they employ lots of people in the production – the tariff is an incentive for that producer to have a presence in your country?

    Tariff, both ways, so both countries do it. Or both waive it together and simply compete fully on merit, I’m easy?

    btw, you assumed that the tariff levied is also the sale price of one of the producers – that would be a fluke? And WTO certainly doesn’t do that?

    [ Your example above – mine is this:

    Seat and Qashquai – both £20K sales price whether produced in the UK or EU. £2K tariff (10%), offset by petrol duty. Assume 50/50 sales after implementation of tariffs. Qashquai buyer (UK produced) now pays £19K (over time they will receive £1K of petrol duty refund), Seat buyer pays £21K (the same principle – £22K less £1K petrol).

    On average, car consumers are no better or worse off in total. Qashquai buyers are better off than Seat buyers. Seat therefore has some incentive to move some of its manufacturing capability to the UK, potentially to increase sales, when the decision comes up.

    If we do this unilaterally, Qashquai has no disincentive whatsoever not to consolidate all of its car production in the EU, rather than perhaps just move the EU sales element there in due course when its decision comes up. ]

  20. “FWIW, I couldn’t work your analogy out. Are shops countries or producers. If countries, then there are consumers associated with the shops? If producers, then – because they employ lots of people in the production – the tariff is an incentive for that producer to have a presence in your country? “

    The analogy was with producers. Yes, there are consumers associated with the producers, but as I said, what they gain from the protection of their own industry they lose from the protection of everyone else’s.

    “btw, you assumed that the tariff levied is also the sale price of one of the producers – that would be a fluke? And WTO certainly doesn’t do that?”

    I just picked exaggerated numbers to emphasise the point. The same principle applies with different numbers.

    “On average, car consumers are no better or worse off in total.”

    If all the goods are indistinguishable and the same price, then yes, it makes no immediate difference to the consumer which they buy. But it depends what else changes as a result. You can’t change prices in isolation – they have a knock on effect all across the economy. If you manufacture more cars in Britain, you have to manufacture less of something else (because there are a limited number of workers) and wages rise with the higher demand for labour, increasing prices.

    In general, if the free market picks a particular allocation of resources, it’s because nobody can improve their own lot by doing things differently. If they could, they would. It maximises collective utility. So if you have to push people to get to a *different* allocation, one they wouldn’t have picked on their own, then it’s very likely a worse solution. You can always move the costs to somewhere else less obvious, but if you have to apply *force* to get people to do something, there’s a price to pay.

    “Seat and Qashquai – both £20K sales price whether produced in the UK or EU. “

    So without the tariff, presumably more customers were buying Seat, but after applying the tariff they’re now 50:50? (Or else why apply the tariff?)

    So why did customers previously prefer Seat, even with equal prices? Maybe they’re better cars?

  21. The thing about CBCR is that he is so fixated on Thatcher, the 19thc. and LVT that he totally fails to understand comparative advantage. It is about relative efficiency rather than low wages. Next!

  22. “So without the tariff, presumably more customers were buying Seat, but after applying the tariff they’re now 50:50? (Or else why apply the tariff?)

    Correct

    So why did customers previously prefer Seat, even with equal prices? Maybe they’re better cars?

    LOL – that’s not relevant to the argument! We could have started at 50/50 and gone to 60/40 (or whatever)! You’re shifting the goal posts again (you’re an expert!) – don’t…

    If you manufacture more cars in Britain, you have to manufacture less of something else (because there are a limited number of workers) and wages rise with the higher demand for labour, increasing prices.

    and the follow up about allocating resources.

    This is the bit that’s relevant, and – if we have full (effective) employment I agree with you.

    But all I have argued throughout with this, is that we don’t “unilaterally” do this suddenly across the board. Or that full employment scenario gets a sudden unnecssary shock.

    If unilaterally, perjhaps do it slowly, so that when Nissan happily decide they no longer need to manufacture at all in the UK (because we unilaterally waived the car tariffs but the EU kept theirs), we’re also OK with this because the shift at that stage will be marginal (for our economy as a whoe) and we will have labour that can more profitably be used elsewhere, rather than simply a load of unemployed (and worse off) workers (aka consumers).

    Hence, first off, pick those that areas that hurt us least, like wine etc, and simply take it along step by step from there. Ideally, as others have said, WTO rates will fall, and the problem then takes care of itself anyway.

    I take the point about exagerated rates. Go back to my 100% tariffs example. You really don’t want to be unilaterally waiving those in a hurry on mass, without a load of ensuing chaos….

  23. btw, all of you unilateralist tariff waivers, why are we even talking about doing trade deals with the rest of the world if you want to waive all WTO?

    The reason car manufacturers from Japan are in the UK already is to avoid tariffs (for cars being sold into the EU).

    Hence, I’m guessing you unilateralists are, on 29th March 2019, planning on saying to “all the world”, “ok chaps, no tariffs any more on anything you want to sell into the UK, effective from tomorrow morning”, or over 4 years in Tim’s transition case?

    In which point, trade deals have no purpose whatsoever? Including with the US? Have you told Liam Fox?

    (Apols for all the typos in the one above.)

  24. Apols NIV – re-reading it later, that came across the wrong way! Happens too often – if badly written, the humour / mood in the mind sometimes doesn’t translate without an emoji or similar…

  25. @Theo & PF

    Israel and Singapore are doing just fine with WTO unilateral free trade. UK in the past was zero tariff.

  26. “LOL – that’s not relevant to the argument! We could have started at 50/50 and gone to 60/40 (or whatever)! You’re shifting the goal posts again (you’re an expert!) – don’t…”

    My thought was that if people give up the car they prefer for one they don’t, they lose the difference in value between the two cars. So it wouldn’t be a loss-free exchange.

    “btw, all of you unilateralist tariff waivers, why are we even talking about doing trade deals with the rest of the world if you want to waive all WTO?”

    Because mutual free trade is better than unilateral free trade is better than mutual tariffs. If we can negotiate mutual free trade, we should. But unilateral free trade is still far better for us than charging ourselves tariffs.

    “Apols NIV – re-reading it later, that came across the wrong way! Happens too often – if badly written, the humour / mood in the mind sometimes doesn’t translate without an emoji or similar…”

    Don’t worry about it! I don’t have any issues with the way you phrased it. (And after some our the recent threads, it should be readily apparent that I’ve got a remarkably thick skin for “robust discussion”!)

    But thanks for your consideration.

  27. UK did all right under unilateral free trade when the Corn Laws and Maritime Acts were repealed – number 1 world economy for the next 30 years.
    Unilateral free movement for non-criminals has to be the way to go – visa stamped NRTPF of course, and instant expulsions for criminality. A lot of Chinese engineering talent would make a beeline here.

  28. Bongo: “Unilateral free movement for non-criminals has to be the way to go – visa stamped NRTPF of course”

    No thanks.

  29. DBC Reed

    “which supported the Confederacy BTW ”

    What are you talking about?

    “On 31 December 1862, a meeting of cotton workers at the Free Trade Hall in Manchester, despite their increasing hardship, resolved to support the Union in its fight against slavery. An extract from the letter they wrote in the name of the Working People of Manchester to His Excellency Abraham Lincoln, President of the United States of America says:

    … the vast progress which you have made in the short space of twenty months fills us with hope that every stain on your freedom will shortly be removed, and that the erasure of that foul blot on civilisation and Christianity – chattel slavery – during your presidency, will cause the name of Abraham Lincoln to be honoured and revered by posterity. We are certain that such a glorious consummation will cement Great Britain and the United States in close and enduring regards.”

    — Public Meeting, Free Trade Hall, Manchester, 31 December 1862.

  30. NiV

    Because mutual free trade is better than unilateral free trade. If we can negotiate mutual free trade, we should.

    Agreed – I was getting distracted!

    unilateral free trade is better than mutual tariffs. Unilateral free trade is still far better for us than charging ourselves tariffs.

    I followed a few texts yesterday trying to understand why some of you were being so insistent.

    For all the theory, not one of the texts appeared to deal with the “real world” issue of a whole lot of your existing consumers (that we want to make richer) currently being employed themselves in a (sizeable) sector that you are wilfully and deliberately going to put at a financial disadvantage to your (otherwise equal) competitors.

    Ie, the argument above about removing any disincentives for (say) UK car manufacturers to save money by consolidating their activities elsewhere. And not even somewhere that may be more competitive or better than us, just that we would – in effect – potentially be offering a freebie for a foreign investor to leave (rather than vice versa)!

    Or as the good Irishman might say: “That’s all very well, but I wouldn’t start from here”?

    And I get “the long transition” arguments, but that’s quite different.

  31. “For all the theory, not one of the texts appeared to deal with the “real world” issue of a whole lot of your existing consumers (that we want to make richer) currently being employed themselves in a (sizeable) sector that you are wilfully and deliberately going to put at a financial disadvantage to your (otherwise equal) competitors.”

    Well, there are a couple of ways of looking at it.

    One is to imagine that you have two towns (countries) linked by roads that have stationary bandits (governments) on them. Left to yourselves, you would engage in mutually beneficial trade in both directions, finding the best/cheapest goods from either town. But there are those bandits. If they steal from the trade going both ways, you’re restricted to what you can get in your own town, losing on either quality or price. But if the bandits only steal from trades moving goods on one of the roads, you can still get the other half of the trades through.

    Yes, a whole lot of your existing consumers (that we want to make richer) currently being employed themselves in a (sizeable) sector that the bandits are wilfully and deliberately going to put at a financial disadvantage to your (otherwise inferior) competitors. But half the banditry is still better for you than the full two-way banditry.

    The other way of looking at it is the game theory way. Despite it being a harm, there are a lot of people around who still think protectionism is beneficial. Sometimes you can persuade them to make a trade – to give up what they see as a benefit to them in exchange for you giving up something they see as a benefit to you. If you declare unilateral free trade and invite them to join you, they’ll just snigger. But if you threaten to impose huge banditry on your own trade with them and then offer *not* to if they will stop banditising their own trade with you, some of them can be persuaded to do the sensible thing.

    The psychologists love experiments like these. People will pick deals that leave them worse off if the alternative is perceived as ‘unfair’. For example, player A is asked to split a dollar between the two players any way they like, like 80:20 in their favour. Player B can either accept or reject this split. If he accepts he gets the 20 allocated. If he rejects both players get nothing. Quite a lot of the time, they will reject deals, even though that actually loses them money, because they know that the other player knows this, and will thereby be induced to offer more money in order to avoid that.

    It’s the same sort of reasoning here. Making trade deals with people who understand protectionism is bad will be easy. We *both* benefit from cutting tariffs. A valid reason for playing it coy is to deal with the economically incompetent politicians who think protectionism is beneficial. Even if our negotiators understand, they’re not going to declare their intention to implement unilateral free trade until they’ve got what they can out of those idiots. The worry is that the main people who like and believe in import/export protectionism fund the Tory party, and we’re not totally, 100% confident that whoever has the final say is playing the game this way.

    Although in a way that’s good. If *anyone* could tell we were bluffing, we wouldn’t get such a good deal.

  32. Bandits – nope, can’t see the parallel (in real practical terms). Remember, I did suggest “net nil” tax take.

    And you haven’t dealt with the large number of employees doing highly skilled (in the current age) jobs and very competitively that might be affected. The owner of their factory (in our country) will quickly spot that there are no bandits on the road “in”, and shift the factory to the other country. Wonderful, now none of his goods are affected by any sort of banditry at all, but all our employees (who used to work for him) are out of a job and are consuming a whole lot less.

    Game theory – you’re making the argument for bilateral (I agree), not unilateral – “they’ll snigger” (and take your business away).

    Politics etc – I agree, a lot of them are otherwise unemployable (outside of the public sector) cretins.

  33. “Bandits – nope, can’t see the parallel (in real practical terms). Remember, I did suggest “net nil” tax take.”

    Taxes are all “net nil”. Everything they take, they give back in government services.

    The problem is they’re not giving it back to the manufacturer offering the best product or the consumer wanting to buy it, they’re spreading it around *everybody*.

    The loss to consumers is on all those goods *not* traded because of the bandits. But the “net nil” only applies to those goods still traded *despite* the bandits. They’re different quantities.

    “The owner of their factory (in our country) will quickly spot that there are no bandits on the road “in”, and shift the factory to the other country.”

    Yes, which will impose all the costs of moving their factory unnecessarily, setting up a new legal administration under unfamiliar laws and customs, recruiting and training new workers, to a place that was otherwise less desirable (or they’d have set the factory up there in the first place). It means everyone has to build lots of smaller factories inside every tariff boundary, (where goods are more expensive because of all the tariffs, and where labour is more expensive because of the higher demand) instead of one big factory in the place where it makes most economic sense. More expense. More cost to the consumers. It’s a deliberate waste of resources, that could be being used to make humanity richer.

    “but all our employees (who used to work for him) are out of a job and are consuming a whole lot less.”

    All our employees can get other jobs. And they can afford to take lower wages because goods have become cheaper without tariffs.

    There are two ways people can get richer – by increasing their wages, or by decreasing their expenses. The free market generally makes society richer by the *latter* method, but people are fixated on getting money and jobs (which are actually costs) and not the goods and services they are used to acquire. (It’s the same mistake the unions made in the 1970s. They were so busy protecting and raising their own member’s wages that they all paid the costs when prices in the shops spiraled.) You generally gain more from making things cheaper than you lose from having a less well-paid job.

  34. “Yes, which will impose all the costs… etc” I think you are supporting bilateral, which I have said from the start that I agree with.

    “All our employees can get other jobs.” Nope, clearly not in any large shock situation.

    Your last para – I repeat, again – I don’t disagree. I simply see no evidence of any en masse unilateral change being beneficial. And no one has provided any (that I can see) in any of these threads so far.

    “The problem is they’re not giving it back to the manufacturer”

    They didn’t take it from the manufacturer, they took it from specific consumers, and which was the point.

    “Spreading it around everone etc” Yep, that was the point. I repeat, they are simply trying to provide an incentive to the producer not to leave (in the absence of any proper bilateral).

    We know that it’s relatively few people that are entrepreneurial / create jobs. We generally try to “encourage” inward investment. If it’s easier for a producer to be elsewhere, rather than here, courtesy of our generous “principles”, they may well do that, when the big decisions are up for renewal.

    All I have argued is that unilateral free trade is not consistent with that objective – of encouraging inward investment – it’s the opposite. We are saying to the budding entrepreneur / producer, “ultimately, you may be better off setting up on our competitor’s patch, and you know what – we really couldn’t give a shit…”.

    If that happens en masse, there are fewer jobs for our newly unemployed to take up. There is no presumption of full employment, and particularly when taking unilateral decisions that might harm us.

    I agree – and I’ve said it more than enough times before this already – that, if a long enough transition (ideally not hurting yourself too quickly at each point), and WTO tariffs may be falling anyway at the same time, then that might work out fine.

    As it’s a “woolly economics theory” (yes, I know, tautologous), not proper science, it may be better to test it as we go?

  35. “. We are saying to the budding entrepreneur / producer, “ultimately, you may be better off setting up on our competitor’s patch, and you know what – we really couldn’t give a shit…”.”

    Suppose our competitor country sets up a scheme where they steal money from their own population and give it to a manufacturer if they promise to set up their factory over there. If you consider only the immediate consequences, then I think we would all agree that yes, they *are* better off setting up over there. In fact, they can steal lots more, and pay *lots* of factories to set up making goods more expensively and inefficiently than we can do it. In fact, take it to the limit, and steal enough to support the business and its employees without them having to make or sell anything at all. Jobs are protected, at the expense of the consumers, (including those who work in all those new factories).

    Do you think that’s a good idea? If we hear that our neighbour country has set up such a scheme, do we “give a shit”? Does that mean we should follow suit?

    If someone runs a business and somebody else comes along with a better way to do it, all their workers will be out of work. And that’s exactly what we want! We want the scarce resources to be reallocated to a more productive use. That’s life. The difference in this case is that they’re being allocated to a less productive use because somebody is robbing everyone else to pay them. We don’t want that as an economy, but it’s something we know very well how to survive as employees.

    Doing things the most efficient way lowers prices, making us all wealthier. Doing things less efficiently makes us all poorer, even as our wages are rocketing upwards. I’m not saying there are never individual losers, but the consequences of protectionism are like the consequences of socialism; if taken to the limit, societal destruction.

    The socialists say the same about the poor workers. Do right-wingers “give a shit” about the poor? The answer is “yes, that’s why we don’t want to inflict the consequences of bad economic policies on them”.

  36. “Suppose our competitor country sets up a scheme where they steal money from their own population and give it to a manufacturer if they promise to set up their factory over there.”

    That’s usually illegal – in any sort of polite international company (re trade)!

    “If someone runs a business and somebody else comes along with a better way to do it”

    I agree, but “a red herring”, because we were very efficient but gratuitously gave our competitors a freebie.

    “Doing things the most efficient way lowers prices”

    I suggest we were doing it very efficiently indeed, but unnecessarily gave our competitors a freebie.

    “We want the scarce resources to be reallocated to a more productive use. The difference in this case is that they’re being allocated to a less productive use because somebody is robbing everyone else to pay them.”

    I understand your earlier analogy (bandits), but “following international law” – and with which we unilaterally decided to harm ourselves by waiving?

    “but the consequences of protectionism are like the consequences of socialism; if taken to the limit, societal destruction.”

    Fuck yes, but – a red herring given where we are..;)

    Listen, I think we’re actually heading towards the same side – you’re establishing the concept / principle, which I understand, and I’m simply trying to be a realist given this particular reality (and where we start from), and suggest “let’s do what works, and from here”, given the position of UK plc in 2017?

    And I think the rest of our various comments may fall into those groupings? Unless I’ve mis-read you?

    I’m not sure I want to carry this on, Christmas cheer beckons – but an analogy: We would agree that the principle of not killing people is undeniably sound, but deciding to waive our right to kill the enemy when they attack us (“bandits” and all that) basically is not the right anwer. Right perhaps in principle, but not in that particular reality, if short term survival is important.

    For another day perhaps?

  37. Pcar

    Your link is a “List of bilateral free-trade agreements”.

    Yes, and which included copious and extensive references to Israel and Singapore, when you said “Israel and Singapore are doing just fine with WTO unilateral free trade.” ..:)

    Not trolling, honest, guv..:)

  38. Free Trade Agreements are not about free trade. If they were, they would take two minutes to agree and be one sentence long. They are about exemptions and exceptions for vested interests of whatever kind.

    And how this comment got posted on the other thread I have no idea. I considered the possibility of a mistake on my part but dismissed it out of hand.

  39. “That’s usually illegal – in any sort of polite international company (re trade)!”

    For some limited forms of it, yes. But my point is that at the end of the day this is exactly what protectionism is.

    I think we’re on the same side. And as I said, there are some game-theory and psychological reasons for taking a more nuanced approach. I’m not as dogmatic about it as some. I’m just trying to explain why many people would consider unilateral free trade to be better.

    Did you ever read Bastiat’s ‘Sophisms of the Protectionists’? It’s an excellent and entertaining presentation of the principles, should you be so moved over Christmas. Much of it is quite humorous. And he does a far better job of it that I can.

    “I’m not sure I want to carry this on, Christmas cheer beckons “

    No problem. Merry Christmas!

  40. @PF, December 23, 2017 at 12:01 am

    PF
    December 23, 2017 at 12:01 am

    “Pcar wrote: Your link is a “List of bilateral free-trade agreements”.

    Yes, and which included copious and extensive references to Israel and Singapore, when you said “Israel and Singapore are doing just fine with WTO unilateral free trade.” ..:)

    Not trolling, honest, guv..:)

    You are (deliberately?) missing the point.

    If UK implements WTO unilateral Free Trade, many countries/blocs will continue to apply existing import tariffs. We then aim to establish bilateral FTAs with them just as Israel & Singapore do.

  41. NiV

    I may not get the chance to read from here over Christmas, but thanks for the rec (for later).. Good Xmas to yourself too…

    Pcar

    No, not trying to be clever and obviously missed the subtly of what you were saying. I didn’t come across those type of links at all for Israel / Singapore (doing unilateral first, and then following up / substituting with bilateral, etc?), maybe I wasn’t focusing / looking properly..:)

  42. @PF,

    Hmm, my subtle statements? Not sure about that, I’m usually accused of being opposite.

    Glad you’ve now understood.

    Merry Christmas to you, our host Tim W, all commentards and readers/lurkers.

    God Bless

    Pcar

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