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Sob, sob, sob

No, we’re screwed, truly. Even The Telegraph can’t get this right:

The EU wants its own supply of semiconductor chips, its own lithium gigafactories, and its own indigenous clean hydrogen, whatever the cost, and even when it patently violates the principle of Ricardian competitive advantage.

It’s comparative advantage.

31 thoughts on “Sob, sob, sob”

  1. its own indigenous clean hydrogen

    Oh, now it wants indigenous stuff….

    The Terriblegraph is a fucking awful rag. I have a free sub and think I am being ripped off.

  2. Except Ricardo didn’t consider that something very complex that is made in a very few places might become virtually the bedrock of society and thus being cut off from it would be catastrophic, so gaining a small advantage for a few years followed by a complete societal collapse is not really very sensible.

    He also didn’t consider that the Uk would eventually reach a state where we have absolutely nothing the rest of the world really needs, and all the basics of human life are imported from somewhere else. I mean it might make sense to you to export computer games and import food, but you can’t eat computer games if the food isn’t available from abroad.

  3. “He also didn’t consider that the Uk would eventually reach a state where we have absolutely nothing the rest of the world really needs”
    THAT’S THE ENTIRE DAMN POINT OF COMPARATIVE ADVANTAGE. EVEN IF EVERYONE ELSE IS BETTER AT EVERYTHING THERE’S STILL SOMETHING TO TRADE!

  4. Jim – something very complex that is made in a very few places might become virtually the bedrock of society and thus being cut off from it would be catastrophic

    But we’re talking about commodity IT components, and a lot of bafflegab and bullshit about “AI” (which is gunna RULE THE WORLD just like Blockchain and Metaverse do).

  5. It’s not that the EU (or US) wants its own supply of chips, it’s that the EU (& US) wants their own supply of bleeding edge, state of the art chips. They don’t give a toss about the bread and butter technologies that make 90+% of the CPUs in the world even though those are the things that keep the world working. Let’s see how far up the wall we can piss the taxpayers’ money.

  6. I suppose the EU could restart the German nukes, including the old Soviet era ones in the former DDR, and use them to produce the clean hydrogen. Perhaps the Frogs might restart Fessenheim as well.

    At the very least, some of the greenaticks might die of heart failure.

  7. “THAT’S THE ENTIRE DAMN POINT OF COMPARATIVE ADVANTAGE. EVEN IF EVERYONE ELSE IS BETTER AT EVERYTHING THERE’S STILL SOMETHING TO TRADE!”

    Thats all very well, but what if the only things we have the comparative advantage in are things that are not based on the basic requirements of human existence? The Uk isn’t good at producing food, energy, heavy engineering or electronics. But it is good at selling people insurance for the ships, designing iPhones and making computer games. So we specialise in the latter and let all the producers of the former be replaced by foreign imports. Great, everyone’s better off. But then something goes t*ts up in the world. People still need food, energy, heavy industry stuff, electronics. They don’t need computer games, spangly designs for iPhones, or ship insurance. What do we trade for our food, oil etc then, when we have nothing anyone wants?

  8. Then we make ourselves poorer by going back to doing those things we are comparatively bad at…..

  9. Bloke in North Dorset

    “Let’s see how far up the wall we can piss the taxpayers’ money.”

    The German federal government has just promised Intel €10Bn to build a new chip factory. And the State is supposedly giving some more money for roads and other infrastructure.

    Labour seems intent on pissing away money on green stuff and at the same time cutting off the North Sea and potential fracking revenues.

    It looks like between Net Zero and politicians’ love of shiny new stuff like factories there’s going to be a lot of entries in the pissing up the wall competition.

  10. Then we make ourselves poorer by going back to doing those things we are comparatively bad at…..

    “Going back” is easy to say but very much harder to do. For most things there is no going back; it’ll be starting again.

  11. Round numbers, UK produces about 77% of the food we need, exports 19 and imports 42.
    Somewhere along the way people shriek that we’re under 60% self-sufficient if there’s a blockade.
    Therefore gizza handout, red diesel, VED exemptions, whatever ‘cos food security or food miles or summat.
    I think security in general is going to be the problem.
    Spend the subsidy money on drones or new sniper rifles where the operator doesn’t personally need to look down the sights.

  12. “Then we make ourselves poorer by going back to doing those things we are comparatively bad at…..”

    What is 70m people going to eat and use to keep their hovels heated while entire industries are rebuilt? Ignoring of course they couldn’t be because we don’t have the industry to rebuild them any more, and couldn’t afford to buy the machinery from abroad to do so anyway. Without foreign built machinery we literally wouldn’t be able to farm within a few years, as machinery wore out and parts weren’t available to keep them running. There’s not one UK combine manufacturer and only one tractor plant that just assembles foreign parts.

    “Round numbers, UK produces about 77% of the food we need, exports 19 and imports 42.
    Somewhere along the way people shriek that we’re under 60% self-sufficient if there’s a blockade.”

    Even at 77% sufficiency there would be a lot of hungry (and angry) people knocking around.

  13. *thinks* Pretty sure we/the EU have/has the capacity to fab anything bleeding edge we need in the EU ourselves already. And do regularly… something, something, not handing your designs over to the Competition.

    Is it worth doing the Basics? Nope.. economically not attractive, and China is willing to sell to us at discount.

    Can the UK do the same? Nope. Let’s be fair.. Any edge the UK once had was lost around the turn of the millennium, and currently? Not a chance.
    I can’t recall a place where there’s a Uni, a (proper!) Polytech, and a corporate producer of actual silicon is, or even would be in the UK. Especially at a fundamental research/engineering level.
    There’s just nothing there anymore.

  14. Even at 77% sufficiency there would be a lot of hungry (and angry) people knocking around.

    Most Britons would live well enough on 77% of their current calorie intake. It’s not like the country is known for it’s svelteness.

    In any case, that number would quickly go to 100% if required. Farms currently making high end specialty stuff could broaden production. A whole lot of British farms are not operating at 100% anyway. There’s land not used that could be, in an emergency.

    Switzerland did starve in WWII, but they have a fraction of the arable land per person. Britain has no such problem.

    If Britain’s imports and exports were cut off, it is not food that would be the limiting factor. You’d be in trouble for all sorts of other stuff first.

  15. The answer is eagerly awaited by Iceland, Norway, Sweden, Finland, Ireland, Spain, Portugal etc etc

  16. Diogenes

    This is one of the reasons I like nukes and fracking. Another of course is that one doesn’t have to get involved in damn wars in some foreign shithole to ensure supply while trying frantically to cover the shortfalls.

  17. BB: We’ve still got oodles of coal just sitting under us. It’s not as easy to get out as yours is but the UK is not actually short of energy resources. It’s government policy that is currently fucking us over. In the light Armageddon scenario being posited here things would be uncomfortable for a while but it would work out. And there would be plenty of innovation going on to keep Jim’s tractors and combines in the fields when they break.

  18. True enough TG. The South Africans did quite well in producing synfuel when sanctioned during the apartheid era. And if the coal is too far down, you can frack it and burn it to produce town gas – and lots of CO2 of course.

    As you point out, it’s only idiotic policy that’s causing you any trouble.

  19. “In any case, that number would quickly go to 100% if required.”

    Know a lot about farming do you?

  20. “And your solution, Jim, is…..?”

    I can only speak regarding food production, but in order to ensure both a long and short term supply of food it is necessary to maintain a broad based farming industry in the UK – once you lose a critical mass its very difficult to rebuild that. You might think that ‘Oh, the land isn’t going anywhere, we can just start farming it again if we need more food’. That is true, but also not true (more later). However a greater problem is the support industries – machinery manufacturers, dealerships, training of mechanics, crop breeding programmes, livestock markets, livestock breeders, abattoirs, meat processing plants, dairies, veterinary services, agricultural builder makers etc etc. All of which are vital to maintaining food production. Once the on farm production drops below a certain level these critical support industries start to contract rapidly. For example due to the contraction of livestock farming its very hard to get veterinary services in some parts of the country – the critical mass of customers in an area is not enough to justify an agricultural service (and no, the sort of vets who currently deal with Tiddles and Rover on a day to day basis aren’t the sort who are going to be able, or willing, to perform a caesarian on a cow while kneeling in cow shit).

    So there is a point where a continued contraction of the industry becomes semi-permanent, because even if you want to produce more, you can’t obtain the materials or services you need to do so. Or at least its not reversible in anything other than the medium to long term, with a sustained national effort to train new people, start new support businesses etc etc. There’s a huge knowledge base required to maintain a farming sector, if that disappears then it would take decades to build it back up.

    Then there’s the issue that land just left to its own devices for years can’t be brought back into production immediately. Land not farmed soon reverts to scrub, and ditches and drains fall into disrepair. Getting such land back into full production would take time, a process of several years at least. Similarly ramping up meat production would take years – building up the breeding stock is not an overnight job. Fences on land not used for livestock would need reinstating, at some considerable capital cost. Buildings would have to be constructed with suitable slurry facilities, again at considerable cost. Dairy production could be ramped up a bit quite quickly with existing livestock and capital capacity, but bringing derelict land back into dairy production would take longer, especially if the specialist technical knowledge on the supply and manufacture of dairying equipment has been allowed to wither (and probably go overseas, it may already have done, I don’t know if there are any UK based milking machine manufacturers any more).

    Food is cheaper in the UK than just about anywhere else, bar the USA I think. People have become used to the idea that food will always be cheap, and readily available, and are not used to having to spend a significant proportion of their income on their needs rather than their wants. Rather like the current situation with interest rates, assuming something will stay low forever is not always the best way to bet. And of course there is the schizophrenic nature of the UK voter – quite happy to vote to restrict food production methods in the UK while eating food produced abroad using those very methods that are banned in the UK. You could probably reverse the entire contraction of the UK food production capacity without any subsidies required at all if you just made the voters pay for their moral choices – no food can be imported that wasn’t produced under UK standards. UK producers would be on a level playing field with the rest of the world, and on the doorstep so to speak.

  21. Oh, and of course our Lords and Masters current agricultural policy is to subsidise landowners to take as much land out of production as possible and plant it with trees or let it ‘re-wild’. All in the pursuit of ‘Net Zero’ of course!

  22. Jim,

    “So there is a point where a continued contraction of the industry becomes semi-permanent, because even if you want to produce more, you can’t obtain the materials or services you need to do so. Or at least its not reversible in anything other than the medium to long term, with a sustained national effort to train new people, start new support businesses etc etc. There’s a huge knowledge base required to maintain a farming sector, if that disappears then it would take decades to build it back up.”

    I’m not sure about “decades”, but we will have long enough.

    This country produces all sorts of things, all sorts of things that I don’t know and you don’t know. One of the biggest problems is people thinking that the world is like a Richard Scarry book. “We don’t make anything”. We make tons of stuff, but people don’t know about it. Apart from shitloads of scotch and gin, loads of drug designs, Red Dead Redemption, F1 cars and some very fine brogues, there’s just a colossal amount of weird niche stuff employing 20 people that does a thing. Like, I don’t know, producing and running safety training courses for people working on oil rigs, asbestos, electrics etc around the world. You’ve never heard of them, and I didn’t until I worked for them. Or parking meters. There’s about 1000 people in the UK making and doing support for parking meters including exporting them globally. Or, software for running drug trials.

    And maybe it all goes tits up and we have to start growing our own food, but it’s not going to happen overnight. If everyone stops wanting new Playstations and iPhones, those people will find a thing to do. Maybe they’ll start making combine harvesters again, because our economy has sunk a bit and it’s now cheaper than importing them. Shenzen didn’t happen overnight. They started by importing components and making things and gradually started adding the suppliers.

  23. You can either follow Ricardo and be rich now, and, in the event of a global catastrophe, be poor later. Or you can follow Jim, or North Korea, and be poor now and poor for ever.

    Not that anyone actually ‘follows’ Ricardo. It’s just what free people do anyway.

  24. I can see Jim’s point. Trouble is, “comparative advantage” only deployed when it suits. Nobody talks about the comparative advantage of China cutting back on building coal fired power stations compared with the UK bankrupting itself in pursuit of Net Zero. Or the comparative advantage of fracking to being hostage to foreign energy suppliers. Or the comparative advantage of UK food security over financing the food security of nig-nogs in Africa via foreign aid.

  25. “Or you can follow Jim, or North Korea, and be poor now and poor for ever.”

    Yes, because Britain in the 50s, 60s and 70s was like living in North Korea……………

  26. “This country produces all sorts of things, all sorts of things that I don’t know and you don’t know. One of the biggest problems is people thinking that the world is like a Richard Scarry book. “We don’t make anything”. We make tons of stuff, but people don’t know about it. Apart from shitloads of scotch and gin, loads of drug designs, Red Dead Redemption, F1 cars and some very fine brogues, there’s just a colossal amount of weird niche stuff employing 20 people that does a thing. Like, I don’t know, producing and running safety training courses for people working on oil rigs, asbestos, electrics etc around the world. You’ve never heard of them, and I didn’t until I worked for them. Or parking meters. There’s about 1000 people in the UK making and doing support for parking meters including exporting them globally. Or, software for running drug trials.”

    All that is mostly ‘wants’ not ‘needs’. I doubt there will be much of a demand for F1 cars if food is in short supply. Or fine brogues, parking meters or computer games either for that matter. Which is exactly my point. The UK is largely specialising in things people in other countries may currently want, but when the SHTF won’t need. And we’d be left with nothing to trade for food, energy and important manufactures like tractors, lorries, machine tools, generators, excavators, IT equipment, rail locos etc etc.

    All globalisation is based on the idea that no large hot wars involving global superpowers are ever going to happen again ever, so it doesn’t matter where stuff comes from, it’ll always be available via trade. Well IMO thats a stupid bet (for a country) to take.

  27. Living standards in Britain in the 50s certainly resembled those in contemporary N Korea, as evidenced by the fact the government was still rationing meat up to 1954.

    Like contemporary N Korea, we devoted resources to food security, but found that as a result there wasn’t much in the way of food. So, instead, over the decades, we diverted those resources to producing things we were better than everyone else at, and bought food with the proceeds.

    And now, we have food insecurity, yet food available in wild and cheap abundance. North Korea, not so much.

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