Tuesday, 19 January 2010

Protectionism: a heretic speaks

The fate of Cadburys has provoked much wailing and gnashing of teeth. It seems beyond doubt that its take-over by Kraft will lead to redundancies in Britain, and production shifting overseas. Some will point out that this merely continues an existing trend in the company. Gordon Brown, pitifully (if he thinks anyone believes him) declares that British jobs must be safe-guarded. Empty words from a moral vacuum.

What the take-over illustrates, and sadly is likely to illustrate further, is the consequence of globalised free trade. When the same product can be made in a factory in one country or another, and the only difference is the massive wage disparity between the workforces in those two countries - the wage bill being the single largest cost, a company will be forced to shift production to the cheaper country. It will not be able to compete if it does not, and the only measure that can reverse the flow of jobs out of our country is to put in place protectionist tariffs. With a tariff in place, which nullifies the wage disparity, our domestic manufacturers can compete. Without one, jobs will continue to haemorrhage.

Preposterous! cry the free-traders. That argument was lost long ago, they will remind me, which is true as far as the political world is concerned, but free trade is a utopian ideology, not a scientifically-established fact. Look at the countries which have dragged themselves up - Germany and Japan in the post-war period, the United States in the 19th and early 20th centuries and China today. This was not achieved through free trade, but protectionism.

Free trade brings great benefits, they will say: cheaper products for the consumer. Who would want to pay an extra 50 pence for a chocolate bar, or £500 for a television?

Sure, under free trade we pay less for products, but the government takes half of everything we earn! Cheap products, high taxes. If the government shifted its revenue-raising efforts to tariffs, an immediate and commensuate reduction in our taxes would be possible. Cut the government down to size, and taxes could be reduced still further.

Others have made the case better than I can, notably Sir James Goldsmith at the time of the GATT negotiations. Free markets; yes. Free trade; only between regions and countries with similar wage levels.

The main reason that tariffs and protectionism are resolutely off the table is that they require something that the elite have laboured throughout the 20th century to demonise, dismantle and destroy: national sovereignty.


alison said...

Great post. The sale was evil. Where was our Cadbury Law like the French Danone Law? And why were British banks funding the debt? It's disgusting. I hope you will sign the current petition and join my campaign fwiw.

Trooper Thompson said...

There's no more patriotism in a banker's heart than the heart of a crocodile. The banking cartel operates above the level of nation states.

I'll check out the petition.

Good to hear from you again.