“On the surface, it is hard to understand why the EU is resorting to such extreme measures. According to the consultancy firm Airfinity, even if the EU does ban exports, it will gain only an extra week of supply, while the British will lose two months. The political and economic price will be high. The EU will trash its reputation as a place in which to do business. Why base a plant in somewhere such as Leiden if the authorities will seize control of production lines whenever it is convenient? If these contracts get overridden by bureaucratic fiat, then so can any other agreement. (After all, if the AstraZeneca deal with the EU was legally binding, the company would have been hauled before a judge in Brussels by now.) The EU risks turning itself into a pirate state, for very little gain, which helps explain why smaller countries that depend on multinational investment, such as Ireland, have become nervous. Blind panic is the only explanation that makes sense.”
In the past, some classical free market types preferred that the UK stay in the EU as the lesser of two evils, and although I think they were misguided, I understood that basis of such a concern (loss of free movement, etc). Given the behaviour of the EU over vaccines, including an obvious contempt for private property, contracts and so forth, the classical liberal case for EU membership looks very ragged now. At the very least, the risk-reward trade-off of being in such a bloc must have shifted. I wonder whether one or more of the smaller nations might bug out if this sort of shit continues. And I am sure some Scottish voters, tempted by independence but concerned about what it means to stay in the EU and be under its single currency, are now thinking.
We never had free movement when we were in the EU.
What was commonly called free movement was dependent on our obedience to a huge number of rules made by the undemocratic EU.
Including rules about having to pay the EU lots of money.
Not free at all.
I do wonder where Matthew has been living for the past year. Clearly not in the UK, where the government seized ‘the means of production’, such as are left us, and closed down viable businesses.
This sort of thing is why I no longer advocate unilateral free trade.
Free trade is predicated on trading partners who act both in their own interests and in good faith. When trading partners (whether the EU, or China, or India, or whoever) are motivated by ideological malice rather than profit, and are unconstrained by the slightest impulse of fairness, honor, or basic morality, it is time to stop trading with them except on the most restricted and opportunistic of terms.
When dealing with pirates: believe nothing, take only cash on the barrel, and keep your hand firmly on your purse.
I will not rant on about the vaccines – the decision to go for mass vaccination of the population has been made, so we should all hope it turns out FOR THE BEST (it will be known within a year or so).
The European Union is a Corporatist State – Corporations tend to like that as they have “internalised” the doctrine of the left that a Corporate State means rule by the Corporations, but it does NOT, not in the end. In the end in a Corporate State it is the STATE (not the Corporations) that has the Whip Hand – quite literally.
What the left teaches about Fascist Italy or National Socialist Germany (that Big Business was really in charge) is FALSE – but Big Business has bought this false account, hence their support for the European Union (and their support for the Collectivist Biden-Harris regime in the United States).
Hopefully, the behaviour of the European Union will finally open the eyes of Big Business – but there is little sign that the eyes of Big Business have been opened, for example they still support the (fanatically Collectivist) Biden-Harris regime in the United States.
I saw a documentary on Some Like It Hot a while back, with Tony Curtis talking about how difficult Marilyn Monroe was – her failure to show up on time, or at all, her tantrums, the 47 takes for everything; and he reported director Billy Wilder’s summing up : “She’s a mean seven year old girl.”
Pretty much everything the EU has done since the British voted for the wrong answer in 2016 has reminded me of that Billy Wilder bon mot. All of the EU puff over forty years or so about Peace in Europe, Ever Closer Union, an End to Nationalism, Free Movement, Whatever dissolves before the inescapable mental picture of a seven year old girl throwing a tantrum.
PS to be fair to Marilyn, Tony Curtis did concede that when she did finally turn up, turned off the tantrum and got through the first 46 takes, the 47th would be absolutely spectacular.
‘If these contracts get overridden by government fiat, then so can any other agreement.’ Yes, quite so. That’s why there is a certain deplorable observation that there is either one binding law for all or no law at all.
Yes, but the point about tariff and quote free trade is to get access to foreign products without additional costs to the consumer, which is what tariffs and quotas always end up being (even when said tariffs are paid to UK Government it is inevitably pissed away on pikeys and boondoggles).
If Johnny Foreigner can make widgets and ship them to the UK for less than the cost of those same UK made widgets, then why would you impede that with tariffs, quotas, duties, customs fees or any of the other sort of government bureaucratic dead weight.
If Johnny F were making those widgets with slave labor, or with raw materials stolen from someone else, and he could thus undercut the price of locally-made widgets which were made without such benefit, and if Johnny F could thus conceivably wipe out the local widget makers because they couldn’t compete, then I would consider tariffs, etc.
That’s the bright-line, easy example. Then there are all of the gray areas in between. Do you do tariffs when Johnny F’s workers are all starving third-worlders who will work for five cents per day? When Johnny F’s raw materials are mined in a very destructive way?
Point is, like the old joke, if you accept the idea in the first, extreme example, then, for the gray area examples, you’re only arguing about price, not principle.
If Johnny Foreigner can make widgets and ship them to the UK for less than the cost of those same UK made widgets, then why would you impede that with tariffs, quotas, duties, customs fees or any of the other sort of government bureaucratic dead weight.
Well, it’s game theory, innit. If Narnia imposes tariffs on imports from Calormen, and Calormen imposes tariffs on imports from Narnia, we may infer welfare losses to Narnian citizens of X from its own tariffs (consumer losses) and Y from Calormen’s tariffs (profit losses to Narnian producers, and the secondary consumer effects thereof.) Therefore the tariffs cost Narnian citizens X + Y. Meanwhile Calormen citizens suffer W (from Calormen’s own tariffs) + Z (from Narnia’s.)
If Narnia comes over all free tradey while Calormen remains mercantilist, Narnian citizens will see their costs cut to Y, while Calormen citoizens will see their costs cut to W. Goodie !
But mercantilist Calormen has no incentive to cut its own tariffs, for it doesn’t recognise W. So Narnia has a policy choice. It can leave things as they are, suffering Y, and hope that sometime in the next millenium Calormen will go free tradey. Or it can apply a stick and carrot approach. It can announce disappointment with Calormen’s failure to reciprocate, and reimpose its own tariffs. Which will impose costs of X on Narnian citizens, but will also impose Z costs on Calormen citizens, which it hopes Calormen will notice.
If the end state is that Narnia’s threat works and Calormen reciprocates in a bilateral reduction in tariffs, then Narnia’s citizens are better off than they would have been if Narnia had just gone unilateral and Calormen had not reciprocated. The history of trade negotiations suggests that governments are fairly mercantilist at heart, and tend to go for the bilateral or multilateral approach.
The other point is that there’s more to life than money. From the perspective of military security it may be in, say, the USA’s interests to hamper, say, China’s economic development by imposing trade restrictions, holding the lifting of those restrictions as a bargaining chip to be traded for non economic concessions. Even if the trade restrictions impose greater costs on the US than on China. The US may be rich enough to absorb a larger cost more easily than China can absorb a smaller one.
If Johnny Foreigner’s widgets are fraudulent crap, and JF’s government allows JF to continually set up new front companies to sell said widgets to Western consumers using deceptive tactics like fake reviews and product switching, while refusing to take any effective action to curb such fraud, then I think it’s reasonable for the relevent governments to offer some protection to their own citizens. I used to believe that fraud outed itself, and that companies would (in their own self-interest) try to make the best product that they could within the given market constraints, but now I think that defrauding Westerners is part of the goal. It’s political; it’s why their own governments shield them from detection and prosecution.
Your game theory only works when all parties are playing the same game.
Yes, just as there is more to life than money, there is more to a product than its price. It seems to me that all these grand theories about free trade make assumptions about product quality, but also about other less tangible product related properties ( the product produced by slave labour is equal in quality to the product made by a motivated, educated and well remunerated workforce ) which are frequently false.
This is another way of saying “Let’s make those poorly paid third-worlders even worse off by putting them out of work so they don’t even get five cents per day, thereby ensuring they can’t capitalise on their only competitive advantage over expensive unionised and/or highly regulated first-world labour.” 😉
However Ferox may have a point when it comes to places like China or Russia, an increasingly hostile expansionist thugocracy & a fascist/communist state respectively, much like it would have made little sense to source parts for Merlin engines from Germany circa 1938.
I think bobby b is pointing at the People’s Republic of China – the Chinese Communist Party Dictatorship.
If a nation becomes dependent on imports of goods from the P.R.C. a person in such a nation might as well take a large calibre pistol and put it deep in their mouth (pointing slightly upward) and squeeze the trigger.
I am not using a metaphor. A quick death would be better than what the CCP has planned.
You make my point with this statement, though.
You recognize that tariffs might have their proper place for some circumstances.
When you push back on the “cheap labor” example, you’re arguing about price, not propriety, like the old joke.*
(*: “Man: Will you sleep with me for a million dollars?”
Woman: “Sure!”
Man: How about two hundred dollars?”
Woman: “I’m no whore!”
Man: “We’ve already established your status. Now we’re just arguing about price.”)
As Paul Marks said, my example aimed at China.