Sunday, 24 June 2018

Free trade is just a slogan


I suppose it is excusable for most people not to understand modern trade. It is to most people as boring as I find football. That's why wibble about "free markets" sounds superficially plausible. But free markets don't exist and we should be mighty pleased about that.

We have a whole myriad of market controls, regulation and taxes to keep trade working - and to keep it honest where we can. This is why we have advanced market surveillance systems and we keep records so we can have a risk assessment based system.

For instance, there is a good reason why we have strict controls on trade with India. They are known for fraudulently bulking out wheat shipments with husks and other adulterants. Sometimes with lethal consequences.

And then last year was the first year with no fatalities in airline travel. That did not happen by accident. We have strict controls so that we have full records of airline spares procurement and we can trace the materials right through to the quarries the ores came out of.

We also spend a great deal on systems to combat counterfeiting. When an American Airlines plane smashed into a Colombian mountainside, outlaw salvagers didn't even wait for all 159 victims' bodies to be collected before they moved in.

Using sophisticated tools, they extracted engine thrust reversers, cockpit avionics and other valuable components from the shattered Boeing 757 and then used helicopters to fly the parts off the steep ridge. Miami is a global centre for spares fraud.

This is why we have elaborate customs systems. This is why we insist on traceability standards and proof of conformity assessment. This is why we need to hire inspectors and employ labs for quality control. The quality of goods we have on the shelves doesn't happen by accident.

This allows us to buy with confidence - not least because we have a trading standards system that protects consumer rights - and that adds productivity and value to the economy.

This is why I am not taken by the ideas of free market ideologues and those who waffle about "free trade". The black market is the only place where truly free markets occur - with all the violence and death that goes with it.

We all want taxes to be lower but the bottom line comes down to a few basic facts of life. People are bastards. If you look into illicit trade the sheer depravity and inventiveness of people really will shock you. Food fraud is a major issue.

Even in Europe we find condemned food stolen by black marketeers and re-labelled somewhere on a factory ship and passed off as genuine. We wouldn't be able to detect it without multi-agency enforcement. And guess what kids? None of it comes for free.

A recent World Customs Organisation blitz on counterfeit medicines found in Africa that “Of the 243 maritime containers inspected, 150 contained illicit or counterfeit products". That's an epidemic. This doesn't happen in the UK. Do you think that is by accident?

As to the issue of tariffs, they can be used as a tool against predatory practices and surplus dumping. We use them in order to regulate markets to ensure their long term continuity. Radical disruption can be healthy but not when it's fly by nights trying to make a quick buck. We also find that very often imports are illegally subsidised which destroys UK capacity - and when that happens we are then vulnerable to price gouging. This is why we maintain trade defences.

And then there is the trade facilitation aspect of regulation. Harmonisation removes inefficiencies from supply chains which means you have greater choice at better prices. Harmonisation removes the overheads for goods and services crossing borders.

When you understand all this "free markets" and "free trade" looks far less appealing. To me they sound like empty slogans precisely because that's exactly what they are. Whenever you hear these such slogans you're either dealing with a charlatan or someone not very bright.

But as I said in the opening paragraph - it's normal for most ordinary people not to know any of this. Good government is invisible government. It's not known to most people because it works quite well. Its invisibility is the hallmark of a good system.

It's only when we have things like the horsemeat scandal that people really notice - and we are able to rapidly correct the system because we have detailed intelligence on the supply chains. Our response is only as effective as our market surveillance.

This is why it is going to be essential to maintain a high level of regulatory cooperation with the EU irrespective of Brexit. The single market has its faults but it's a better model than the deregulation fantasies of juvenile Tories and their lacklustre think tanks.

This really hits home how inadequate the ideas machines of London have become. If you are going to preach free markets and free trade you should at least have a functioning idea of how it works. But instead they give us @LowTaxChloe. A moron. That's what's driving hard Brexit.

I'm a Brexiter because I think trade cooperation can be achieved without political union. I do not want the UK to be a subordinate member of a European proto-state - but the single market is a nifty piece of trade technology we would be fools to turn our backs on.

No comments:

Post a comment