Sunday, 29 July 2018

The death of the West, one lawnmower at a time

I don't know who said it but someone recently said "Thatcher's greatest achievement was to convince people that a mortgage and a Mondeo on the lag from Costco makes you middle class". I would go with that. But it was more Blair's accomplishment than that of Mrs Thatcher.

The latter half of the Blair administration will remembered as the great credit binge. Cheap borrowing for nation states and consumers alike. I remember it well. At the time I was with a girlfriend who was obsessed with home improvements so I spent many of my prime years going back and forth to the local DIY shop and spending money we didn't have.

It was also the era of retail parks. It was the done thing to waste one's weekends circling for a parking spot at a nearby out of town retail estate to spend money on Christ alone knows what. Everybody was doing it and there was temptation aplenty. We thought we were rich. And compared to the rest of the world, we were. But at what price?

It was in 2007 I realised the game in play. This wasn't wealth. There was no tangible reason why my hometown of Bradford was suddenly awash with cash. As much as the Labour government was spending like a drunken sailor, so were the public. Household debt mounted to record levels. This is where the seeds of Brexit were sown.

Back then if you were savvy and knew how to handle debt as an asset then you could amass a healthy property portfolio, not least because you could run yourself a welfare farm, carving up decent properties into micro-flats where housing benefits would mount up and pay for your retirement. You were, of course, screwed if you missed the boat, and now we find the millennial generation are frozen out of the property market.

The biggest casualty of the 2008 financial crash was social mobility and many are still paying the price for the debts they mounted while being trapped in rental properties paying well over the odds. This of course triggers the generational debate between frugal baby boomers who tell you they existed on fresh air while hoarding every penny and spoiled millennial who expect to have what their parents had while spending money on daily luxuries that weren't even available to their parents.

This debate has spawned a number of lazy stereotypes, some of which are true and some not so much. That's really one for the sociologists. My point is that we have now arrived at a political deadlock where those who did well in that era wish to preserve what they have and vote accordingly, leaving a rump of people in perpetual economic exclusion to eke out a living on insecure contracts.

This in part explains Brexit. In more basic terms, as explained to me by another Yorkshireman... If you have money, you vote to remain. If you don't, you vote to leave. But this article isn't really about that. It's about lawnmowers and other stuff.

Back in those days of plenty, the great millennium credit binge, consumer habits changed substantially. That was the age of 9p noodles, £12 DVD players, computer printers for peanuts and a throwaway culture that didn't know the meaning of make do and mend. The entire retail model was based on shifting huge volumes of consumables on credit.

What is was, though, was a heist. This is why we are now seeing Donald Trump waging a retaliatory trade war. I realised the game in play back in 2007 when I was in need of a lawnmower. Flush with available credit I went shopping in search of the ideal machine. Traditionally one might have purchased a recognised brand like Qualcast. A known British prestige brand (actually owned by Bosch) but still a European brand. Not this time though.

What I bought was a no-name Chinese piece of junk. What suckered me in was the novelty of being able to afford a petrol driven lawnmower. You know, like posh people have. This goes right along with perceptions of class on the basis of stuff you own. An MFI kitchen (on credit), a mortgage and a Mondeo in the drive.

And the thing about this lawnmower was the chassis might as well have been made of blancmange for all the structural integrity it had. Over only a few uses, the pressure from pulling the ripcord while holding it down with the footplate very soon warped the outer housing so that it was no use at all. It was a rip off. A clone made from cheaper, inferior materials built to a far lower standard.

And this is why only fool opens their borders to Chinese goods. Free trade dogma has it that if you open up your borders to competition then everybody wins. Everybody has cheaper stuff as competition drives down the price. But that's only fair if there is a level playing field. You can only really have free and fair trade with like-minded operators.

What we've done by liberalising trade with China is to open the floodgates to cheap crap built to stolen specifications in one of the greatest wholesale intellectual property thefts of all time. There was never any possibility that domestic firms could compete and now we're in a place where it's nearly impossible to find high quality.

Fast forward a decade and the paradigm still exists only we shop directly from Amazon, where you're very often ordering directly from a Chinese distribution centre, circumventing taxes along the way - where we often find the item is, putting it politely, not as described. So not only have we destroyed UK brands and, driving down overall standards, we've destroyed UK retail in the process. Exactly as China intended. This is all part of the scam. A recent article in The American Conservative spells it out.
A federal judge recently issued a $1.5 million fine to a Chinese wind turbine company, Sinovel, for stealing key intellectual property from a Massachusetts technology company, American Superconductor (AMSC). 
China’s growth into the world’s leader in manufacturing has been largely dependent upon stealing the trade secrets of foreign companies. The details of the Sinovel case demonstrate the severe damage associated with this crime. Sinovel had a $700 million contract with AMSC for the use of its software. However, Sinovel stopped paying for the software in 2011 when it owed AMSC over $100 million.
At that point, Sinovel no longer needed the software because two of its employees had bribed an AMSC tech who had stolen the company’s source code. He was offered close to $2 million, along with a variety of other enticements. The theft devastated AMSC’s stock price and reduced its market value by roughly $1.4 billion. It also forced the company to slash its workforce by 70 percent (roughly 700 employees) and relocate its headquarters to a much smaller venue.
China’s intellectual property (IP) theft costs the U.S. economy between $225 billion to $600 billion annually, according to the Commission on the Theft of American Intellectual Property. Trump cited that estimate when issuing a $34 billion tariff on Chinese goods that went into effect earlier this month.

Of course it never suited UK politicians to counter this attack. Politically it was convenient for them. People felt wealthier and it made the politicians look good. In thrall to the cult of GDP, who could complain at booming retail sales? It also helped inflate our export figures. China would send us ships full of knock off tat and we'd send back containers of waste plastics, notionally as a raw material for recycling, but actually ending up  in Chinese landfill. In 2014, 2015 and 2016 the UK exported 800,000 tonnes of plastic waste a year. In 2014 and 2015, 500,000 tonnes of that went to China and Hong Kong, while in 2016 it was 400,000 tonnes.

We should be under no illusions. China, and to a large extent India, have been waging a silent economic war on the West and thanks to our boneheaded enthusiasm for trade liberalisation come what may, we have allowed them to do it to us. 

This is what makes the Ultra Brexiter Tory policy of unilateral trade liberalisation so utterly horrifying. It's an open invitation to predators to asset strip the UK. This is all the more concerning when Tory "think tank" the Institute of Economic Affairs is selling access to ministers to foreign corporate lobbyists. Moreover, it's one thing to gut the UK of retail consumables. It's another thing entirely to open up our markets to fraudulent and dangerous medicines from China

I've been watching international trade forums for some time now. I know its denizens quite well and they all suffer from the same disease. Spreadsheet sociopathy. Trade liberalisation is a great thing on paper but even its advocates can be found delivering speeches to UNCTAD and the WTO earnestly telling us "We need to do more to ensure that those who are made casualties of globalisation are not left out". Which is a tacit admission that trade liberalisation is devastating to industrial communities.

We therefore have to ask before signing any deals what we actually value and who actually gains from liberalisation. If it means a race to the bottom in standards then the consumer doesn't benefit from it and all we do is hand over lucrative UK industries to Chinese and Indian criminals. 

In fact, for all that the EU is often described as "protectionist" it hasn't actually been particularly good at protecting us from predators and though we might welcome FTAs with allies like Canada, signing up to a similar deal with India when there is virtually zero chance of them sticking to their promises and their treaty obligations does not sound particularly clever. 

It really comes down to the question of what sort of country do we want to be? What are we building here? I'm all for repatriating trade and taking back control, but certainly not to accelerate globalisation making us entirely dependent on imports. It's bad enough there is so much systemic risk in just leaving the EU. Trade can just as much be a tool of social policy as industrial policy. It is a question of what we value. 

The millennium credit binge changed attitudes and behaviours in the UK and not, in my view, for the better. It has made us wasteful, spoiled and greedy and the consequence of that is the hollowing out of British conservative values while we hand over our capital assets to China. 

And if this sounds like a case for protectionism, yes it is exactly that. Free and fair trade on a level playing field with our allies is a good thing. Wholesale sell-your-own-granny liberalisation is not a vision I want any part of. Yes, protectionism means some things stay expensive, but what if some things should be expensive and what if it isn't good to have a throwaway society where people do not place a premium on the things around them? What if it's better to have inefficient farming to keep our countryside the way it is rather than becoming a sea of plastic greenhouses and Chinese solar panels tended by an immigrant slave class?

In respect of that, leaving the EU of itself is not enough. If the faceless technocrats in Brussels cannot be trusted to safeguard what we value then that goes double for the free trade fetishists on the right of the Conservative party who are evidently interested in conserving precisely nothing. 

I am of the view that our country is a precious inheritance and we are for a time custodians of it. The role of politics is to preserve the best of it for generations to come - be that landscapes, communities, coastlines and industries. Politicians of yore had no business handing over decisionmaking to Brussels - and the very last thing we want to do is open it to unfettered globalisation. The Tory right would have us take the brakes off.

We are now entering a new age. Make no mistake we are in a trade war and by leaving the EU we will be fending for ourselves, but it's not a trade war started by Donald Trump. This has been a sustained attack on the West over decades and because trade has slipped out of the public lexicon - thanks to offshoring it to Brussels, we have been blind to the threats. 

This, therefore, is the very worst moment in history to set upon a Tory free trade experiment which amounts to unilateral disarmament in a war we don't even know we are fighting. It could very easily do more damage than anything Corbyn's mob could imagine. There is something far larger at stake here. If the worst Corbyn manages is to mess up the railways and nationalise electricity and water then that is hardly a crying shame. Compared to the zealful designs of Tories with a head full of free market dogma, the evil that is Labour might well be the lesser of the two.

Additional: If the Guardian has the nerve to ask for donations for the crap they produce then so do I. Please give if you can.

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