Index

11:    THOUGHTS ON A NEW PROTECTIONISM

Frank Taylor

From time to time the media carries ‘food miles’ stories. There were recent reports that Brussels sprouts were being shipped from across Britain to an East Anglian airport to be airfreighted to Poland for washing and packing and then airfreighted back again. Each sprout would have clocked up nearly 3000 miles before arriving on the dinner table.

Perhaps more alarming, but much less prominent, was a report that Harris Tweed was being airfreighted to China to be turned into high quality garments to be returned for sale in Britain. Of course we often hear of burgeoning imports from the third world and of the rapid decline of farming and manufacturing. Even so we seem to talk almost entirely of 'food miles', as if that were the only issue, rather than 'product miles', as if the latter were somehow not a trade issue whereas the former is.

This is a similar mode of dissociative thinking to that which regards the growth of stress related factors, family breakdown, crime, violence, neurosis, not to mention the epidemic of various compulsive addictive disorders which seems to accompany consumer materialism, as if they were wholly separate and unconnected phenomena. It is the same unlogic which regards ‘child’ and ‘adult’ poverty as different entities emanating from different universes, or which cannot perceive any connection between the level of personal debt and a sharply diminished ability of people to save for their pensions. But we must always reckon dissociative thinking as a likely symptom of a deeper schizophrenia.

Unfettered free trade has been so often sold on the grounds that it affords one country greater access to the markets of others. It is hardly ever remarked that the reverse will also be true. When Britain entered the then Common Market we were promised greater access to European markets as an elixir for our economic maladies. In fact there has hardly been a year of surplus since. The accumulated deficit with the rest of Europe over 30 years is now said to top £300 billions corrected to present day prices. The elixir proved to be quackery.

More often than not increased trade will be no more than an increase in gross trading turnover to little or no net accounting benefit. This process is too often accompanied by a rapid decimation of domestic skill based industry and to a widening environmental deficit as so many extra resources are guzzled in moving so much stuff around which could and should be made more locally.

Once upon a time classical economic theory told us that trade should be largely on the basis of comparative advantage. If one place has a long standing skill and speciality in producing pottery, potatoes and clocks then it might benefit from trading with another place which was good at producing machine tools, apples and carpets.

Now, in the new globalised world order, more or less anything can be made anywhere. As a result competition is increasingly in the basis of price alone. As an even more extraordinary example of dissociative thinking we are told that this is intended to 'create a level playing field'. Nothing could be further from the truth. High cost western economies now find themselves pitted against third world economies whose labour costs and standards are a fraction of their own.

Since 1990 Britain has lost over 50% of an already severely shrunken textile industry, 40% of its pottery industry and 95% of shoemaking. For two decades we have experienced the madness of shutting down coalmines and steelworks in order to import coal and steel, shutting down garment factories to import clothes, and grubbing up orchards to import apples.

If this process were leading to a clear and progressive improvement in the wages and standards of ordinary people in third world countries it would be an acceptable sacrifice. All indications are to the contrary. The gap between rich and poor is widening both internationally and within a good majority of countries both rich and poor. At best globalised trade benefits only a small, and usually already reasonably affluent, segment of the population of most third world countries whilst the poor get poorer. By the merest coincidence such trade is of enormous benefit to the multi national corporations, which are mostly western owned.

It is said that making things no longer matters very much. What the western economies need is to create 'knowledge based' industries. Yet what are these 'industries'? True, information technology has provided a large arena of growth and trade, and such products as energy saving lightbulbs, photovoltaics and improved communication equipment have been of benefit.

But with such diamonds comes so much dross. Bluetooth is intended to save us a few bits of wiring, GPS saves motorists the need for a street atlas or surveyors the need of a theodolite; most cars are now equipped with remote locking.

We can only sympathise with the sufferings of motorists having to look up destinations in their atlases or with the burden of having to insert a key into a lock and twist it, or of a householder having to plug a couple of connector wires into the back of their computer or television. There is now a company now trying to market voice-actuated bathrooms taps. Contemplation of the dreadful burden of a person forced to manually run their own bath can only bring a compassionate soul to tears.

So often the 'knowledge economy' is about goods and services whose overall cost of development, production, distribution and disposal is wholly disproportionate to any gain in personal, domestic or social productivity that might be yielded. So often it is about gee whiz, high tech, resource guzzling, and usually very costly 'solutions' searching desperately for a problem'.

In the meantime economies such as the USA, Britain, and increasingly some European states run huge and incurable external deficits which are, in turn, being severely aggravated by the growing need to import hydrocarbon energy. And no state, however strong, can go on covering such deficits with what arc essentially paper IOUs, piling debt upon debt, forever.

More than that the scorn so often directed at manufacturing tells a bigger story. We, the rich westerners, can do the posh stuff, whilst the dirt jobs can be passed on to third world coolies to make what we need for a few shillings and a bowl of rice every day. The cheapest throw-away trash produced in the cheapest places; the race to the bottom. In that way we can create our fool's paradise of infinite consumer bounty based on a chimera of low inflation.

The new globalised order of trade does not have, nor is designed to have, any check or balance against the fiercely centripetal forces of big money. The third world must be held in a state of impoverished dependency in order to keep us in the manner to which we have become accustomed.

The argument% for a revival of protectionism is therefore overwhelming. And let the Green and anti-globalisation movement call it by its proper name, and in doing so address the issue simultaneously to both third world poverty and the decimation of our own skill-based industries. Every state, region and locality, must have the right to protect the means by which it earns its living.

Contrary to current globalised trade mythology most of the 'economic miracles' of the post World War II era did not achieve their status through free trade. Until fairly recently exporting goods to Japan, South Korea or Taiwan was akin to getting a camel through the eye of a needle, such were the cultural, regulatory and tariff barriers erected to imports. Even today it can still be difficult.

There are more examples from history. Although revolutionary France lost its British trade, import substitution helped keep its economy afloat. The axis powers demonstrated high growth rates through severe, and often self-inflicted, restrictions on external trade through the 1930's. Very few poor states have become rich through the generosity of their neighbours.

The impetus to a new protectionism will almost certainly have to come from the third world. Could the scenario every arise of the African Union confronting the EU and NAFTA or of the African/Asian bloc within the Commonwealth confronting the developed states with, for example, import quotas on such commodities as rice, maize, sugar, soya and cotton? Perhaps a dream might come true.

For ourselves we must be able to insist on minimum wages and industrial standards as a condition of trade. We should not be using serf labour and to do so is obscene. Any factory or farm which supplies us should have a programme of convergence with western standards of safety and hygiene and a starting minimum wage on which there would be real and significant year by year increments which again would result in convergence with western standards of living within a generation.

How would such a regime be enforced? Firstly we would need to place absolute responsibility on any importer or importing agency to ensure that proper standards were maintained. Large retailers from Marks and Spencer to Nike and Tesco already have their own inspection regimes. Although it would be unreasonable to expect small importers to conduct their own inspections, it would surely not be difficult to have a system of agents to verify conditions.

Nothing could be of greater benefit to the ordinary people of the third world than to earn substantially and progressively higher incomes from their produce. Is such a proposal worth making into a campaign? Might it even strip bare the true intentions of those who claim to want to make poverty history?

Frank Taylor

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