Tim Worstall

Woefully Silly

A (new to me) German website, Atlantic Review, picks up on the idea of Germany being willing to push for a transatlantic free trade area.

A woefully stupid idea. As we all know, unilateral free trade benefits the population of a country that adopts it. It is not necessary for there to be reciprocity at all. We don’t actually, give a damn about whatever restrictions the US might put upon imports into that country. We care only about the idiocy of our Lords and Masters imposing restrictions upon what we might buy from the US.

Thus talk of a free trade area that might take 10 years to negotiate is stupidity of the highest order. The solution is in our own hands, here in the European Union. We should simply abolish all quotas, tariffs and other barriers upon imports, from wherever in the world they originate.

While said Lords and Masters ruminate upon such programs, the diplomatic manouvering necessary to make such grand agreements, they keep us poorer than we should be by ignoring the simpler measures they could take immediately, ones that would provide us with huge benefits, simply by removing the barriers to trade that they themselves impose.

In

10 responses

  1. james C Avatar
    james C

    ‘As we all know, unilateral free trade benefits the population of a country that adopts it’
    This is wrong.

    Reply
  2. Matthew Avatar
    Matthew

    “We don’t actually, give a damn about whatever restrictions the US might put upon imports into that country”
    This is certainly wrong. In the absence of any imports into the US of foreign goods or service foreigners (eventually) would not be able to pay for US exports (or at least Americans would not accept payment).

    Reply
  3. johnny bonk Avatar
    johnny bonk

    “As we all know, unilateral free trade benefits the population of a country that adopts it. It is not necessary for there to be reciprocity at all”
    … ok, but if its reciprocated then the benefits are squared not doubled.
    In truth the world is more complicated than that, trade can do harm, though the general priciple is well founded.

    Reply
  4. sanbikinoriaon Avatar
    sanbikinoriaon

    Buying things from outside the EU makes the net amount of cash in the EU go down, doesn’t it? Doesn’t that make us poorer? This is a point I haven’t had sensibly explained to me so I’d be grateful if you’d give it a shot.
    Tim adds: OK. The amount of money we have as a determinant of our wealth is an idea called “mercantilism”. It’s wrong.
    It is the imports that make us rich. If we can make something better or cheaper ourselves (as an individual, household, city or country) then of course, that’s what we do. If someone else can make it cheaper and sell itto us cheaper than we can make it ourselves, then if we buy that then we have become richer. We then have the thing, plus the money (or time, or labour, whatever) to go and get something else as well. For our 8 hours of labour (say) we now have two things, not just one: we’re richer.
    The exports are simply our labour that we send off to the foreigners in order to get the things we really want, the imports.
    This is why all trade negotiations are such complete bollocks: there shouldn’t be any negotiations at all. None of us should have any restrictions upon imports: for they are the very things that make us richer, so why are we insisting that we ourselves must pay more for them?

    Reply
  5. johnny bonk Avatar
    johnny bonk

    “Doesn’t that make us poorer?” … no, we get to enjoy the use of whatever we bought … my brain hurts.
    Presumably, we get a better deal than we would have if we had bought within the EU else we would not have chosen that purchase .. my brain hurts.

    Reply
  6. Forester Avatar
    Forester

    james C: why do you think this is wrong?
    Matthew: “In the absence of any imports into the US…” surely an impossibility?
    [Tim, I think ‘johnny bonk’ and ‘sanbikinoriaon’ are trolling, look where their links point]

    Reply
  7. james C Avatar
    james C

    Forester: Look up ‘second best’ and’trade’.

    Reply
  8. Tristan Avatar
    Tristan

    Unfortunately not everyone knows that. Many (including most Tory and Labour politicians) cling to mercantalism.
    There are still socialists around who think that protectionism is the way forward and that trade is bad…
    Its a sad fact that these people have so little economic knowledge…

    Reply
  9. Matthew Avatar
    Matthew

    “Matthew: “In the absence of any imports into the US…” surely an impossibility?”
    Not quite sure what you mean about an ‘impossibility’. Very unlikely, yes. But what I mean is Tim is right to say that exports are the price one pays to enjoy imports. But, as such, it follows that you can’t have the imports without the exports (somewhere down the line).

    Reply
  10. Jon Avatar
    Jon

    Re: second best theory.
    Don’t see how it supports James C’s claim. At the end of this piece on second best theory and trade policy, it says:
    “In general, the only way to assure that trade liberalization will lead to efficiency improvements is if a country removes its trade barriers against all countries.”
    http://snipurl.com/wqy2
    …which supports Tim’s original claim.

    Reply

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