One of the great puzzlements to economists is why people have to be persuaded into the benefits of free trade. OK, sure, all are aware that politicians suffer from incentives different from those of normal people, perhaps even of human beings. But even then the puzzlement remains, the benefits of such free trade are so great that it really is, in those economic terms, a complete no brainer. Even if you really were that stationary bandit of Mancur Olson’s structure, you’re able to farm more out of a richer population, trade makes people richer, so the dictator should also be a free trader. The only economist who disagrees with this is Peter Navarro.
That means it’s always a bit difficult to understand why people have to be persuaded into it, as The Queen’s being asked to do:
Queen drafted to charm ex-colonies into post-Brexit free trade
Sure, there’s a great deal of good feeling towards Brenda but still, why this persuading? After all, the only thing that we’re asking anyone to do is not to tax themselves when they buy foreign made products. Really, that’s it! If everyone had unilateral free trade – no taxes on imports that is, something of benefit to their own population – then we’d have global free trade, wouldn’t we? Why would anyone need persuading?
As the Commonwealth heads of government met in London this week, two trade experts debated whether this group of nations could provide Britain’s trading future after Brexit. Policy adviser Allie Renison argued that the 52 Commonwealth nations could be the foundation for a global approach to trade. Former cabinet minister Peter Mandelson stressed the challenges of increasing trade with these distant allies if Britain loses its traditional selling point of access to the EU single market.
Mandelson is of course wrong. The benefits of trade are what we buy from foreigners. How they handicap themselves is of no import to us. We don’t have to have barriers to what we buy therefore we shouldn’t. That we buy from the EU or the Commonwealth thus has nothing at all to do with the trade policies that they follow, only with our own.
After decades of sidelining the Commonwealth as a relic of their imperial past, many in Britain are now promoting the group of ex-colonies as a ready-made market for what they hope to be the country’s buccaneering global business spirit after the exit from the European Union.
Going out and selling to the colonies does have unfortunate historical overtones. But that’s not even what we nee to happen, all that we do need is that we don’t put barriers in the way of our own buying from them. This alone will make us richer.
As I’ve pointed out before the correct trade treaty – policy even – for the UK post-Brexit is very simple indeed:
1) There will be no tariff or non-tariff barriers on imports into the UK.
2) Imports will be regulated in exactly the same manner as domestic production.
3) You can do what you like.
4) Err, that’s it.
Get that onto the statute books and we’re both richer and done. But then the difficulty of getting politicians, with their own incentives, to understand this is why we’ve got to the draft the Queen in to persuade those colonial ones isn’t it? If only someone of equal stature could go to work on Theresa May and the Cabinet. D’ye think Phil the Greek might like to come out of retirement?