To Shout About Tariff Free Trade, Again

19
476

We’ve had one sensible decision made about trade post-Brexit. Bangladeshi goods will continue to enter the UK tariff free. Now, if only people got to grips with the more general application of this point:

The underlying argument comes from Adam Smith himself — you can understand why someone at an institute named after him might like this — and is about the division and specialization of labour. None of us is good at everything, some of us at least are good at doing some things. It makes sense for things to be done by people who are good at them.

That way, we get better things and also we get more of them. So, that’s the division of labour, we each do different things and make different things. As we do so we are “specializing” and as we do more of the one thing then we will get better at them. So far, this is just obvious from any observation of the human beings around us.

It applies to who cooks and who puts up the bookshelves in a household just as much as it does to who makes clothes and who does the accounting in the economy as a whole.

If we are to have this division though, we clearly need to have trade following it. It’s no good the cook having nowhere to put her books, nor the shelf-maker not being able to eat. Or, of course in the country as a whole, only the clothes-makers having anything to wear and the accountants being entirely naked. So, that increased and specialized production must be traded.

The thing about this argument is that there is no obvious difference between the few people within a household, those in a village, a town, a country or the entire world. We are all made better off by more division, more specialization, and more trade in the resultant higher production.

So, stop taxing people for buying from the specialists. That is, have no tariffs on anything.

19
Leave a Reply

avatar
4 Comment threads
15 Thread replies
10 Followers
 
Most reacted comment
Hottest comment thread
11 Comment authors
JasperQuentin VoleCharlesBloke on M4Spike Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
jgh
Guest
jgh

It’s post-Brexit trade, not trade post-Brexit. Post-X is a *pre*positional adjective, if you want a postpositional adjective the correct one is “after”.

John Galt
Guest

You’re being a pendant.

Wheels
Guest
Wheels

I just learned something. Thanks

Bloke in Kent
Guest
Bloke in Kent

I understood Tim’s sentence, however I don’t really understand yours and I can’t be bothered to go and look it up. Language is about conferring knowledge; so long as it’s understood, who cares?

Jasper
Guest
Jasper

Generally I agree with the sentiment. However, you should always add the qualifier ‘fair’ as in we want tariff free trade as long as it is fair and not subsidised etc. I expect Bangladeshi goods meets that requirement but we should also require those workers involved to be fairly treated.

Spike
Guest
Spike

Sure, free trade provided I can examine money flows in a foreign country. Free provided we are allowed to assert mistreatment of foreign workers. Free provided no foreigner works in conditions in which I would not work. Free provided the foreign country screws up its labor laws just as badly as my country has done. Sorry; I’ll take my free trade free.

Jasper
Guest
Jasper

Ah, the extreme approach. That is not what I am saying. I am certainly not wanting their laws to be as screwed up as ours or to follow ours down a rabbit hole. I just mean they should meet certain minimum standards e.g. avoid child and slave labour. I also don’t want countries undermining our economy by subsidising their trade (e.g. China). That should not be too much to ask surely?

Bloke on M4
Guest
Bloke on M4

What’s wrong with it being subsidised? If Russia wants to subsidise tours by ballet companies, great. Cheaper ballet. Please come again.

Bongo
Guest
Bongo

Quotas do more harm than tariffs. Don’t be a member of any organisation that likes quotas.

Charles
Guest
Charles

No mention of David Ricardo? Trade is stil advantageous even if you’re the best at everything – you profit by only doing what you are best at and paying others for everything else – even if you are much better at doing those things too. And tariffs and other trade barriers are why Brexit will be a disaster. In theory, it might work if it meant much freer trade globally, but WTO terms are not free of such trade barriers and progress on agreements has been extremely slow (as was predicted by many, but dismised by Brexiteers). A far more… Read more »

Bloke in Kent
Guest
Bloke in Kent

As Tim has articulated many times, WTO rules set only the maximum, not minimum tarrif rate, which can include 0%. The only stipulation is that you must apply the same rate to all other WTO members unless there is a separate agreement between countries which overrides WTO rules.

Charles
Guest
Charles

Indeed. So to get the rate to 0% requires negotiation, but we;re doing rather badly at that. Perhaps unsurprisingly as the negotiation is in the hands of the deluded Brexiteers who never took it seriously in the first place despite lots of warnings.

Quentin Vole
Guest
Quentin Vole

to get the rate to 0% requires negotiation
No it does not, only if we want to apply it to some countries and not to others. And I thought we were doing rather well at trade deals, unlike the glacial progress of the EU.

Spike
Guest
Spike

Trade is indeed always advantageous, as efficiencies gained by partnering with foreigners are ruined by drawing arbitrary lines and imposing taxes. But trade is most advantageous when these partnerships exploit differences, such as moving labor-intensive activities to a low-wage country.

Bloke rebuts Charles’ 2nd paragraph entirely. Free Britain could make decisions more stupidly than the EU has, but is not required to.

Quentin Vole
Guest
Quentin Vole

TBF as a Brexiteer I have every confidence that British fonctionnaires are at least as idle, useless and stupid as those in Brussels. But Brexit gives us the chance to vote the idiots/rascals in charge out every few years.

Charles
Guest
Charles

We always had that power – just never used it. That fact does not bode well for our future.

Quentin Vole
Guest
Quentin Vole

Rilly? I must have missed the election of Barroso, Druncker, von der Leyen etc etc.