Patrick made an impassioned post defending protection of British business over globalisation and of British agricultural self-sufficiency over free trade.
The contention by the OP, which is the de facto position of many modern economists, that specialisation and trade is always beneficial is also fallacious. It both presumes perfect access to markets, and that those markets are operating efficiently. This is rarely (ever?) the case
My response is unequivocal: that's just crap. If a trade doesn't benefit you, why do it? That argument goes all the way along the line. If at any step the trade was not to both parties' benefit, the trade would not occur.
I feel that Patrick, like many other people, is confusing the idea of a beneficial trade with the idea of an optimal trade. And it's true that trade will rarely be optimal, but if it's not beneficial, then the party making the trade without benefit or utility is an idiot, and you can't spend your life catering for them.
No system will ever offer optimal trade, but the free market, corporate or no, offers the opportunity for beneficial trade.
I've written previously, for example, about why it might make perfect sense for a nation state to impose protectionist measures on trade. In the idealised neoliberal view of the world, such measures are seen as frustratingly unnecessary and a restraint to trade; for the government of the nation state in question they are perfectly reasonable mechanisms to ensure the growth and long-term health of their economy. This is one of the reasons why this party might not always see eye to eye with certain other proponents of 'free-markets' -- our interests our focused solely upon the well-being of the UK, whilst theirs see the existence of nation states as an inconvenience to the realisation of the global market.
The arguments in favour of protectionism do not convince me, either. One may argue that you are "ensuring the growth and long-term health of your economy", but actually, you're just making your own people pay more for those things you are protecting, now and for ever more. How that helps anyone, I don't know. Well, apart from the people who are in the industries that cannot compete without protection, of course.
I struggle to see the logic of favouring a system which punishes the individual while favouring ineffective, benefit-seeking corporates, in a post attacking ineffective, benefit-seeking corporates and their abuse of the state.
The final point that I want to touch on (in this interconnected, if somewhat wandering post) was brilliantly expressed by Robert Heinlein, in the quote that this post takes it's title from, and which I've used previously:"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."
To economists, the politicians who seek to plan our lives, and the companies that employ us, we are nowadays 'human capital'. We're a resource to be used in the manufacturing process, whether the 'goods' produced be something tangible like a new kettle or, as is largely the case in the UK, a 'service', or a mere financial transaction.
The deleterious effects of specialisation have long been recognised, including by Adam Smith:"In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, of the great body of the people, comes to be confined to a few very simple operations, frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life."
Perhaps modern economists are happy to view themselves, as Heinlein puts it, as 'insects' -- if so, it would probably be fair to suggest the wasp as their arthropod equivalent.
But I'm not happy with being perceived as 'human capital', grist to some greater mill, part of some gigantic corporate clockwork mechanism. I'm an individual human being, with my own wants, needs and desires. My own hopes and fears. This simple fact is something that the classical economists well understood, but which has been tossed away in the last 60 or so years with the neoliberal rush to profits at all costs. And it is another reason why a Libertarian Party, an expression of a political ideology that puts the individual at the very centre of things, will always be in a position of conflict with those who wish to put 'the group' foremost in their considerations; whether those seeking to ride roughshod over the individual human being are socialist politicians, or those pushing the corporatist business agenda.
Heinlein's comment is not invalidated by people specialising in trades or things they're good at. I'm buggered if I'm going to learn how to service my car when I have a perfectly good dealer less than a mile away. I can still change a nappy, write a limerick, program a computer, etc., etc.
The days of people straightening wire to make pins is long gone. Over the course of my career, I have gone from being incredibly generalist to incredibly specialist. I do not find my job in the least bit repetitive, however.
And in a broader sense, it's a bit pointless saying that the UK needs to be self-sufficient in every kind of food we need, there isn't enough agricultural space for us to do it. There are some things we just cannot grow, or cannot possibly grow enough of.
I feel that good Libertarian economics would revolve around the removal of barriers to smaller businesses or individuals, allowing to partake of the market more easily. The massive regulatory burden that we currently have in this country favours large corporates, who can afford to devote manpower to coping with and understanding the regulations imposed. Smaller businesses cannot devote the necessary effort to work with all the regulations and this is really what penalises the individual and benefits the corporate.
I feel that it's important to highlight the fact that government is the guilty party in all this for encouraging business to get co-opted in the government power play. The government wants to grow in power, and it does this, inter alia, by adding more regulation to markets. Big companies like regulations, because coping with regulation is a relatively small part of their cost base, but can potentially ruin a start-up competitor. It also allows them to charge more: "See all this terrible regulation we have to cope with? It requires whole departments we have to pay for!" You pay more and you feel sympathy for them!
Protectionism justifies the government taxing people more and redistributing wealth to the chosen few who have lobbied the hardest for some kickbacks. Businesses of whatever size will naturally and quite rationally indulge in "rent-seeking" if it is offered. (Rent seeking is the business of making money by manipulating the economic and / or legal environment rather than by trade and production of wealth.) Protectionism is classic rent-seeking: "We can't compete with those Chinese, they don't get paid a living wage!" "OK, we'll stick an extra tax on imports from China / give you some extra subsidies of taxpayer money." "Great, now we don't have to worry about containing costs / reducing profits / improving efficiency, and we'll still be cheaper than the Chinese!"
Who in their right mind would turn down the chance of free money? Who in their right mind would not ask the government for free money if the government had a history of giving free money to people who asked nicely? As much as I hate the soulless corporate, they're just playing the game by the rules that the government has set.
Who is paying for this? Only individual taxpayers and voters, who are paying more than they need to or directly subsiding a business that wouldn't survive without the handout. This specific issue is one that I find particularly difficult to reconcile with Libertarianism.
(Read Timmy for genuine sense on matters economic.)
5 comments:
I wouldn't say Patrick was necessarilly claiming a protectionist standpoint, only why he can imagine some countries partake in it - its all about avoiding the more harmful effects of the changes in economic grounding and, much more importantly, avoiding the longer term negative implications of economic changes (how long will it be before the chinese discover sage/SAP/MADISUN, western business practices and become net importers? happening already!).
What I garnered from Patricks post is neatly encapsulated in your comment below:
"I struggle to see the logic of favouring a system which punishes the individual while favouring ineffective, benefit-seeking corporates, in a post attacking ineffective, benefit-seeking corporates and their abuse of the state."
The only way to avoid rent-seeking is to remove the walls that cause it; look at the impact of REACh on small businesses (http://eureferendum.blogspot.com/2008/08/propaganda-us.html) and you have some idea of what causes the little guy to get squashed.
In truth I can see the need for regulation in this manner; if we are to defend life, liberty and property and that is to be the only purpose of government then it has to be all covering - this doesn't explain the need for a separate "tax" that allows rent seeking and destroys small businesses though; why not cover something like this in a centralised agency to police it for the UK, receipts collected via corporation tax (which I still think is on the cards as LPUK policy?).
I'm sorry, tomrat, but I can't agree with what you're saying either: you can't avoid the longer term negative implications of economic changes, that would require our ability to stop the outside world from changing.
And when you say: "In truth I can see the need for regulation in this manner; if we are to defend life, liberty and property and that is to be the only purpose of government then it has to be all covering - this doesn't explain the need for a separate "tax" that allows rent seeking and destroys small businesses though; why not cover something like this in a centralised agency to police it for the UK, receipts collected via corporation tax (which I still think is on the cards as LPUK policy?)", I don't really understand what you mean?
Are you defending protectionism? Are you implying that a general tax on business is going to avoid the harmful effects of economic changes? If we levy a corporate tax on business, who is going to pay that tax in the form of say, increased prices or lowered wages?
Answers on a postcard, please!
Obnoxio,
Are you defending protectionism? Are you implying that a general tax on business is going to avoid the harmful effects of economic changes? If we levy a corporate tax on business, who is going to pay that tax in the form of say, increased prices or lowered wages?
I am not defending protectionism, I am defending protection; we have banded together over millenia and laid down rules and laws because at some point someone realised that some of mans actions have a negtaive impact in terms of money or quality of life - ergo, it is cheaper for society to pay a small penalty for a police force than to cope with the negative, costly actions of the few, both in terms of money and quality of life, individually.
What I am alluding to in saying we need some sort of regulation is not in favour of protectionism of small business - the lifeblood of a growing economy (history has shown such "regulation" or protection is merely palliative in any case) - but in protection of the individual.
Consider this: in a land where there are no regulations regarding dumping of industrial waste into lakes and rivers we have a corporation move in which can significantly reduce the costs of its product because it doesn't have to realise a major one in terms of its environmental impact - the river gets polluted, people die and the bods get rich; the people in that land bear the cost of that corporations malfeasance and drive for profit either way - whether the cost comes via the increased price of goods due to regulation, or via a diminished quality of life.
My belief (and Patrick please correct me if I am wrong) as to what he is saying is that as a party we should be quite clear that we expect a companies actions to be reflective of the entire cost of those actions; this means that some regulation is required, though I grant you, there is way, way, way too muuch at present - caused primarily by too much government control.
What I am calling for is a policing agency that effectively does the same job as the police, but for businesses; what we have at the moment is a mishmash of toothless wonders - what we need is a tiger, independant of government and paid for via taxation to all businesses, good or bad, in the same way we should pay for effective policing.
Aha! Much clearer, and yes, I do agree that profit with the hidden expense of someone else's physical harm is unacceptable.
My sincere apologies; am working from home today with a bad cold, strung up to the eyeballs on anti-cold meds and caffeine trying to complete a fairly large bit of data gathering; plus I tend to vere toward incoherent waffle the longer a post goes.
:-0
Needless to say I think a libertarians stance is not necessarily pro-business; thats a by-product of being pro-freedom - the difference comes to conscious acts of infringements on what should be very simple, enforceable laws that apply to everyone, not just the few who cant afford to lawyer or spin their way out of the problem.
As for protectionism it is completely unnecessary - I believe pointed out some time ago the resurgence of farmers markets was occuring; he then went on to point out that this was exactly how companies like ASDA started - money isn't always the primary consideration when picking a product; you need only look at the withering look most englishmen will give the teacaddy on holiday.
Diversity is the key.
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