Shorties-14

Feeling Trumped

Unfair trade-2Donald Trump has signalled that ‘America First’ will not mean protectionism, merely a defence against unfair trade practices. In his latest comments during an interview with Piers Morgan he explicitly added the EU to a list headed by China. He has a good point, do Germany’s cars need a 10% barrier against an influx of US vehicles when the latter’s protection is a mere 2.5%? Audi, BMW, Daimler, Mercedes and Volkswagen seems like a roll call of quality brands (‘Diesel-gate’ aside), especially compared to Chrysler, Ford and GM. They should be able to hold their own on merit, and if they can’t they should try harder to please customers or give way to superior makers. That is what free trade means, the EU is not a Free Trade Area, it is a Customs Union which cocoons its favoured corporations to everyone else’s disadvantage, both customers and competitors. Trump has previously threatened the EU with a 35% retaliatory tariff – that’d show ’em! OK, let’s not be too selective with our figures, the US does impose a 25% import duty on trucks.

Chlorine chickensMeanwhile he promises the US is ready to do a great deal with Britain the minute we’ve disentangled ourselves from the EU. He feels the balance is fair between our two nations, actually we have a small surplus in trade by value. Naturally the prospect of a free trade deal with America will face fierce opposition here with the nightmare of chlorinated chicken in our salads – the critics never mention that the salad leaves themselves will have been washed in chlorine if bought pre-bagged at the supermarket. That’s anti-American hysteria.

IrrelevanceCarolyn Fairbairn, head of the Confederation of British Industry (CBI) speaks mostly for big business in opposing leaving the Single Market/Customs Union. Her constituents might actually have to work at being the best at what they do for a change, they may lose some ground initially but companies that rely on protection rather than satisfying consumers eventually decline into irrelevance. This is happening to the EU as a whole as we’ve reported before.

 

Economical With the Truth

VerhofstadtThe everyday debates about Brexit are overwhelmingly about its economic effects. However, the truth is that the main issues are not economic because if they were the EU would focus mainly on what is best for its citizens’ wealth, not what furthers the Project’s other goals. So for example, when Guy Verhofstadt says extending ‘transition’ beyond the end of 2020 is “not a matter of religion”, he rather implies that some things certainly are religious, and that’s pretty obviously true.

The EU is generally hostile to others not of its faith however much it pretends to be welcoming and generous. Its protectionism, including its high tariff rates – which are much higher than America’s for instance, despite Trump – demonstrate this. But the attitude to its sole apostate nation, Britain, proves it beyond doubt, otherwise it would try to part on good and mutually beneficial terms rather than punitive ones.

Righteous path-1The EU’s preachers (there are many of those) seek to prove that leaving the flock is the path to damnation, they mean to frighten others into staying on the path of righteousness. The flock may not be convinced about the path they’re on but they’re damned well going to be frightened by the alternative if the holy ones can help it. This is a common pattern with faith (that is, belief without regard to evidence), the infidels can go to hell, with our help if necessary.

 

The Brexit Stakes

Starting gate-1The runners are nearly ready, they’re approaching the starting gates. The jockey in the blue and yellow silks with the soft cap is looking nervous. Next to him, the chap with the hard helmet is clearly full of confidence – we hope he remembers to tighten his chin strap because his mount is rather frisky. The going is fair, there was talk of it being pretty sticky before the off but the ground hasn’t changed a lot since the race was planned, eighteen months ago. Judging the form is tricky because no race like this has been run before, the favourite keeps changing and the tipsters are confusing the punters with their predictions. The course is over hurdles, thousands of them, and it’s very long; although there is no official end the bookies will pay out after fifteen years when the stewards will assess the runners’ performances. There could be fallers and that soft hat won’t give much protection from the flailing hooves of the other runners if the rider chooses to stay with the bunch – he could get badly trampled. We spoke to the trainer and that’s his race strategy, not to fall obviously but stay close to the others; such caution might merit an each way bet rather than a clear win. Brexit stakesIt’s a bit dangerous because the ‘bunch’ contains some hard-nosed jockeys, experienced in all the sneaky tricks, like pulling on the reins of others or illegal use of the whip. Old Hard Hat reckons he can get clear of the rest and stay well ahead, out of trouble – we’ll see.

We’ve taken the allegory far enough now, you’ve got the point. Where would you put your money in the real Brexit stakes? If you trusted the form guide of the UK Treasury when the race was agreed you’d be confident of a win or a place for Softie, but that tip has been effectively falsified already in the lead-up to the event. Others see things very differently but the truth is it’s a gamble, nobody can predict the results fifteen years in advance. Economists use highly mathematical models but these are partial representations of extremely complex systems and simulate only what’s in the model. Such ‘closed’ systems cannot account for external, unexpected events. How would Brexit Britain perform in a vibrant global economy, or dull one? What would happen if the Euro collapsed because of bank failures in Italy and the resulting domino effect on others in the zone, would we be safer in or out of the EU? UnknownThese are just a couple of the “known unknowns” in Donald Rumsfeld’s hierarchy (“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.”)

We like the look of Hard Hat’s mount, the breeding is excellent judging on past form but she’s untried in these conditions, as is her jockey. So how do you know who to back? First, this isn’t just about money, the horse you favour and the jockey you trust may well have been chosen because of qualities you admire and not just from quantitative estimates. These qualitative assessments should be taken seriously and continually questioned, therefore we welcome your comments and would try to address any counter arguments fairly.

 

Productivity

Productivity-1We have previously mentioned the difficulty of measuring productivity but didn’t explain. It’s worth having in mind what the problem is in case the statement is challenged. It has been claimed that France is more productive than the UK, provided we ignore the fact that France has double the unemployment level. This is what the figures do, they attempt to measure output per employee but that doesn’t include the whole potential workforce. Then if you have an economy with an unusually large finance sector but add increasing numbers of regulators and compliance staff there are more people producing less. Again, if the economy has about double the level of on-line sales compared with others then hundreds of thousands of warehouse staff and drivers are employed to do what high street shoppers do for themselves but they aren’t counted in productivity figures because they aren’t employed to visit, choose what they want and take their purchases home. Yet this last example improves living standards and employment, which can’t be bad (also service levels in shops may improve if staff are kept on).

Productivity-2

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