Is a Trade Deal a Panacea?

About this Anglo-American trade deal, which John Bolton says will be a reality. Actually, he says we can do a lot of mini ones, sector by sector, sounds good to me, as it does to a lot of Brits. A bit of a dark cloud over it comes from Stumbling and Mumbling via our friends at Notes on Liberty.  They say this:

Brute facts tell us this. As part of the EU, the UK and Germany have the same trading rules. Last year, however, Germany exported $134bn of goods to the US whereas the UK exported only $65.3bn. Per head of population, Germany’s exports to the US were therefore 60% higher than the UK’s. Much the same is true for other non-EU nations. Last year Germany exported $11.8bn to Australia whilst the UK exported just $5.9bn, a per capita difference of over 50%. German exports to Canada were $12bn whilst the UK’s were $7.3bn, a 28% per capita difference. German exports to Japan, at $24.1bn were 2.2 times as great per head as the UK’s. And German exports to China, at $109.9bn were three times as great per capita as the UK’s $27.7bn.

Now, these numbers refer only to goods where Germany has a comparative advantage over the UK. But they tell us something important. Whatever else is holding back UK exports, it is not trade rules. Germany exports far more than the UK under the same rules.

As for what it is that is holding back exports, there are countless candidates – the same ones that help explain the UK’s relative industrial weakness: poor management; a lack of vocational training; lack of finance or entrepreneurship; the diversion of talent from manufacturing to a bloated financial sector; the legacy of an overvalued exchange rate. And so on.

There is truth in that, but I don’t think it’s the whole truth. One, Germany is something of an outlier, it has designed itself to be dependent on exports, in a sense it is like China that way. And also like China, that makes it vulnerable to events elsewhere.

But there is something else that bothers me with the UK, yes, but even more with all of Europe. They appear to have no confidence in themselves, the EU is essentially an economic Maginot line, not designed to make the members more profitable but to prevent them from going broke.

I pay more attention to the UK, so I see it more there, but I think it pervasive. I see few innovations coming out of any of these countries. The British, like us, used to idolize their inventors and entrepreneurs, now they seem to envy them and attempt to destroy them. And above all, they appear to have become welfare babies, completely unwilling to take a risk, no matter how well-considered. This is especially prevalent in the political realm where absolutely no one will call out the politically correct nonsense that Westminster insists on. This is the primary reason for the Brexit debacle, and perhaps including a fair amount of corruption, as well. Even to the point where the British are losing essential freedoms, like speech, as the government tries to protect the useless mouths. And then there is the seditious BBC (and Channel 4), if you think CNN is fake news, you should try these!

Now mind, this is probably not a majority of Britons (or quite a few other nationalities in Europe) but it does appear to be a majority in the City of London/Westminster, in other words in the political/government/big business sphere. For Britain to truly prosper as it once did, it will somehow have to overcome the blob that is holding it back.

That is something a trade deal cannot do for the British. In truth, we’re fighting the same battle.

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