Anorak News | Polly Toynbee really needs to learn some economics

Polly Toynbee really needs to learn some economics

by | 2nd, November 2012

OK, so there are some nutters out there (like me!) who think that we should leave the European Union. There are arguments about why this might not be a good idea. But this is not one of them:

The cost of membership is not high: we pay a net 1% of GDP, the same as France, 85% of it redistributed to poorer countries. What we get back in trade is far greater:

The mistake being in the “what we get back from trade”.

What we get back from trade, the point of trade, the benefit of bothering to trade, is the imports we get. And no one at all is suggesting that if we leave the EU then Johnny Foreigner is going to refuse to sell us stuff. That’s just not the way that the system works.

Just about everyone gets this wrong: exports are the cost of trade. We do all this hard work, we use up our natural resources, our steel, energy, labour to make something and then we send it off overseas. That is, the product of all of our work and effort is enjoyed by some fat Frog in Lille or wherever. The benefits of trade to us are not in doing that. The benefits are that that fat Frog (or whatever non-Brit you care to mention) can do something better or cheaper than we can. Make wine, fatten up geese for foie gras, grow olives, build nuclear power stations, make windmill blades, design iPads, whatever. These are our imports and they are the point and purpose of doing trade at all.

If Johnny Foreigner couldn’t do anything at all that we want then we wouldn’t bother to trade at all. If there was nothing we wanted to import then we wouldn’t bother to export.

So we don’t “get back in trade” from the EU. Or any other system of trade like the WTO or free trade agreements or whatever.

Imports are the benefit of trade, exports are the dreary work we’ve got to do to afford them.


Posted: 2nd, November 2012 | In: Money Comment | TrackBack | Permalink