And before I start, yes, this really is me this week. Last week’s article was something of a play on the Liberal Democrat Voice April Fool, although even my colleagues thought that it was credible. Perhaps I should be troubled by that…
Greetings from the Czech Republic, where I’m off interrailing. And yes, most of this week will be on trains, but I get to enjoy the scenery and allow my mind to wander a bit.
One of the great things about the past forty years is the impact of increased freedom. Freedom to travel, freedom to trade with minimal barriers. Both of these things have enhanced our lives, whether we always realise it or not. From the emergence of European supermarket chains, driving price competition, to the ability to travel randomly across Europe by train without, for the most part, passport checks or varying currencies, all of the benefits of a large free trade zone have made things better for many of us. And, given that Elon Musk apparently agrees on the benefits of free trade zones, it seems to me that support for the concept is pretty widespread.
The challenge offered by President Trump is for the rest of us to remain faithful to the concept whilst addressing the fact that the United States seemingly doesn’t want to play any more. In truth, if any country could make a move towards economic autarky work, it’s the United States, with its enormous economy and access to raw materials, even if most economists suspect that it will hurt Americans more than it helps them.
The rest of us will have to explore new trading opportunities, build new relationships (or develop further the ones we already have) and work out who our friends really are. They may not turn out to be who we might have expected…
Party strategy appears to be one of encouraging people to buy local, and whilst I’d never dispute the value of doing so, it smacks more of posturing in this situation. I’d be happier if we focused more on restoring our trading links with Europe, and with the Commonwealth, many of whose members, such as Lesotho, have been sorely hit by the Trump tariffs. By helping such countries to refocus their trading arrangements, we help to reduce poverty (and thus perhaps make up in part for cuts in development aid), and we make friends, something increasingly important in a troubling global climate.
Free trade is not a given, as we are now seeing. But, like every other freedom, it needs to be fought for, defended. And, as liberals, we need to be on the frontline.
Freedom of movement is, for some, more challenging. There should be an acknowledgment that it more obviously favours the middle class and those with transferable skills, as they can take advantage of the opportunities. But, if you want to encourage social mobility and aspiration, then somebody must be making that argument. It isn’t an easy one, but it’s the right thing to do.
Freedom of movement is also something that has become problematic since the Trump administration came into office. Of course, any country has the right to operate its border controls as it pleases. But the stream of stories about European visitors being held in unpleasant conditions is likely to put people off travelling to the United States, reducing the exchange of cultures and creating a wall between us, which would be a pity.
But at least the cricket season has started in earnest which, for me at least, offers an escape from an increasingly complex world. As Howard Blake wrote in his “The New National Song Book”, the English invented the Industrial Revolution, a way of making things faster and more efficiently than ever before whilst, at the same time, inventing cricket, a way of doing absolutely nothing for four whole days.
And with that thought, as my train speeds towards Brno, I hope that your week is as restful as mine is likely to be.
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16 Comments
Nations / Continents have been trading with each other since the year dot. It wasn’t invented by the EU. A European trading block is one thing – but a federalist Europe is a road too far for many people. FOM as you rightly point out was indeed a one way ticket that many could never envisage . A huge mistake by New Labour in not capping those numbers. Ultimately it gave rise to ukip & facilitated Brexit – labour lost its socially conservative vote across the midlands and north.
@ Craig,
And nobody is claiming that free trade was invented by the EU, but the creation of a tariff-free transnational area was a massive step forward, and it changed all of our lives for the better.
As for a cap on numbers, would you like to explain how that would have worked, and would it have been reciprocal, in which case it wouldn’t be freedom of movement, would it?
But given that your whole ‘schtick’ is for a notion of sovereignty that died once free trade began to impact on our economies, I guess I shouldn’t be surprised by your stance.
Countries did put a cap on numbers – I’m stating it was a huge mistake by NL in not doing so. In many towns it was purely a one way ticket. Many communities would look at that ‘it changed our lives for the better’ and wondering what exactly. Who could blame them in that respect. Dismal EU election turnouts anonymous Mep’s the norm. Membership didn’t make one iota of a difference , the status quo is never a good sell.
” ….a notion of sovereignty that died once free trade began to impact on our economies”
Free trade doesn’t imply a loss of sovereignty. We have a FTA with the EU now which presumably either party can terminate if they choose to.
Australia has a FTA with New Zealand. However, they have separate laws, separate Parliaments and separate currencies. Neither country interferes with how the other wants to run its railways or sets rules on how budgets have to be close to balanced.
The constitution of Australia does allow for NZ to be a part of the “Australian Commonwealth” too. I haven’t actually come across any Kiwis who want a change in the status quo, though. The typical reaction is “No Way” but often expressed in more industrial language!
Mark….Party strategy appears to be one of encouraging people to buy local, and whilst I’d never dispute the value of doing so, it smacks more of posturing in this situation….
I’m ‘posturing’.. Like my commitment to ‘net zero’, pollution, homelessness, etc. I know it won’t get the whole world or even Trump to change but it’s the best, and only, thing I can do…
Mark writes correctly “if any country could make a move towards economic autarky work, it’s the United States, with its enormous economy and access to raw materials, even if most economists suspect that it will hurt Americans more than it helps them.” Each of the 50 states has a high degree of autnonmy in the setting of state laws and raising of local taxes. California alone has an economy larger than that of the UK and even the poorest state, Mississippi, has a per capital GDP greater than that of the UK or most other European states. Aggregate incomes do, however, mask extreme inequality within states and across the USA as a whole.
The primary cause of trade deficits is not tariffs, trade barriers or currency manipulation. It remains what it has always been – wage differentials. Outsourcing of manufacturing to low wage countries in Asia are driven by these differentials. Even Germany has suppressed domestic wages (combined with cheap imports of energy and raw materials) for decades to maintain export growth.
The benefits of International trade to the raising of living standards in both importing and exporting countries is indisputable. The productivity gains that have been realised, however, have not been equitably distributed between merchants and non-graduate workers. Real wage growth has been stagnant in the USA for decades with almost all of the immense gains being captured by investors both domestic and foreign. US economic growth has far outstripped that of the UK and Europe since the 2008 financial crisis and yet the minimum wage has remained at $7.25 per hour since 2009. As the French economist, Thomas Piketty, has writtem -the accumulation of immense wealth by investors, both foreign and domestic, has created a global rentier class that is metaphorically sucking the blood out of the great majority of populations across the world.
@ Joe
“The primary cause of trade deficits is not tariffs, trade barriers or currency manipulation. It remains what it has always been – wage differentials.”
Are you saying high wages or low wages create the surplus?
It’s primarily the currency level. Compare what it is, to what it should be, for any country reporting a large trade surplus.
There no particular reason why a wealthy country can’t have a high income economy and have either a surplus or deficit in its trade. Examples of one would be Germany and the other the USA.
It really depends on how much it chooses to spend on imports. Germany could spend far more if it had a higher value currency , which it could have, whilst the USA probably couldn’t. The US$ does freely float.
Can you think of any country running a large export surplus which couldn’t have a higher value currency if it chose to?
@ Expats,
I don’t mean to be negative about the idea of buying local but, in the face of an international trade war, it does slightly smack of missing the point a bit.
@Mark Valladares 7th Apr ’25 – 5:06pm…
Maybe. But you could say EXACTLY the same thing about how futile it is when my wife and I fully insulate our home, buy and recycle products, use solar power, use public transport, etc.
After all, we know we won’t change the world; BUT, “What the heck!”.
Mark: ‘One of the great things about the past forty years is the impact of increased freedom. Freedom to travel, freedom to trade with minimal barriers.’ So true.
IN AN OPEN LETTER TO CHANCELLOR MERKEL, I WROTE: ‘In 1962, returning from hitch hiking (autostop) to India, the driver of my lift said: ‘Adenaur liebt De Gaulle’. As a 22-year-old, his statement was the foundation of my life-long love of Germany and Europe.
In a frightening world where the US-World Economic War is imposing tariffs just like those in the Anglo-Irish Economic War of 1932-38 the LibDems must concentrate on the message: ‘Freedom to travel, freedom to trade with minimal barriers.’
https://www.yiannisbooks.com/india.html
Actually, I thought there was something funny about last week’s article but I couldn’t quite put my finger on it….
Peter Martin,
Can you think of any country running a large export surplus which couldn’t have a higher value currency if it chose to? – Switzerland or Norway. Housing costs are already among highest in Europe. Germany is part of the Euro and cannot choose to have a higher or lower value currency
The US trade deficit arises because Americans choose to save less than the USA invests. It is a debt driven consumption society in contrast to the high saving rates of Asian countries like China, Japan, South Korea or Vietnam.
Despite persistent trade deficits the US economy has outpaced the rest of the G7 for over three decades and done very well from access to the surplus savings of its trade partners recycled into US investments.
“ Freedom of movement is, for some, more challenging. There should be an acknowledgment that it more obviously favours the middle class and those with transferable skills, as they can take advantage of the opportunities.”
This comment is incorrect. Within the EU, Freedom of Movement (an EU concept) was used by all classes of people from manual labourers to professionals. And the citizens of the EU member states clearly don’t find it all that challenging since they are happy to have it.
Time to remind people of the TV series “Auf Wiedersehen, Pet”
https://en.wikipedia.org/wiki/Auf_Wiedersehen,_Pet
@ Joseph Burke,
Both Switzerland and Norway could have a higher value currency if they chose too. Norway runs a Sovereign Wealth Fund which is a mechanism for exporting capital and so reducing the value of the Krone. Switzerland doesn’t have an de-jure SWF but there is a de-facto SWF in the form of $840 bn of held foreign currency reserves. If they converted those reserves into swiss francs the value of the currency would of course rise.
Germany can of course choose to have a higher value currency by leaving the euro. The euro isn’t quite the single currency of popular supposition. If it were, there would be no need to have national central banks like the Bundesbank. The euro can be understood to be a whole group of separate currencies: German Euros, French euros, etc which are held at parity to each other by the intervention of the European Central Bank in the currency markets.
The influx of Eastern Europeans used the right of Fom to work in UK towns across the country . A significant number were employed in warehouse order picking roles , normally minimum wage zhc. A 50 year old manual worker from Mansfield doing the same warehouse job – as his industry has long since gone, was hardly going to travel to Poland.