Afternoon:
10°c
GORDON Brown may have boobed in 2007 with "British jobs for British workers". But in 2009, his view that "protectionism protects nobody" is spot-on.
Whatever the wildcat strikers may feel, the lessons from history seem clear: American protectionism played a major part in turning the 1930s recession into a depression. US tariff barriers, most notoriously those erected by the 1930 Smoot-Hawley act, contributed to a tariff arms race and a collapse of international trade, with terrible consequences. Manufacturers did gain in their domestic markets - but they lost far more from their international ones. Could history now be about to repeat itself?
For amid the Euro-phoria about Barack Obama's arrival, there was always one small cloud: the way the new President campaigned against the US's free-trade policies as failing ordinary Americans, and his promise to amend his Democratic predecessor Bill Clinton's North American Free Trade Agreement. Nor did Obama's Senate votes suggest a sympathy towards free trade.
It's true that Obama's pre-campaign credo The Audacity of Hope strikes an anti-protectionist note: "The US economy is now so integrated with the rest of the world," he wrote, "that it's even hard to imagine, much less enforce, an effective regime of protectionism."
But on this front, his early actions in office have been discouraging. He first offered the US trade representative's job to a free-trade sceptic, Xavier Becerra, and has now given it to another nominee with no record of enthusiasm for free trade.
Protectionist clauses have been attached, by the Democratic-controlled Congress, to Obama's $825 billion bailout - in the new infrastructure projects to be funded, only American steel must be used. It has caused real fury, and threats of retaliation, in Europe. How far the President tries to water it down will be a key test.
In Britain, last week's current of worker unrest may subside, for the moment, perhaps as much for the weather as for any other reason, but the underlying anger remains. It will flare again - and London, with its huge numbers of migrants, will not escape. We need ways other than destructive nationalism to address people's rightful concerns.
One way might involve the ideas of a man I wrote about recently: the think-tank Demos's "red Tory", Phillip Blond, who has called for a major redistribution of power and wealth - not just from the over-centralised state but from large corporations such as supermarkets; a restoration of Britain's "lost" civil society and local pride, breaking up monopolies, defending small businesses and promoting microfinance.
A balance needs to be struck, of course: elements of this programme could be construed as protectionism by another name. But if trade freedom and access to international capital is preserved, the progamme advocated by Blond could restore to the angry working-class some of the control over their own employment and lives that they have lost. It could also, as Blond argues, diversify the financial system - and thus diversify the risk - away from the large banks and other monopolisers (and blockers) of credit.
Interestingly, in Davos, David Cameron - who joined Blond for his launch last month - seemed to be singing his tune, calling for a popular capitalism that is about "recapitalising the poor rather than just the banks".
It's no good just propping up the failed structures of the past, as Brown seems to be doing. If we are to defeat the populist siren calls of "British jobs" and the siege economy, we need an equally popular alternative. Could this be it?
It's the wrong sort of snow
IT DOESN'T very often snow here, and we need to make allowances. But even with that, the performance of our public transport operators today has been titanically feeble. They've essentially given up before they even got going.
The entire London bus service suspended, though many main roads in central and inner London are quite passable, with the Tarmac showing through; the Circle Line suspended, though it runs about 99 per cent underground; on several of our privatised rail operators, even the websites not available. Did the snow get in the phone lines, guys? I suspect, however, that at least for today the people of London won't be too bothered. It'll be a three-day weekend for most, another blessed day of relief from having to go on our rotten buses and trains.
Ken's U-turn on City greed
WHAT fun to see Ken Livingstone reinventing himself, last weekend, as a scourge of the financial “deregulation espoused by Thatcher” which “in large part caused the present catastrophe”. Let's remind ourselves what the great socialist thought of deregulated City turbo-finance when he was actually in a position to do something about it.
Just over two years ago, Ken wrote in the Sunday Times how vital it was that the City “maintains ... its light-touch and principles-based regulation against any challenges ... New York and London have the most sophisticated financial workforces in the world. These should be allowed to assess risk”.
Asked a few months earlier by The Times what were the failings of capitalism, he replied: “It's not the failings of capitalism, they are much more failings of government ... Whitehall does not work.”
And those non-domiciled bankers that Ken has now decided are evil? His was among the loudest voices calling for them not to be taxed.
Oops — on this evidence, Livingstone Brothers clearly joins Lehman Brothers as a big-name casualty of the credit crunch.
Reader views (14)
Why do people continue to peddle the myth that if we were not tied into the European political system we would not be able to trade with Europe, Business will always shop around, if our goods are the best quality and value for money, Companies from around the world will buy them, or are these Euro nuts suggesting that our goods are purchased only because we are members of the European Community ??
- Steve M, London, 03/02/2009 02:54
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Nigel,
Importing low-cost workers is exactly the same as importing low-cost goods.
Let's take importing clothes from China. Essentially what is happening is we are importing low-cost workers from China to make those clothes, under-cutting the wages of people in the domestic clothing industry.
So both good for some people (those whose employment is not connected with those industries/services exposed to foreign competition, who can now buy goods more cheaply), bad for others (those who's employment depends on those industries). In both situations, its perfectly possible for winners to compensate losers, but rarely happens in practice for political reasons - see e.g. 1980s opening of the UK economy and development of long-term unemployment and associated social problems in areas that industry was decimated in, that still dog those areas today. The South gained a lot, large areas of the North are still affected today (where do you think the benefit culture came from - certainly didn't exist before 1979)
- Adam, London, 02/02/2009 22:53
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Exploitative employment practises are what have triggered these strikes and that creeping exploitation is part and parcel of free market globalised capitalism, which is inherently anti-social, malign and destructive. Accusations of 'Protectionism' or 'xenophobia' are just hard Thatcherite invective and politically-correct soft soap by the likes of Mandy 'Antoinette', the personification of corruption.
- Nigel J., Manchester, 02/02/2009 22:31
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Sorry Andrew, you got it wrong. According to our beloved leader, Boris, it was the right sort of snow, just the wrong quantities. It was for insight like this that he was voted in.
- Andrew, London, 02/02/2009 21:43
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Being open to goods and services produced in other countries, good - Makes us all richer. Importing low cost workers from foreign countries, bad - makes the poor poorer by driving down their wages or making them unemployed and the rich richer.
- Nigel, London, 02/02/2009 18:42
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EU withdrawal would be rather like drilling through the hull of the Titanic even before she hit the iceberg. To those proposing withdrawal, how do you propose to (a) rehouse the 4m+ retired obliged to come back, (b) find new jobs for those working abroad (who incidentally outnumber the "foreigners" here) and (c) deal with the fact that more than 50% of our export markets would be on the wrong side of a tariff wall?
- John Buckeridge, Poiters, France, 02/02/2009 18:13
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Madmax: Yeah, let's get the rid of the minimum wage; that; help the economy recover! Besides, why should those lazy working-class types have a decent life?
- Steven Pyne, Calgary, Canada, 02/02/2009 18:08
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Why is it that modern political commentators seem unable to grasp that neo liberal economics has been a catastrophic failure for thirty years. People need work to service debt. In fact if there is a booming jobs market there is no need for debt. We now have hyper unemployment in the UK and the more jobs that are lost the worse the crash will get. This slump is unprecedented in history. Even during the 1929 Wall street crash we had a much larger industrial base which still managed to function and kept many in work. The true level of unemployment in the UK is much higher than what is claimed. If our economy had allowed our workforce to save money rather than borrow it we would not be in this mess. If protectionism is wrong per se then our banks should not have been bailed out. The market should have prevailed. I am sick of hearing this nonsense from people who have never even run a business. Protectionism when managed properly does work. It is common sense. Our economists and so called experts - who could'nt see this coming - are incapable of utilizing the correct strategies to sort this mess out.
- Clive Holland, Milford, Derbyshire, 02/02/2009 17:36
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The next government must get us out of the EU, this should be their priority, on taking office.
- David, Fleet UK, 02/02/2009 16:52
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Yes Mr Gilligan, there is another way,take the two faced power from the union bosses, who side with the workers, and also pay tens of thousands of pounds to the Labour party, who abide by these accursed EU laws.
The answer is bring this government down and put in a political party that will take us out of the EU, not change the rules.
- Richard Partridge, Eaton Bishop UK, 02/02/2009 16:01
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I'm sure we used to cope with snow much better in the past. When I was a child 30 years ago, I had to travel 20 miles to school by bus, in weather just like this. Our classrooms were in portakabins, with snow and icicles outside, but it didn't bother us. How the Germans, Swiss and Scandinavians must be laughing at us!
- Katie, London, UK, 02/02/2009 14:41
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Pure drivel, protectionism when it comes to jobs is a good idea - if you've let the world and his wife thru the door, and then filled their outstretched hands with the receipts from UK taxes.
Get rid of the minimum wage and watch them run.
- Madmax, London, 02/02/2009 14:14
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I see the Standard has a new editor. Hopefully one that will get rid of Gilligan.
- Carl, London, 02/02/2009 14:04
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Spot on about Ken. Gets my prize for hypocrite of the century. Boris is a breath of fresh air compared to bozo Ken.
- Keith Price, Luton, 02/02/2009 13:14
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