In the Telegraph yesterday, Colin Hines wrote a blog defending his "progressive protectionism" idea from what he called the "extreme Right", by which he means Tim Worstall. Well, Tim has some strange ideas, but I wouldn't call him "extreme right". But that's not what made me angry.
Colin describes his idea of "protective protectionism" thus
"....progressive protectionism rejects the incessant mantras of more open markets and the need to be internationally competitive. Acceptance of these edicts as inevitable invariably results in politicians being forced to drive down tax rates, constrain social and environmental improvements and preside over the eradication of countless local jobs and small business opportunities....
.....progressive protectionism would not involve a return to the oxymoronic protectionism of the 30s. Then the goal was often for each protected industry or country to increase its economic strength by limiting imports, and then hoping to compete and export globally at the expense of others. Unsurprisingly, the more countries did this, the less trade there was between them. Today’s example of a self-defeating economic approach is the ludicrous fantasies of export fetishists. They whistle in the dark trying to keep up the nation’s economic spirits by promising hi-tech export-led growth. In an era of rising Asian dominance, this has to rate as the last colonial delusion.
The alternative to this is a progressive protectionism which will allow countries to wean themselves off of present levels of export dependence. It would enable the rebuilding and re-diversification of domestic economies by limiting what goods states let in and what funds they allow to enter or leave the country. Having regained control of their economic future, countries can then set the levels of taxes and agree the regulations needed to fund and facilitate this transition. National competition laws would ensure that monopolies didn’t develop behind protective barriers. Finally, there is an internationally supportive approach to trade with poorer countries, ensuring that the gains from the remaining international trade would be targeted to help fund the move towards a localised economy that benefits the poor majority. In essence, this approach will make space for domestic funding and business to meet most of the needs of society worldwide."
Now, I agree this is not easy to understand. For example, what is the difference between "limiting imports" and "limiting what goods states let in?" So let me interpret this convoluted piece of writing as I see it. If you disagree with my interpretation, please do give your alternative in the comments.
Colin's objections to the current system of international trade - "globalisation", as he calls it - are the following:
1. Free markets are bad.
2. Low taxes are bad.
3. International trade is bad.
4. Small domestic businesses are good.
So Colin's progressive protectionism basically involves ending most international trade. He doesn't say what international trade would be "allowed" to continue, but he implies that there wouldn't be very much. To achieve this he proposes that countries should:
- "wean themselves off export dependence"
- "limit what goods they let in AND what funds they allow to enter or leave the country" (my emphasis)
Translation: Countries should have import controls, capital controls and export barriers. Now if you have neither imports nor exports, and you have capital controls, you have a closed economy. I should point out that Colin castigates the import controls of the 1930s because they weren't coupled with capital controls and export restriction, so resulted in global competition for exports, not because he thinks import controls are a bad thing.
Colin's idea seems to be that if you create a closed economy you can "set the levels of taxes and agree the regulations needed.....". Yes, absolutely you can do what you like, because you have no relationship with the outside world. It seems he would like North Korea replicated worldwide - a global system of autarkic states.
But if your economy is so closed that you control all trade and financial transactions, and you have seriously restricted imports, how are you going to create an "internationally supportive approach to trade with poorer countries"? For poorer countries to get richer they have to export to richer ones - that way they get the capital inflows they need to develop their domestic economies. Domestic economies don't get richer all by themselves: a closed economy may create the ILLUSION of prosperity, but real prosperity comes from the redistribution of global resources that arises from good international trade. I would be the first to castigate the practices that keep poor countries poor - trade tariffs imposed by richer countries to protect their domestic businesses from competition from lower-cost businesses in poorer countries, international investors that remove capital from the country at the drop of a hat, strings attached to international aid, protection of international lenders at the expense of the people of the country (now where are we seeing that at the moment?), corruption in domestic governments, and above all, war.....But Colin's solution to all of those is not to address the issue, but to close the doors . And this is what made me angry.
You see, Colin doesn't actually want poorer countries to trade with richer ones. He wants them to develop "a localised economy that benefits the poor majority". But a localised economy in a poor country can only be poor people trading with each other in local markets - subsistence farmers, one-boat fishermen, small craftsmen. What a lovely romantic image! What a truly charming picture! As Splinter Sunrise put it on Twitter last night:
"there's a lot of this stuff going around about how we should help Tanzanians to remain poor subsistence farmers".
What right have people like Colin Hines - rich people in the rich developed world - got to deny people in poorer countries the opportunity to become richer and have a better life through exporting to richer countries? And to do this in the name of environmental protection and "improving social conditions", as well. Oh yes, it will improve the environment in poorer countries because they won't be able to develop their natural resources - their countries will stay pristine and undeveloped, like a Constable painting. And it will improve social conditions - in the richer developed countries which are losing business to poorer countries.
I am trying not to swear (though I'm afraid I did, on my comment on the Telegraph article!), but I have seldom read anything that made me so angry. Global inequality, set in stone. Let the poor remain poor so the rich can remain rich. Absolutely appalling.