PLAIN TRUTHS NEED REPETITION

“The Government has a duty to the next generation to build more homes” – reads a recent headline, quoting the Housing Minister, whose choice of words masks the real role of most administrations, which is to get out of the way and dismantle the regulatory complexity that interferes with and obstructs what is best left to markets, if they are allowed to work.

The volume and intricacy of rules on planning, safety, building regulations and the appeals process are legion. Whether they relate to right-of-way, tree or hedgerow preservation, party walls or scaffolding – the scope for simplification is vast. It is this regulatory maze that allowed the Grenfell cladding failure to remain uncorrected until tragedy struck.  The 1990 incarnation of the Town & Country Planning Act is an overburdened tome of 337 Sections and 17 Schedules occupying 550 pages - a veritable minefield in the way of anyone who just wants to build a house!

At root, all this documentary piffle is a monument to lazy thinking that confuses pen-pushing with constructive work. This is why each crisis is an incarnation of the last one – and evidence that the important lessons are rarely learnt.

Protectionism – it still persists

Last Sunday’s headline reads: “Ministers clash over protection from cheap imports for steelmakers”, an issue that refuses to go away. Political advocates of protectionism in international trade believe their own myths, which are always resistant to reasoned argument.

Liz Truss, our International Trade Secretary, appears to have an unusually clear grasp that businesses - not governments - trade. She appreciates that her role is to facilitate trade deals between willing partners, there being no need to concoct them. Removing barriers is the best way to achieve this, but such is the weight of false doctrine that her scope remains severely circumscribed.

Representatives of steelmaking constituencies, and the trade body, UK Steel, mouth the familiar platitudes: “Removal of tariffs would be a ‘hammer blow’ to the sector as it could not possibly compete with products from foreign steelmakers, many of which are state subsidised, thus putting thousands of British jobs at risk. Our competitors are keeping their own trade protections in place – therefore dropping our protections would leave us exposed to steel imports.”

Well, as my mentors usually put it, there’s a semester’s worth of hogwash to unravel in that lot!

Victims of “doublethink”

The first thing to note is that the flavour of this self-interested rhetoric is emotive, and therefore unable to withstand reasoned analysis. If the purveyors of this mercantilist dogma stood back and reflected for a moment on what they are actually saying, they might recognise that they play a dual, not single, role: they are individuals who, like the rest of us, have a nose for lower prices when shopping. They should therefore recognise the factors that make lower prices possible: trans-border cross-fertilisation of technological advances, for example, lowers prices everywhere. They also benefit from not having to bear taxes for subsidising domestic sectors. If they are so obsessed with “buying British” their cost of living will soon become unaffordable.

Instead of lobbying on behalf of partisan bandwagons, their MPs should be educating them in a few basic truths. If a foreign company is able to produce steel of a quality that is fit for purpose, and can export it to Britain at a total cost below our home-produced commodity, do we really want our government to renounce this gift to British citizens by imposing a tax on its import? A tax that we are all subject to?

The counter-argument normally advanced is equally familiar and runs something like this: if the government of a foreign country subsidises its widget-makers to help them undercut the price of British widgets, thus unfairly creating an uneven playing field, our patriotic response is surely to beat them at their own game.

Well, no. Look at the mechanics more carefully: that government subsidy is gift to their widget-makers, who are now able to reduce the price of their widgets. In this way their gift is passed on to British widget-buyers, courtesy of foreign taxpayers. Again, why should our government interfere?

There is, however a moral proviso that matters in this wicked world. French prosecutorsare now  now 

“Saving British jobs” – more hokum!

The idealistic zealots whose placards cry “save British jobs!”  haven’t acknowledged that division of labour, the principle that underlies the entire ethos of productive capitalism, applies equally across borders. It’s the archetypical “no-brainer” - if identical commodities can be produced more cheaply abroad, it would be a crime to resort to tariffs to keep them out. As for the standard antipathy towards imports per se, this is just an ignorant by-product of the wider mythology. Just try identifying a country of origin in a world of global supply chains, components being sourced via markets - not politics.

Oh, but those jobs? Our industrial history is littered with instances of creative destruction, At the corporate level, entities with cost structures that leave no margin for exigencies face extinction virtually daily, and those jobs are having to migrate to meet skill shortages elsewhere. Whenever new technologies and innovative production methods find commercial expression, redundancies are implicit - but today’s tragedy is often tomorrow’s triumph.