Now is the time to stick up for stocktrades
and the huge benefits it has brought
Let us suppose you are so brave or mad as to get in your car today, and head off through the snowy wastes. Suppose you find that you are almost alone on the roads, and that actually it isn’t so hard to drive. The car is snug, the radio is on, and slowly you allow your speed to climb.
With every successfully negotiated corner, your sense of risk diminishes until suddenly – whoops – you take a bend slightly too fast, and you hit that patch of inevitable snow-covered ice.
As you begin to skid, something weird and frightening starts to happen in your brain. You know intellectually that the correct thing to do is to steer into the skid, to let the wheels regain traction; and yet every instinct is yelling at you to take immediate short-term action to correct the disaster. Brake! screams your instinct. Haul on that steering wheel! In that split second at the start of the skid your reason and your instincts are at war – and that is the terrifying moment we have reached in our response to the economic crisis.
As the downturn turns into a recession, and governments start to lose their sense of control, the overwhelming instinct is to enact swift countervailing measures to protect our economies and our labour force.
I feel it. You feel it. We all feel it. If we are going to raise British taxpayers’ money, to spend on recession-busting investments in the UK car industry, then we want that money to go on British workers and British jobs.
If we are going to have a glorious new bike-hire system in London, then we want those bikes – if at all possible – to be made or supplied by London firms. If we are going to drive forward big infrastructure projects such as new road and rail links in Britain, then we would think it pretty crazy to allow the work to be gobbled up by foreign contractors. That is why President Obama has enacted his Buy American Act, which insists that if the state is going to spend $850 billion on Rooseveltian schemes to stimulate the economy, then they must use American steel, and protect American jobs.
It is a natural assumption that in times of economic distress we should put our own nation first, and if you want evidence of the strength of this emotion, listen to the voices supporting the current wave of strikes.
It’s all about British jobs for British workers, they say. They don’t want these Italians coming here – no matter how efficient they are – and taking “our jobs”. They want government to stick up for us, the British, and to hell with all this foreign competition.
That is the mood of many angry people, convinced that globalisation has somehow impoverished them and put their employment at risk. Sometimes, frankly, their anger shades into xenophobia – and in so far as they seem to want to cut off the legitimate business opportunities of foreign concerns, and workers from other EU countries, then it cannot be said too forcefully that their sentiments are ugly, mad and wrong.
Let us imagine that the boot were on the other foot. How would we feel if some of the hundreds of superb British engineering consultancies were suddenly told that they were not welcome in China, or Italy, or any other market in which they have flourished over the past century?
It would be a disaster for those companies, and for their workers, and for Britain’s ability to earn foreign exchange. Imagine if the world were convulsed by nationalistic and chauvinistic strikes along the lines we are seeing in Britain today. There would be a catastrophic collapse in world trade, and a fall in global economic activity. The overall pie of wealth would shrink, and so would our national slice.
What kind of British industry do the protectionists think would emerge? Some sort of crazy autarkic system in which we tried to substitute imports with home-made PlayStations and home-made shoes and brassieres once again produced in the cotton mills of Lancashire? We would not only be forcing British consumers to accept second-rate goods; we would be impoverishing them by obliging them to pay more. It is terrifying that some serious politicians – including members of the Labour Cabinet – seem prepared to support these strikes, and to side with the Luddite trades unions and the far-Right BNP. Now is the time to stick up for free trade, and the huge benefits it has brought.
Remember what happened in the Thirties, when they had exactly the same instinctive and panic-stricken reaction, and a recession was turned into a slump. Remember the old truth, that when goods, people and services are not allowed to cross borders, soldiers eventually force the way. It is vital now that we complete the Doha round of world trade talks, not so much because it will liberate a great pent-up wave of trade, but because without it a signal will have been sent around the world that protectionism is winning.
We need Obama to drop the Buy American clauses of his package, because in the end – no matter how seductive the idea may be – a refusal to compete and a refusal to be open will be no good for America and no good for the world. If the world continues with its current lurch to protectionism and me-first-ism, we will end up intensifying the very phenomena that we are most afraid of. The big European banks that used to lend money in sub-Saharan Africa are increasingly directing their remaining credit to their home markets. The result is that African businesses are failing, and unemployment is set to surge – and what will be the result? Migration, of course: an irresistible tide of economic migration to Europe.
Of course people are angry, and of course they want to protect themselves and their families. But if the nations of the world decide that it makes sense for them each to discriminate against foreign competition, then we are really on the road to perdition, and a skid will turn into a prang from which it could take a long time to recover.
[First published in the Daily Telegraph on 03 February 2009 under the heading: ‘If we put a brake on free trade, the world will skid into a crash.’]