Sunday, 4 January 2009

Trade Off!

State aid to the financial sector in one country automatically puts foreign competitors at a disadvantage. By being forced to nationalise the United Kingdom banks (and then hide the horrid failure of their previous decade of economic governance under a pretence of leading the way in saving the world), and in its support of national financial institutions, New Labour cuts the United Kingdom off from both the benefits and the costs of globalisation.

Protectionism of manufacturing activities in the form of state aid to domestic producers is an even more blatant rejection of any globalist analysis or policy choices; at least the financial sector can be regarded as the social infrastructure of the economy. And if there is a net benefit in protectionism why is New Labour promoting globalisation?

Economics 101 teaches that lack of foreign competition raises the price of the products of protected activities. What we are witnessing is the defence of employment (and thus the defence of New Labour's hold on power), at the cost of inflation. A trade off which the government denies in its 'global' rhetoric.

New Labour talk global - oh boy do they spout-off about global - but in truth they are small minded, old-fashioned, nationalist and socialist economic statists.
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1 comment:

Unknown said...

First of all, Free Trade is not trade as historically defined and practiced. Free Trade is primarily about moving production from place to place for the sake of cheaper labor.

And it does not make any sense to deflate the value of workers and labor because they are real tangible assets. The more they get paid the more they can support society as consumers and help those who are left out of the process.

Our economies based on making money on money instead of making things is burning out. We won World War 2, with our created industrial might in our county not somewhere else with workers and labor growing as a real tangible asset for all of society to enjoy.

The Marshall Plan became and example of how we can duplicate success in other lands by duplicating local value added economiest in particual balanced geopolitical settings.

Now we find a massive working poor class created in the USA who are finding it more and more difficult to afford even the cheaper imports at places like Walmart. It is a downward cycle for most people.

4 January 2009 at 20:24

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