Corbyn's protectionism
Charging ahead with his so-called policy blitz, Jeremy Corbyn seems to be channelling the League of Gentlemen’s Tubbs and Edward in calling for increased powers to local councils to prioritise local firms when awarding contracts post-Brexit. He also claims that a Labour government would “support new and existing businesses and industries in Britain” - protectionist rhetoric that ‘Candidate Trump’ would have been proud of. To top it off, he wants to ensure that businesses are imbued with the same friendly, abstract values as us, like ‘fairness’ and ‘doing right by everyone’. Combined, Labour will be able to ‘upgrade’ the British economy. Unfortunately, I have my doubts that JC even knows how to upgrade his phone software, let alone the economy.
Where to begin? Prioritising local businesses for public contracts will lead to inefficiency and poorer services, not more local jobs. Isolating the UK from a €2.4 trillion EU public procurement market, to say nothing of the rest of the world, will prevent many of the best service providers in the world operating here and spreading best practice. Unions have complained that state-owned foreign companies, like Abellio, MTR and Arriva, are able to run our train services. Fortunately for train users though, they are usually picked because they offer the best deal. This is not to say that British firms are incapable of providing the same quality services—when they do they should win and keep deals—but the ultimate goal should be the best public services, not the best deal for the provider.
While the ‘infant industry argument’ (nascent firms don’t have the economies of scale to compete internationally so need some initial support to get going) is at least a partially defensible idea, government protections for British firms is an idea that should have died in 1846. What he means by ‘support’ is unclear, but subsidies to domestic firms will create inefficiencies and waste taxpayers’ money, while barriers to trade will make us all poorer. Not only will this decrease consumer choice, allowing firms to hike prices and scrimp on quality, but foreign governments whose companies have been spurned will impose similar restrictions to our firms; overall revenues and profits will fall. Employment will fall. Tax revenues will fall. Public services will suffer.
Thankfully recent outbursts showed no sign of his ‘bargain basement tax haven’ attack line, but the meaningless and mendacious rhetoric is still evident (though that is obviously not exclusive to the Labour party). I worry that Corbyn is trying to stoke and capitalise on the growing suspicion for business across the political fringes. Of course, bad business behaviour exists, but greater competition and a more knowledgeable consumer would help self-correct these problems. Ministers jumping at the next twitter storm scandal to make it look like they’re helping, with the aid of bureaucrats with zero experience of the industry will lead to cumbersome and unhelpful regulation.
The Labour leader has had a bee in his bonnet about banning zero hour contracts for some time, and while there are some issues with reliability of work, people actually on a zero hours contract are more likely to be happy with their work-life balance than those on full-time contracts and are just as satisfied with their job. Indeed, these contracts have also been a significant factor in our record high employment figures. Politicising rather than liberalising the jobs market will put people out of work.
We should all be grateful that Corbyn is unlikely to ever become Prime Minister - ‘Don’t Know’ has a far better chance. But then, Donald Trump got elected on lazy and populist economic ideas, so maybe we shouldn’t be so complacent. Free trade, free markets and economic liberalism make people better off, protectionism and state regulation does not.