Apparently there’s going to be a trade war. In which we’ve got to pick sides:

Britain would side with the European Union over the US if Donald Trump sparked a trade war with China, the Business Secretary has suggested.

Jonathan Reynolds said the scale of the UK’s trading with the bloc meant the Government would be required to “weigh the consequences” of any action that would create an “adverse relationship” with Brussels.

Mr Reynolds’s comments suggest the Government will prioritise appeasing the EU if Britain finds itself in the middle of a heated trade war once Mr Trump re-enters the White House.

Now, yes, this is as reported and one minister only and so on. So take with that correct amount of salt.

It’s possible to think that if there are only two sides why would we go with the wrong one of course. But rather more important. If there is going to be this trade war and we do have to pick a side why not pick our side?

As economist Joan Robinson suggested in her Essays in the Theory of Employment (1947), protectionist retaliation looks like the decision “to dump rocks into our harbors because other nations have rocky coasts.” One’s own government’s trade policy should not depend on the restrictions that foreign countries impose on their own citizens.

It is always useful to remember that, from the viewpoint of a country (this collectivist way of speaking being just a shortcut), imports are the benefits, and exports are the cost, not the other way around.

Our side, here, would be to allow those others to get up to whatever they want and to take the actions which most benefit us. That is, declare unilateral free trade and the rest of you can b’ggr off.

Think on it, think on it properly. Imports, our imports, are the things that we consume. They are those things which Johnny Foreigner can do better, cheaper, in a more timely fashion, even just more fashionably, than we can. Even if they’re subsidised, subsidised illegally even, that’s a transfer from their taxpayers to us in making those things better, cheaper etc. That’s why we buy them, doing so makes us better off than having to put up with wine made by the use of walls and glasses in Scotland. We, for our benefit, therefore do not wish to put barriers in the way of those lovely things that we can gain from Bourdeaux or other groupings of J Foreigners labouring away to make our lives better. We certainly don’t want to tax our own consumption of them. Well, not any more than we tax domestic consumption with a VAT or sin taxes - we don’t want to preferentially tax those imports that is.

Given that we don’t want to do that we shouldn’t.

Now note how politics works. If Washington DC, or Brussels, says “We are going to make our own citizenry poorer by denying them access to lovely Marmite” the correct response is not “And we’ll make our citizens poorer by denying access to macademias or merlot.” The correct response is “You do that then, see if we care.”

That is, we do not threaten Mr. Foreigner by throwing rocks in our own harbours. But politics seems to think we do - which is why politics is such a lousy way of running a place of course.

We have, in the past, drawn up a draft trade treaty:

What Johnny Foreigner does about this is up to them. For the only rational trade stance is unilateral free trade. So, that’s what we should do. Whether there’s a trade war or not we should be on our side - free trade and the politics of it can go to b’ggry.

As that final Parthian Shot, who is it that benefits from such restrictions and taxes upon imports? Those who own the domestic producers of the worse and competing products, obviously. We’re really quite adamant that taxing consumers to benefit the local capitalists is not a valid function of political or economic policy.

Tim Worstall