Sanctions are imposed on a country as a punishment. The ultimate form of sanctions is a military blockade - like the Germans did in the two world wars - submarines, battleships, bombers, mines, to prevent goods reaching Britain and the other Allies.
Protection has exactly the same effect. It is astonishing that people find it so difficult to see the similarity.
Chinese protectionism and the sale of goods at below cost is at the cost of the Chinese. If their government is stupid enough to force its people to make stuff and give it away or sell it for less than it costs to produce, then the only rational reaction from the rest of the world is to take it and say, "Thank you very much!"
If someone in your street set up a bakery and insisted on selling the bread at half price, everyone in the neighbourhood would scratch their heads for a while and then take advantage of their stupidity. Nobody else would try to compete directly. Sooner or later the crazy baker would get the idea that customers were taking the mickey, or realise that they could not carry on like that indefinitely, but in the meantime they would make the most of the opportunity.
Economic models assume rational behaviour. When one player, in this case the Chinese, behaves irrationally and effectively gives stuff away for next to nothing, or everyone else has to work round their stupidity until they come to their senses. When and if that happens, they will want the proper price for their products.
What is the economy for, if not to enable people to provide themselves with the goods and services they want and need? It does not exist to keep people busy.
söndag 29 oktober 2017
lördag 28 oktober 2017
Free trade deal oxymoron
Free trade means a country's rulers allow goods in tariff free and with minimal other restrictions. It is a unilateral action. It was demonstrated long ago by the classical economists that it is optimal for the importing country.
Other countries can do the best for their own people by following suit. Or they can cause them trouble, expense and inconvenience by imposing protectionist measures, eg the EU, Trump, Peron, etc.
"Free trade deal" is a contradiction in terms.
Other countries can do the best for their own people by following suit. Or they can cause them trouble, expense and inconvenience by imposing protectionist measures, eg the EU, Trump, Peron, etc.
"Free trade deal" is a contradiction in terms.
Trade deals
The classical economists demonstrated that if country A imposes restrictions against country B, then wealth in country B is optimised if it does not impose retaliatory tariffs. Which makes trade deals pointless and irrelevant. Just open the doors.
Obviously we do not want people selling 110 volt appliances when the national supply is 240 volts, and chlorinated chicken should be marked at least with its country of origin, but the general principle holds. A lot of issues with standards can be dealt with by control at the retail end, so that responsibility passes up the supplier chain to the importer (or manufacturer in the UK, for that matter).
Obviously we do not want people selling 110 volt appliances when the national supply is 240 volts, and chlorinated chicken should be marked at least with its country of origin, but the general principle holds. A lot of issues with standards can be dealt with by control at the retail end, so that responsibility passes up the supplier chain to the importer (or manufacturer in the UK, for that matter).
The UK's vital interests
Britain's vital interests are that goods and flow freely into the country. Enemy opponents in two world wars were trying to block that flow, with battleships, submarines, mines, etc. North Korea is a potential enemy, which is why the country is under sanctions which prevent the sale of goods TO that country.
As far as I know, there has never been any threat from the EU to refuse to supply the UK with goods, post Brexit, whether it be ball bearings from Sweden, cars and washing machines from Germany, bacon from Denmark or tomatoes from Spain.
So as long as the UK government does nothing silly like imposing retaliatory tariffs, there is no problem on that score. On the contrary, leaving the EU means being free of the burden of tariffs which restrict the flow of goods into the UK and add to their cost.
At the same time, consumers and business inside the EU are faced with the same restrictions on importing goods from the UK as they already have when importing from the rest of the world. That is a burden we are well rid of.
As far as I know, there has never been any threat from the EU to refuse to supply the UK with goods, post Brexit, whether it be ball bearings from Sweden, cars and washing machines from Germany, bacon from Denmark or tomatoes from Spain.
So as long as the UK government does nothing silly like imposing retaliatory tariffs, there is no problem on that score. On the contrary, leaving the EU means being free of the burden of tariffs which restrict the flow of goods into the UK and add to their cost.
At the same time, consumers and business inside the EU are faced with the same restrictions on importing goods from the UK as they already have when importing from the rest of the world. That is a burden we are well rid of.
onsdag 25 oktober 2017
Topsy-turvy view of trade
Trade takes place because goods are worth more to the buyer than to the seller. Everyone's idea of a good deal is that one buys things that satisfy their wants and are good value for money. A brand new car at a 20% discount is a good deal, in normal usage.
But in this whole debate over Brexit, the idea of a good deal has been turned inside-out. The "good deal" is that people in the UK are allowed to sell UK produce to people in the EU. It is as if people in the EU were not really buying British goods because they wanted them, but as a favour or act of charity.
The reality is that keeping out British goods is depriving EU people of the opportunity to purchase them. It is exactly the same as if the UK imposed sanctions on the EU and refused to sell its goods. In normal situations sanctions are imposed against a country as a punishment. In this case the EU is imposing the punishment on itself, not particularly because there is any desire to punish the UK but because that is the way the Single Market trade rules operate.
Why are so few people able to see this? Is it because it is too obvious?
But in this whole debate over Brexit, the idea of a good deal has been turned inside-out. The "good deal" is that people in the UK are allowed to sell UK produce to people in the EU. It is as if people in the EU were not really buying British goods because they wanted them, but as a favour or act of charity.
The reality is that keeping out British goods is depriving EU people of the opportunity to purchase them. It is exactly the same as if the UK imposed sanctions on the EU and refused to sell its goods. In normal situations sanctions are imposed against a country as a punishment. In this case the EU is imposing the punishment on itself, not particularly because there is any desire to punish the UK but because that is the way the Single Market trade rules operate.
Why are so few people able to see this? Is it because it is too obvious?
lördag 21 oktober 2017
IEP problems - give them a break
The very public failures of the Hitachi IEP on its first run in public service have been the subject of much criticism in the press. I am no fan of this project but the criticism is unfair at this stage. It takes at least a couple of years in public service to get a new design of train working reliably.
British Railways Mark 1 stock is often held up as an example of robust simplicity, but its introduction was plagued with problems. The ride quality of the trains deteriorated rapidly due to the design of the BR1 type double bolster bogie. This led to the setting up of a research programme which eventually resulted in the B4 bogie, but that took almost a decade. In the meantime, the Commonwealth bogie with cast steel frame was adopted as an interim replacement; the ride quality was much improved but it was a heavy piece of equipment.
Ride quality became even more of an issue when the mark 1 stock was adapted as an electric multiple unit design for service on the newly electrified Kent Coast lines in 1959. The standard BR bogie was modified due to the reduced clearances on the route. So bad was the ride quality that the trains became known as the "Rock and Roll Trains". The ride over the motor bogies was even worse.
That was not all. The double glazing seals did not work and the spaces between the panes filled up with water, so the inner panes were removed, with double glazing not being reinstated until the trains were given a mid-life refurbishment in 1981.
Mark 1 stock also suffered badly from corrosion from the inside out, especially around the windows. The window problem was eventually resolved by placing the windows in aluminium frames, but corrosion remains an issue for the preservation movement which relies on these vehicles.
Similar reliability issues affected the locomotives. The flagship express steam locomotive Duke of Gloucester was a notoriously poor performer and was quickly dispatched to the scrapyard. Years later, it was rescued and the original design team brought together with a view to discovering the cause of the problems. These turned out to be a combination of inaccurate construction and bad design decisions arising from office politics. Once most of the faults had been corrected, the performance of the machine was transformed, making it possibly the best of the British express designs. Before that there had been the issues with the Bulleid Pacfics, which were troublesome until they received their major rebuild in the mid-1950s, following a serious accident.
The issues continued with subsequent generations of stock. Rust affected the earlier Mark 2 stock and the suburban versions of Mark 3; the class 455 stock need a major repairs as the floors dissolved into flakes of rust. Air conditioning was unreliable until about ten years ago. Electrostars were another class which did not settle down for almost five years after they first came into service.
It is possible to build new trains which will run reliably, but they have to be technically conservative. The new locomotive hauled fleet for Northern should go into service without problems, since they will be pulled by locomotives which have been in use for several years and hauled carriages are a simpler affair altogether. But given the complexity of the IEP, and based on historical experience, it is too soon to start criticising. The design is indeed complicated, unnecessarily so, and costs about double what it ought to have done. But those decisions were made by the civil servants and the Department for Transport. Hitachi and its engineers should not be made to take the blame.
British Railways Mark 1 stock is often held up as an example of robust simplicity, but its introduction was plagued with problems. The ride quality of the trains deteriorated rapidly due to the design of the BR1 type double bolster bogie. This led to the setting up of a research programme which eventually resulted in the B4 bogie, but that took almost a decade. In the meantime, the Commonwealth bogie with cast steel frame was adopted as an interim replacement; the ride quality was much improved but it was a heavy piece of equipment.
Ride quality became even more of an issue when the mark 1 stock was adapted as an electric multiple unit design for service on the newly electrified Kent Coast lines in 1959. The standard BR bogie was modified due to the reduced clearances on the route. So bad was the ride quality that the trains became known as the "Rock and Roll Trains". The ride over the motor bogies was even worse.
That was not all. The double glazing seals did not work and the spaces between the panes filled up with water, so the inner panes were removed, with double glazing not being reinstated until the trains were given a mid-life refurbishment in 1981.
Mark 1 stock also suffered badly from corrosion from the inside out, especially around the windows. The window problem was eventually resolved by placing the windows in aluminium frames, but corrosion remains an issue for the preservation movement which relies on these vehicles.
Similar reliability issues affected the locomotives. The flagship express steam locomotive Duke of Gloucester was a notoriously poor performer and was quickly dispatched to the scrapyard. Years later, it was rescued and the original design team brought together with a view to discovering the cause of the problems. These turned out to be a combination of inaccurate construction and bad design decisions arising from office politics. Once most of the faults had been corrected, the performance of the machine was transformed, making it possibly the best of the British express designs. Before that there had been the issues with the Bulleid Pacfics, which were troublesome until they received their major rebuild in the mid-1950s, following a serious accident.
The issues continued with subsequent generations of stock. Rust affected the earlier Mark 2 stock and the suburban versions of Mark 3; the class 455 stock need a major repairs as the floors dissolved into flakes of rust. Air conditioning was unreliable until about ten years ago. Electrostars were another class which did not settle down for almost five years after they first came into service.
It is possible to build new trains which will run reliably, but they have to be technically conservative. The new locomotive hauled fleet for Northern should go into service without problems, since they will be pulled by locomotives which have been in use for several years and hauled carriages are a simpler affair altogether. But given the complexity of the IEP, and based on historical experience, it is too soon to start criticising. The design is indeed complicated, unnecessarily so, and costs about double what it ought to have done. But those decisions were made by the civil servants and the Department for Transport. Hitachi and its engineers should not be made to take the blame.
onsdag 11 oktober 2017
New Thameslink nasties
The new class 700 Siemens trains are even worse than the class 319 stock which it replaces.
- There is nowhere to put a cup of coffee apart from balanced on one's lap. Had the designers never heard of "food to go"? Do they even travel in trains?
- The uncomfortable seats have no spacers in between the pairs so if there is one large person in the window seat, his or her neighbour will be half-way off the seat by the gangway.
- The skirting level duct cuts into the space to put one's feet so that one is forced to sit twisted round.
- The lighting is dim - there is only a strip in the centre of the ceiling.
- What is the reason for the curved shape of the windows?
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