Johnson meets Vradakar and looks frustrated

The two prime ministers are shown standing side by side. Johnson looks frustrated and bewildered. Small wonder. It is difficult to negotiate with people who insist on irrational behaviour. The Single Market trade rules are nothing if not irrational, since their underlying principle is that goods should be KEPT OUT of one’s own country. That is what the EU tariffs and other restrictions are intended to do. They are an application of the long discredited seventeenth century economic theory known as ‛Mercantilism’.

The Irish will be the biggest losers after Brexit because so many of their imports come from the UK. They will either have to bear the additional costs of the EU's tariffs or obtain their supplies from alternative sources in mainland Europe. Since this involves a long voyage round the tip of Cornwall, these goods will carry the burden of higher transport costs; the route is too long for economic RoRo services.

The Republic was effectively obliged to follow the UK into the then EEC when it joined in 1973, due to the volume of trade between the two countries. The logical solution is for the Republic to follow the UK out again. Better still would be for the EU to embark on a programme of radical reform, to achieve free trade with the whole world, unilaterally if necessary. This would give rise to widespread benefits, because the problems that the Irish will face already have an adverse effect on the economies of countries in eastern Europe with borders with non-EU countries, who are cut off from their natural hinterlands; trade cannot even take place between businesses in adjacent towns when one is in, say, Latvia and the other in Belarus, giving rise to a situation where important regional hubs like Daugavpils in Latvia have become ghost towns.

If the Irish really want to restrict the inward flow of goods from the UK, they could always invite the Royal Navy to lay mines at the entrance to the ports of Dublin, Rosslare and Cork.

The Scottish nationalists who want to subject themselves to the same punishment presumably do not understand the implications.

The EU social model

Force people to migrate to where the work is, and suck the life out of the peripheral regions. With 30,000 lobbyists in Brussels and an unaccountable and unelected Commission, policymaking was long ago captured by the most powerful producer, banking and landowning interests - the very same who supported the fascist regimes before WW2. It is astonishing how the progressive left has been mesmerised into supporting this.

Independent Scotland in the EU? #3

Some things to look forward to.

• Queues at the EU customs post at Berwick leading to a traffic tailback on the A1 all the way to Alnwick, if not to the suburbs of Newcastle. 
• Crowds of Scottish shoppers descending on Gateshead Metrocentre and a boom in the north-east. 
• Trains terminating at Berwick as passengers have to disembark and pass through customs control.
• Goods imported from England subject to EU tariffs and extra VAT, and a thriving smuggling industry as people tried to import the bargains purchased on their shopping trips.
• Higher prices for substitute goods imported from mainland Europe due to extra transport costs; it is too far for low cost RoRo movement.
• Value of savings destroyed as Scotland enters the Euro at at realistic rate.
• Great idea - independent Scotland in the EU.

An inefficent tax

I received a parcel from the US yesterday. I was asked to pay 110 kr tax (Value Added Tax), plus 75 kr collection fee. By my calculation, that makes it 65% efficient.

Rampant Mercantilism - continued

The current preoccupation with exports is a manifestation of the seventeenth century theory of economics called Mercantilism, which had been discredited several times over by all the Classical economists before 1800, including of course, Adam Smith in “Wealth of Nations”. People ought to read it.

A balance of payments surplus means that real wealth flows out of a country and paper claims on wealth flow in ie there is a net loss of real wealth. A balance of payments deficit is a healthy sign because goods are always worth more to the purchaser than to the seller – otherwise the trade would not take place. Imports transfer goods to where they are more wanted ie they represent an increase in wealth due to the mere act of transporting them.

It follows that any impediment to importation eg tariffs, is an obstacle to wealth creation, and from that, it further follows that unilateral free trade is more advantageous than reciprocal free trade. In reciprocal free trade, both sides gain, but in unilateral free trade it is consumers and manufacturers in the country which persists with the tariffs who are the losers. From this, it further follows that free trade agreements (an oxymoron) are unnecessary; a prudent government would take down the tariffs for the sake of its own.

Balance of payments deficits arising from large scale consumer purchasing funded by credit are unhealthy but the solution is not tariffs but regulation of credit.