EU Referendum


Brexit: all in the name of the poor


22/05/2021




The Telegraph has really been pushing the boat out in support of its boy Johnson's "free trade" deal with Australia, publishing two long opinion pieces on successive days.

The first was by Ryan Bourne, formerly of the Institute of Economic Affairs (IEA) – where he was head of public policy - and now of the Cato Institute. The second, published today, is Iain Duncan Smith, who needs no further introduction.

It is Bourne, though, who sets the scene, framing the argument in binary terms, as between anti-Brexiteer "keyboard warrior Remainers" in alliance with "protectionist farming interests", and the saintly free trade advocates who, as Iain Duncan Smith, have done "far more for the poor than socialism".

This framing, to my mind, most of what is – and has been – wrong with the Brexit debate, falsifying the argument as one between two polar extremes. It thus refuses to allow any recognition of the centre ground which looks for a more cautious, considered approach, taking account of the realities of the situation rather than pursuing opposing ideologies.

By taking this binary approach, of course, people such as Bourne and Smith are able to set up their own ranks of straw men. Bourne, for instance, dismisses the "hyperbolic Minette Batters" of the NFU, and her own framing of the current controversy.

Bourne has it that she is arguing that we can have cheaper imported food from lower-quality Aussie ranchers and see "the end" of much British farming, or we can use price-raising tariffs to maintain high-quality British family farms. This "British consumers vs. producers trade-off" than thus we written off as a "wild overstatement".

The all-knowing Bourne, however, has a different view, resorting to his own brand of hyperbole, informing us mere mortals that all FTAs "and the hysteria surrounding" them bring miserable political compromises. The idea, he airily opines, that there's some simple consumer-producer trade-off "is bad economics".

British consumers, he declares, would unambiguously benefit from freer food trade with Australia, and not because "cheap" beef or lamb will suddenly flood the UK.

Without a scintilla of evidence to support it, he then goes on to claim that "Australia has high standards" and then complains that the NFU "hasn't produced meaningful evidence that standards here raise production costs". Thus, Bourne gets a free pass to make unsubstantiated assertions, while the NFU must provide "meaningful evidence". This way, you can win the argument every time.

This technique paves the way for another unsubstantiated assertion, that "the real consumer welfare benefits from bilateral FTAs usually arise from a greater variety of products, improved quality, and more security of supply, rather than falling prices". This, Bourne confidently assures us, would be the case with the Aussies.

And, with such a promising, happy outcome, the concerns of UK farmers are easily batted away. If the NFU is correct that a tariff-free FTA would end much British farming, Bourne declares, "this suggests current protection is extremely harmful to UK consumers, as they are priced away from products they prefer".

Plugging the gaps in this threadbare argument with yet another straw man, he asserts that if UK famers really can't compete on price with food produced 10,000 miles away, then tariffs are a very regressive means of covering up "awful inefficiency".

In any event, we need not worry our pretty little heads about vast flows of meat to the UK, as the Aussie government "admits its agricultural exporters are maxed out with Asian demand". There is, of course, no mention of that minor problem of the trade dispute with China – Australia's biggest export customer.

He does conceded, though, that eliminating tariffs with Australia "would obviously open British farms producing certain products to direct competition". However, that's not the same as saying the FTA’s provisions would harm UK producers overall, oh no!

Freer trade is an unalloyed blessing: it facilitates cheaper inputs to industries like farms. More importantly, the resultant competition weeds out inefficiency, freeing up resources for more productive ventures.

Indeed, warbles Bourne, the main long-term benefit of freer trade is not cheap imported stuff, but more specialisation. Openness forces producers to adopt new techniques, invest to serve new markets, use land productively, carve out niches, or downsize. This enhances overall production, rather than diminishing it.

Earlier in his dissertation, Bourne happily sneers at "keyboard warrior Remainers", and yet this man sees nothing untoward free trade forcing the more productive use of land. What price the researchers for the Welsh Assembly?

Chained to their keyboards and quite obviously lacking Bourne's grand vision, that note that Wales is characterised by upland and mountainous topography and is subject to a wetter climate than much of the rest of the UK. As a result, they say, a large proportion of utilised land – about 80 percent – is classified as “less favourable areas” or LFA land, rendering it more suitable for grazing livestock, specifically sheep, on comparatively small farm holdings that make relatively modest incomes.

Just how would Mr Bourne propose that Welsh farmers would use their land more productively? But then, in the absence of increased productivity, he does offer a solution: the farmers must "downsize". But isn't that what the "hyperbolic Minette Batters" was complaining about?

This brings us neatly to Iain Duncan Smith, who reverts to the first half of the 19th Century, the Corn Laws and the doctrine of free trader Richard Cobden. Smith would have is that the epic dispute over the Corn Laws, which split the Tory Party, was a battle between good and evil.

In one corner were those saintly free traders whose sole aim in life was to bring down the price of bread for the impoverished working class. In the other, there were the evil, grasping landowners determined to keep their prices high in order to maximise their profits, heartlessly grinding the faces of the poor into the dirt.

On the other hand, the filthy grubby landlords were insolent enough to claim that manufacturers like the saintly Cobden simply favoured cheaper food so that they could pay their workers less, and maximise their profits. In effect, this was nothing to do with the welfare of the poor – just competing visions on maximising profits between rival capitalists.

What may have been a rousing argument for the early 19th Century, though, somewhat loses its force in the 21st, when the average income of a Welsh sheep famer (2014-15) was £29,400. When the grasping landowners have become the impoverished working class, feeding the comfortable Waitrose warriors as they misread Adam Smith and the incredibly wealthy David Ricardo, free trade takes on a somewhat different hue.

Nothing of this, of course, can be expected to impact on Iain Duncan Smith. This simple man is only concerned with simple truths. FTAs benefit the whole economy, he says, which is why the this FTA is in effect "an early test".

After all, he purrs, Australia is an ally and friend that shares our values and commitments to human rights and has the same high animal welfare and food safety standards. If we aren't able to sign a trade deal with them, then you have to wonder who we will ever strike an FTA with.

A lucky man is Smith, completely devoid as he is of uncertainty. "Now is not the time to get cold feet", he warbles. "Let's rediscover our belief in the power of free trade, get this deal done and kick start global Britain".

What could possibly go wrong?

Also published on Turbulent Times.