My Anglo-American friend Iain Murray sent this bit to me. Alas, it’s not from the Babylon Bee:
‘Without industrial strategy, whatever your trade deal, you will not sell enough to pay your way in the world’
Former Chief Economist at the BofE [Bank of England] Andy Haldane says industrial strategy with a ‘strong export focus’ is as important as securing a new trade deal with the EU
What can Mr Haldane possibly mean? Obviously, he believes that unless the British government imposes protective tariffs on imports of A, B, and C, and subsidizes the production and exportation of goods X, Y, and Z, the British people as a whole will import too much and export too little. But what, I seriously wonder, is the (il)logic he uses to arrive at this belief.
Does Mr Haldane suppose that most residents of Great Britain, unless prodded by government to buy fewer of these items and to produce more of those items, will bankrupt themselves by funding excessive consumption with debt? If so, are the British people as a rule really so personally irresponsible as to lead themselves into this predicament? And will not the creditors of individuals who are bent on unsustainably consuming by going ever-further into debt not raise the interest rates charged to these British prodigals, or simply stop lending to them altogether? Creditors, after all, generally lose when their debtors go bankrupt or repay their loans with devalued money. Are members of Parliament – elected, after all, by these same presumably feckless Brits – more likely than are the creditors to notice when British borrowers have been extended too much credit?
Remember, a market economy is not an entity with an actual balance sheet or income statement. If the British people as a whole consume beyond their means, that result would arise only because many British persons, households, firms, or the government each acted in this irresponsible manner. Yet there’s no reason to suppose that private persons, households, or firms are generally this irresponsible – or, were they so, that financial markets would long let them get away with acting so irresponsibly. That leaves only the British government – which, unlike private persons, households, and firms, can spend other people’s money (including that of taxpayers still unborn). It’s rich to assert that the one institution in Britain that can long get away with truly consuming beyond its means must be given the power to tell everyone else in Britain what they can and cannot consume and on what terms.
Or perhaps Mr Haldane believes that, absent a British “industrial strategy,” the Chinese, the Americans, the French, and all other non-Brits will collectively and into the indefinite future gift goods and services to the British people. Of course, this belief is nutty. But were it true, it is one that the British people should welcome rather than reject.
Or maybe this former Chief Economist at the BoE simply assumes that a British current-account (or trade) deficit necessarily indicates that the British people are consuming beyond their means. If so, he – like so many other people – utterly misunderstands international trade. He should read Adam Smith.
