Razeen Sally, “Trade Policy, New Century”

This post originally appeared on cobdencentre.org.

Razeen Sally’s Trade Policy, New Century (PDF) succeeds magnificently in explaining the 21st-century case for free trade and, specifically, unilateral trade liberalisation to the interested, non-specialist reader.

From the IEA home page of the book:

The World Trade Organization (WTO) is failing to deliver the trade liberalisation desperately needed to bring prosperity to developing countries, according to a new study released today by the Institute of Economic Affairs. The WTO is hamstrung by a cumbersome negotiating model and the influence of vocal protectionist lobbies who oppose free markets. At the same time, increasingly popular regional ‘free-trade agreements’ often create as many barriers as they remove by erecting new obstacles to trade with countries outside the blocs concerned.

In the context of policy paralysis at the WTO, the author, LSE trade expert Dr Razeen Sally, argues that governments must take back the initiative from supranational institutions. The priority must be unilateral liberalisation – removing trade barriers to benefit domestic consumers rather than waiting for tortuous international negotiations to be resolved. Governments can also help maximise the benefits of free trade by liberalising their economies and strengthening key institutions.

But what is the imperative for the UK? Surely, European Union citizens enjoy free trade?

The EU is a customs union: we trade ostensibly freely within it, but, as can be seen from the EU’s TARIC database, we find ourselves behind a complex system of tariffs on, for example, wheat, notwithstanding the battle long since won by our inspiration, Richard Cobden, to repeal England’s Corn Laws in the general interest.

And this is the key point: free trade is in the general interest. We may make the political and economic arguments in detail, but the public good is our ultimate aim, and not just at home. Razeen Sally explains (pp179-180, emphasis mine):

Adam Smith fortified his presumption in favour of free trade with an explicit political argument. Protectionism is driven by ‘the clamorous importunity of partial interests’ who capture government and prevent it from having ‘an extensive view of the general good’. Free trade, in contrast, tilts the balance away from rent-seeking producer interests and towards the mass of consumers. It is part of a wider constitutional package to keep government limited, transparent and clean, enabling it to concentrate better on the public good.

As important to Smith and Hume was the moral case for free trade, centred on individual freedom. Individual choice is the engine of free trade, and of progressive commercial society more generally. It sparks what Hume called a ‘spirit of industry’; it results in much better life-chances, not just for the select few but for individuals in the broad mass of society who are able to lead more varied and interesting lives.

To sum up: free trade is of course associated with standard economic efficiency arguments. But the classical-liberal case for free trade is more rounded, taking in the moral imperative of individual freedom and linking it to prosperity. Finally, free trade contributes to, though it does not guarantee, peaceful international relations. Freedom, prosperity, security: this trinity lies at the heart of the case for free trade.

In a short article, I can scarcely do justice to this monograph’s insight in relation to the case for classic liberalism nor to its observations on emerging geopolitics: I heartily recommend the book.

Further reading

Sir Ken Macdonald on Tony Blair

Via The Scotsman, we learn of Sir Ken Macdonald’s view of Tony Blair in respect of the war in Iraq:

TONY Blair deployed “alarming subterfuge” to mislead the British people over the war in Iraq, one of his top law officers has said.

Sir Ken Macdonald, who was director of public prosecutions at the time of the invasion, launched a devastating attack on the former prime minister, accusing him of acting like a “narcissist” as he tried to justify his actions.

Mr Blair had exhibited “sycophancy” towards Washington in the run up to the war in March 2003, Sir Ken said.

Read more…

How to destroy the British banking system

Cobden CentreOver at The Cobden Centre, my friend and colleague, financial engineer Gordon Kerr, explains how to destroy the British banking system through the use of derivatives which take advantage of the regulatory system, then sets out four measures to solve the problem:

Nine years ago I worked as a structuring engineer in a three-man team within the investment banking unit of a major British bank. One of us was very bright. He stunned me one day with an idea as to how we could:

Produce immediate (but illusory) substantial profits for our bank, thus ensuring that we would enjoy generous personal remuneration;

Generate ‘virtual’ share capital to boost our bank’s capital reserves;

Leave the actual investment risk exposure and profit expectation of our bank almost exactly the same after the transaction as before it.

Was this idea the kind of rocket science derivative engineering that justifies master of the universe labels for the three of us who designed and implemented it? No: it was extremely simple. Here’s how it worked. We transmuted some loan assets into a derivative transaction for regulatory purposes, whilst leaving the actual loan arrangements unaltered.

Ireland votes yes to Lisbon treaty | World news | guardian.co.uk

Via Ireland votes yes to Lisbon treaty | World news | guardian.co.uk :

In a dramatic political U-turn, Ireland has voted decisively in favour of the Lisbon treaty just 16 months after it first rejected the European Union reform plan.

With counting continuing this evening it was expected that 64% of those who voted in Friday’s referendum would have backed the treaty.

But I don’t like this result: best two out of three?

Now expect to hear Eurocrats celebrating the democratic will of the Irish people…

In a related message, David Cameron has sent this to supporters (emphasis mine), explaining how difficult a Conservative win will be to secure:

Our Conference starts in Manchester this weekend. It’s going to be the most vibrant and exciting for years.

Next week, we won’t be playing it safe – instead we will be offering bold plans to deal with the big problems the country faces.

Labour spent their conference talking only to themselves – not the country.

In contrast you will see a Conservative Party united, determined and ready to deliver the bold, tough and radical change Britain needs.

Labour are now the party of unemployment – at this conference we will show that we are the party of new jobs and new opportunities.

To deal with Labour’s Debt Crisis we will be setting out some of the tough decisions that need to be taken and unlike Gordon Brown we won’t duck them.

To give people hope for the future the country needs to change direction, and our Conference will show how we’re ready to make that change.

But there is absolutely no complacency.

Every member of the Conservative Party needs to remember the following: the Conservatives have never won a General Election from a starting point as difficult as we face now.

To win a majority, we must hold every seat we won in 2005 plus an additional 117 constituencies. This would be the biggest number of Conservative gains at a General Election since 1931.

We can do it: but we are going to have to work incredibly hard for every vote, every day between now and polling day. In this election, every vote will count.

This weekend we will hear the results of the referendum in Ireland on the re-named EU Constitution.

I want to make one thing clear: there will be no change in our policy on Europe and no new announcements at the Conference. There will be no change in Conservative policy as long as the Lisbon Treaty is still not in force. The Treaty has still not been ratified by the Czechs and the Poles. The Czech Prime Minister has said that the constitutional challenge before the Czech Constitutional Court could take 3-6 months to resolve.

I have said repeatedly that I want us to have a referendum. If the Treaty is not ratified in all Member States and not in force when the election is held, and if we are elected, then we will hold a referendum on it, we will name the date of the referendum in the election campaign, we will lead the campaign for a ‘No’ vote.

If the Treaty is ratified and in force in all Member States, we have repeatedly said we would not let matters rest there. But we have one policy at a time, and we will set out how we would proceed in those circumstances if, and only if, they happen.

This is going to be a great Conference. I look forward to seeing many of you in Manchester.

Well, I’m off to Manchester tomorrow where I will be chairing three joint fringe debates for the Smith Institute and the Centre for Social Justice on the bank bailouts, housing and insolvency. Looking forward to it.

A Miliband disgraces himself

Foreign Secretary Milliband disgraces himself with propaganda worthy of the old Marxists:

The foreign secretary, David Miliband, today made a politically sensitive attack on the Tories, saying the Conservative party’s new alliances in Europe made him feel “sick”, and meant that the party was run by “a bunch of schoolboys”.

Much of Miliband’s annual speech to the Labour conference was devoted to a critique of the Tories’ foreign policy and, in particular, their new relationships being forged in Europe. Miliband told delegates that the Tories were now in alliance in the European parliament with the For Fatherland and Freedom party, a Latvian party that participates in an annual event commemorating the Latvian Waffen SS.

via Tory ties with EU extremists are sickening, says David Miliband |Politics |The Guardian.

However:

William Hague has described smears made by David Miliband in his speech to the Labour Party Conference as “disgraceful”.

Miliband’s speech included insults towards the Latvian Government, accusations of anti-Semitism against Polish politician Michal Kaminski and allegations against Eric Pickles.

William said that Mr. Miliband’s remarks were “cheap party spin” and “represent a failure of his duty to promote Britain’s interests”.

“This kind of shoddy politics should be beneath a Foreign Secretary”, William added.

via The Conservative Party | News | News | William Hague responds to Miliband’s “disgraceful” smears .

These dreadful new left politicos can’t be ejected too soon.

Comment Central – Times Online – WBLG: What the Conservatives should do about Europe

I am constantly amazed by the equivocation of people who really should understand the importance of being able to dismiss a government at the ballot box.

I love Europe. I want deeper, freer relations among European people — all people for that matter — but I am not prepared to surrender democratic control of power in order to install a government which plans to force what could happen naturally. And yet here is Daniel Finkelstein’s view:

Second, they risk looking unreasonable and obsessive about Europe. While resisting the treaty before ratification was completely correct, resisting it after ratification risks Cameron’s image as a moderate person, fit to govern, someone who gets things in proportion.

Read more at Comment Central – Times Online – WBLG: What the Conservatives should do about Europe.

At this point, all we can do is hope that either the Irish vote no or that the Cameron team has a good answer up its sleeve. Otherwise, we may find ourselves locked into a failed and failing superstate.

Promoting ‘a country called Europe’

In so many ways, wrong:

New Research: EU diplomats spend £3.4 billion promoting ‘a country called Europe’

  • EU foreign service now costs £3.4 billion a year
  • The property portfolio of EU embassies is worth £55 million
  • EU ambassadors earn up to £244,000 a year
  • Former ambassador to Washington DC expresses concern at report’s findings

A new study by the TaxPayers’ Alliance reveals the huge size, scope and cost of the EU’s own diplomatic service, which has quietly grown to effectively challenge the British Foreign Office around the globe. The report, which includes a foreword by Sir Antony Acland KG, GCMG, GCVO, former UK ambassador to the USA between 1986 and 1991, exposes the way in which the European Union’s External Relations programme has used huge quantities of British taxpayers’ money to progressively usurp the nation’s global standing.

via The TaxPayers’ Alliance – Campaign: New Research: EU diplomats spend £3.4 billion promoting ‘a country called Europe’ .

CentreRight: One hundred reasons why Ireland should say ‘no’ (again) to Lisbon

Via CentreRight: One hundred reasons why Ireland should say ‘no’ (again) to Lisbon:

Jim McConalogue, Editor of The European Journal and occasionally of this parish, has listed one hundred reasons why Ireland should again reject Lisbon. It was disclosed at the weekend that Ryanair are helping to bankroll the ‘Yes campaign’ which current opinion polling suggests is on course for victory.

Read more here, and if you have not done so, it is well worth watching Daniel Hannan’s speech to the Conservative Party Conference last year here.

It is indeed an incredible thing that ostensible advocates of democracy are prepared to support the Lisbon Treaty. Ladies and gentlemen, the EU will be what is laid down in its Constitution, and that is a state whose ultimate and active originators of law cannot be dismissed at the ballot box.

As Karl Popper said:

You can choose whatever name you like for the two types of government. I personally call the type of government which can be removed without violence “democracy”, and the other “tyranny”.

Does the man have no shame!? – Jack Perschke

Jack Perschke, PPC for Derby South, attacks the preposterous rhetoric of the Leader of the Labour Group for Derby City Council:

He talks about the triumph of Labour over unscrupulous employers – presumably he’s happy with the bank fat cats who on Labour’s watch have privatised profit and nationalised losses.  Is it really a triumph for ordinary people that every man, woman and child in this country is saddled with a £20,000 share in the national debt?

via Does the man have no shame!? – Jack Perschke.

Did You Hear the One About… by Floy Lilley

Did you hear the one about bobbing heads on Sunday agreeing that the cause of the Great Depression was the absence of government guidance? “The Great Depression would never have happened if there had been any economic regulations,” agreed the policy wonks.

Oh, really?

So you think a free society generated that monstrosity?

It is accurate to say that in 1900 a free society did exist. The government still approximated a minimal state, exerting minimal guidance, and commanding minimal economic regulation. But, after 1900, virtually all public policy proposals called for more extensive governmental guidance.

via Did You Hear the One About… by Floy Lilley.

EU soldiers raise the 12-star flag to inaugurate the European Parliament – Telegraph Blogs

You remember the sole and fairly meagre change made when the European Constitution was revived as the Lisbon Treaty? That’s right. The EU’s national emblems were taken out: its flag, anthem, national day and so on.

via EU soldiers raise the 12-star flag to inaugurate the European Parliament – Telegraph Blogs.

Ireland commissioner says most EU countries would reject Lisbon Treaty – Telegraph

Ireland’s EU Commissioner, Charlie McCreevy, has conceded that voters in most EU countries would reject the stalled Lisbon Treaty.

via Ireland commissioner says most EU countries would reject Lisbon Treaty – Telegraph.

FT.com – Private equity consortium wins BankUnited auction

Following the collapse of BankUnited:

Regulators have worried that sales of troubled banks to private capital should not look overly generous. Those fear were fed when Chris Flowers, founder of private equity firm JC Flowers, said the investor group that bought IndyMac’s assets had all the upside for the failed California bank, while the government had all the downside. Calls to Mr Flowers were not returned.

via FT.com / Companies / Banks – Private equity consortium wins BankUnited auction.

“The government had all the downside”? The taxpayer, surely? No government should socialize business risk.

The Revolution: Ron Paul vs Alan Greenspan

Ron Paul’s manifesto, The Revolution, is a remarkable read, not least for his account of Alan Greenspan:

Few Americans during his tenure knew that Greenspan had once been an outspoken advocate of the gold standard as the only monetary system that a free society should consider. Not long after my return to Congress in the election of 1996, I spoke with Greenspan at a special event that took place just before he was to speak in front of the House Banking Committee. At this event congressmen had a chance to meet and have their pictures taken with the Fed chairman. I decided to bring along my original copy of his 1966 article from the Objectivist Newsletter called “Gold and Economic Freedom”, an outstanding piece in which he laid out the economic and moral case for a commodity-based monetary system as against a fiat paper system. He graciously agreed to sign it for me. As he was doing so, I asked if he wanted to write a disclaimer on the article. He replied good-naturedly that he had recently reread the piece and that he would not change a word of it. I found that fascinating: could it be that, in his heart of hearts, Greenspan still believed in the bulletproof logic of that classic article?

Congressman Paul goes on to write that Greenspan expressed a different view before a later committee but that his views are ultimately unimportant: it is the system that matters. It appears Greenspan agreed:

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

Greenspan goes on to blame the Great Depression on the Fed’s creation of excess credit: a bitter irony.

Greenspan’s article may be found here. Quite what we are to make today of his advocacy of gold is a matter for further study, particularly as Gordon Brown sold half our reserves, without Bank of England advice, at the bottom of the market.

Now Chancellor Alistair Darling under fire for expenses – Times Online

Including a neat summary of the latest dramas:

Alistair Darling has claimed thousands of pounds in expenses on his family home while renting out his privately owned London flat and living in a grace-and-favour apartment in Downing Street, it was reported last night.

The Chancellor has on a number of occasions swapped the title of main home between his house in Edinburgh and his flat in London, reportedly enabling him to claim expenses for both dwellings while also earning rent from his South London flat.

Mr Darling joins Jacqui Smith and Geoff Hoon as the latest senior members of the Cabinet to have their expenses put under scrutiny.

via Now Chancellor Alistair Darling under fire for expenses – Times Online .

When military officers serve unaccompanied in a consistent location, they take a room in the officers’ mess, which provides a modest room plus shared dining, lounge and bar facilities. I wonder if such an arrangement could work cost-effectively for our MPs…

The Great Deception

A good time to complete Booker and North’s extensive history of the European Union — “The Great Deception – Can the European Union survive?” — seemed to be these last few weeks, as I visited Portugal, France, Germany and Austria. It was an enlightening read.

I have visited most countries in western and northern Europe, perhaps all except Finland, Eire and the Balkans. I have also worked and toured widely in North America, the Middle East and Asia: those trips were a great pleasure but Europe is home and I love it. The political structure that is the European Union is another matter.

There runs through human history the idea that mankind could be happy, if only the good and wise were allowed to rule the rest, free of the inconvenience of democratic accountability. The European Union is yet one more embodiment of this idea.
Read more

Man, 97, completes 120mph skydive

A 97-year-old man from Dorset is believed to have become Britain’s oldest skydiver after jumping out of a plane at 10,000ft (3,048m).

George Moyse, who will celebrate his 98th birthday on Wednesday, landed safely on Salisbury Plain in Wiltshire.

via BBC NEWS | England | Man, 97, completes 120mph skydive.

Good on him :)

And remarkably, to watch the video on the BBC site from Austria, I had to watch an advert first:

Adverts on the BBC

I had forgotten the games the BBC plays to raise revenue while maintaining the licence fee… See also “How to save the BBC”, a publication from the CPS.

Driving and personal responsibility

Two road safety initiatives struck me today:

Drivers will have to declare every 10 years whether they are medically able to get behind the wheel, according to proposals to be set out early in the new year.

via Drivers to have 10-year health checks under driver licence reforms and:

Automatic speed control devices should be installed in cars to force motorists to stick to speed limits, an influential pressure group recommended today.

via ‘Speed control’ devices should be installed in cars, say campaigners. The Times fails to point out that the proponent “pressure group”, the Motorists’ Forum, is part of the Government quango The Comission for Integrated Transport

Both proposals diminish personal responsibility. Both will be costly for someone. Both have voluntary elements which don’t sound like they will be voluntary for long. Neither is very convincing.
Read more

Telegraph — Labour planning secret tax on ‘nice houses’

Predictably:

Millions of middle-class home owners living in desirable neighbourhoods are facing higher council tax bills after the next election following a secret Government exercise to assess the “niceness” of different areas.

read more | digg story

Harriet Harman criticised after suggesting pensioners should be grateful to Government – Telegraph

The Telegraph furthers its “Justice for Pensioners” campaign:

As well as losing out on income in their retirement, pensioners are hit twice over because when calculating their benefits the Government assumes they are receiving interest rates of 10 per cent on any savings.

Ten percent? It would be funny if it didn’t hit vulnerable people’s life savings.

Once again, we find an episode illustrating Labour’s belief that state dependency is right and proper: that we should be glad to be wards of the state.

read more – Telegraph | digg story