Tuesday , August 3 2021

Cheap Foreign Goods Cost More

There’s lots of cheap stuff about. You can pick up a pair of Primark shoes for the change behind your sofa as easily as you might grab a pure polyester suit from the Moss Bros sale in exchange for a few hours’ wages – fast fashion has filled out our wardrobes, without forcing us to empty our wallets. Similarly, toys and games are ten to the dozen on supermarket shelves, and for more of us now than ever, money is little object in amassing mountains of plastic playthings beneath the Christmas tree. The same is increasingly true of white goods and electronics, sans those which bear the Apple logo, which in huge number are literally given away due to inbuilt obsolescence and the pace of technological advancement. If you’re after a TV, and you’re happy to settle for anything less than the latest 56″ curved screen – you’ll find plenty of freebies online.

But the cheapness of consumer goods belies a heavy and hidden price. The low cost of labour and the absence of effective health and safety regimes in developing countries means that tat can be piled high and sold cheap, and neither the British worker nor British business can compete. Much of the cost has been paid by workers, as industries and crafts which once thrived have gone to the wall. Our historic tradition of cobbling is a shadow of its former glory, tailors and seamstresses have been displaced by chain stores, and electronics have become the purview of East Asia. I’ve been trying to put my money where my mouth is, and recently bought a pair of Dr Martens shoes, made their UK factory, in Wollaston. But they were over £100, and though they will last for 5 years, making it an entirely cost-effective move – many people cannot afford to make that decision. It is often far more expensive to be poor, as anyone with a pay as you go phone or a top up energy metre can attest.

The Import shock of the past four decades has decimated communities. A dire lack of reskilling programmes, and a series of unsatisfactory industrial policies, for which successive governments have been responsible, have led to generational unemployment, and dependency on 0-hours contracts and the gig economy. There were drastic increases in alcohol-related morality, suicides and violence throughout the 80’s and 90’s as people’s historic livelihoods were made unviable. But this is not a call for industries to outlive their usefulness, or to look back with rose tinted glasses on the toils involved in manufacturing. Afterall, we have less thatchers, blacksmiths and barrel makers than ever before, and though its right those traditions live on in the peripheries, a return to the feudal age would do us no good. But outsourcing has moved the production of both luxury and essential commodities and assets to distant shores. Yet, we are at all times surrounded by things, and those things are made by people. And while it is true automation reduces the labour required to make those things, machines still need to be designed, built, serviced, installed and maintained by people. Those people should be here in the UK.

The strategic consequences of a supply side dependency have been made painfully clear by the pandemic. At its onset we could scarcely produce a surgical glove or a gown. One after another, the nations of the world imposed export bans on PPE, ventilators, and medicines, and Britain’s much diminished manufacturing base failed to meet the demand. Despite the noble efforts of Formula 1 teams, Burberry, JCB and others to equip the health service with the gowns, respirators and ventilators that were required to fight coronavirus, they lacked the scale and the capacity to meet demand. Billions have been lost on delinquent PPE, millions have been stuffed into the pockets of predacious middle-men, and undoubtedly, some have paid with their lives. Such is the price of cheap stuff.

The rapid decline in British food production has in part prevented the comprehensive border closures that would have been a boon to our war efforts. The percentage of food required to feed the British population that is home grown has collapsed from 85% to 61% in the past two decades. Yet there is no shortage of land, no shortage of rich agrarian tradition, and no shortage of skills that could prevent the UK from feeding itself, or indeed becoming a net exporter of food. Yet dependent as we are, we remain plugged in to the world, at a time when the most successful countries have endured the storm by sheltering in place. But looking inward in perpetuity is no solution, and shunning trade for isolationism no remedy. We must look to the world, and look to trade fairly, opening our markets gladly to nations and economies with living standards, wages, working conditions and regulations in line with our own. We cannot simultaneously hamstring the competitiveness of British workers by demanding they receive a minimum wage, and mandating a ceiling in their weekly working hours, while asking them to compete with economies in which workers are paid as little as $2 a day, for 10 hours work. By realigning our trade policy to prioritise trade with economies comparable to our own, as with our application to join the CPTPP, we give entrepreneurs and investors all the more reason to have their products stamped: Made in the UK. Now Britain is no longer straightjacketed by the EU, there is no better time than this to make CANZUK work.

Matt Hancock played a blinder in ensuring British vaccine manufacturing capabilities were developed onshore. Even though maximally efficient free trade failed to survive first contact with the enemy, our inoculation programme was guaranteed.  If not for our ability to produce our own vaccines, we would face the real risk of having our orders blocked at the border, and our world leading inoculation programme might never have come to be. Thanks to continued investment, and additional manufacturing facilities stretching from Teesside to Scotland, the UK is set to lead the world in vaccinations, and hopefully thereafter, aiding the nations of the world in their struggle, and we should start with the Commonwealth.

It’s often said globalisation has brought us closer together than ever before. But in reality, it has atomised communities, from potters in Stoke to Sheffield steelmakers. The deindustrialisation brought on by import shock has had 40 years and more of unforeseen consequences; violent crime, absentee fathers, drug abuse, and a breakdown in trust for institutions and civil society. Amazon has become the marketplace of utmost convenience, and its ability to deliver cheap goods to the consumer in record team throws us off the scent of its dodgy tax regime, and the controversies that dog their warehouses. Such is the case when the consideration of price trumps an understanding of value. Unfettered free trade and the great hope for a white-collar jobs revolution that left our regions behind, has left us at the mercy of the goodwill of other nations, and as the PPE crisis has shown, that mercy does not always extend beyond national borders in times of crisis. It is time to look again at tariffs, as a way to provide social and economic protection to British communities, while also ensuring that we retain the strategic assets necessary to fight a crisis of any kind, lest they be allowed to go to the wall in the name of the market, and leave a gap in our defences once more.

 

About Mario Laghos

Mario Laghos is the editor of Just Debate.

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2 comments

  1. Great article. The Humanities have become so politicised that it is now difficult for any economist to make a career unless they support unfettered free trade and the demolition of borders.

    Moderate international trading is a very good idea but utterly unfettered free trade is a weapon to demolish nation states.

    • Thanks John, I quite agree, the open border – open market hegemony is increasingly dull – hopefully events have done enough to illuminate the political class to its weaknesses.

      – Mario

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