That economics can be a tad tricky at times is well known. What is, for example, the tax rate that maximises tax revenue? And is that static over time? Libraries are full of books disagreeing with aspects of that discussion.
On the other hand aspects of economics are really easy. Trade - it’s a good thing. If Johnny Foreigner can make something better, cheaper, faster, than we can then buy it from J Foreigner Ltd. Simples. There is also no difference at all in the logic here between our sensible activities as an individual, a household, a city, county or country.
The pub has better beer than I can make (OK, given my brewing, not difficult) so I buy the beer in the pub, not make it at home. If China can make solar cells and panels cheaper than we can we should buy them. Ship them Burberry coats in exchange - which is, actually, what we do. Tho’ we do it even better. The coats are made in China, from Chinese materials, we just slap the label on then charge them a 90% gross margin. Cool stuff, obvs.
However, there are people who get this wrong. I recall one story that Naomi Klein got entirely outraged about. Some factory in Canada was making solar cells/panels. Then some interfering bastards went to the World Trade Organisation and argued that those Canadian panels were being subsidised, against WTO rules (there was an import tariff on the cheap Chinese stuff to protect the Canuck factory). The subsidy was declared illegal, banished, the factory couldn’t compete and closed.
This, according to Klein, showed why free trade - and thus capitalism, obviously - was bad as it militated against solving climate change by manufacturing Canuck solar panels.
Now, given that this is Klein we know that she’s wrong for she’s a fool. But the joy is in how obviously she’s wrong.
The installation of solar panels will depend upon the prices being charged for solar panels. Humans do more of cheaper things, less of more expensive. So, the closure of the Canuck factory increases, not decreases, the installation of solar panels in Canada. For, if the cheap Chinese panels are now allowed in, tariff free, then solar panels are cheaper in Canada and more people buy them. We can prove this, as the Canuck factory closed because it could not compete - it was too expensive, see? - without the tariff making the Chinese stuff more expensive.
Free trade in cheap Chinese panels solves climate change that is.
And yes, the European Union is - potentially at least - as stupid as Klein:
Europe’s ambitious plans to expand green energy generation with “Made in EU” solar panels face a distinctly cloudy future as the continent faces a massive glut of the devices.
Millions of solar panels are piling up in warehouses across the Continent because of a manufacturing battle in China, where cut-throat competition has driven the world’s biggest panel-makers to expand production far faster than they can be installed.
The supply glut has caused solar panel prices to halve. This sounds like great news for the EU, which recently pledged to triple its solar power capacity to 672 gigawatts by 2030. That’s roughly equivalent to 200 large nuclear power stations.
In reality, though, it has caused a crisis. Under the EU’s “Green Deal Industrial Plan”, 40pc of the panels to be spread across European fields and roofs were meant to be made by European manufacturers.
It is a great deal. Chinese factories are losing money (yes, they are) producing really cheap solar panels. So, we all get to install solar real cheap. This makes us better off and also solves climate change. Whoop! Whoop!
At which point we’re told that this must all stop:
However, the influx of cheap Chinese alternatives means that instead of tooling up, manufacturers are pulling out of the market or becoming insolvent. Last year 97pc of the solar panels installed across Europe came from China.
The European Solar Manufacturing Council (ESMC) has warned of a looming “wave of bankruptcies” including Dutch panel producer Exasun and Austrian module manufacturer Energetic.
ESMC secretary general Johan Lindahl has appealed for “urgent” measures to safeguard the sector, calling for the EU to buy up all those unwanted solar panels to keep his members in business.
We must make solar more expensive in order to beat climate change apparently.
At which point we could just snigger, point out that if the EU is as stupid as Naomi Klein then no wonder we left and good riddance too.
But, of course, there’s another level of argument here as well. We will be told - often are told - that if we don’t do something ourselves, if we don’t protect domestic manufacturing, then we’ll be poor. We must actually make something ourselves and if that means more expensive solar then, well, but just think of the jobs!
Hmm, OK. So let’s put that idea to the test then. Places which don’t trade, places which make all their own stuff, must be richer than those which trade and buy cheapy shoddy from wherever:
The demonstration late on Sunday was a rare public show of disenchantment against Cuba’s communist government, and was apparently led by parents struggling to feed their children in the face of a worsening food crisis. The protesters reportedly chanted: “Without electricity and food, the people get hot.”
Power cuts of up to 18 hours a day have meant that as the island heads into summer it is almost impossible to preserve what little food there is.
So Cuba’s piss poor then.
The Cuban government blames the nearly 64-year-old US trade embargo for Cuba’s economic situation.
It’s piss poor - according to the local government at least - because it doesn’t trade because it is not allowed to trade. So, taking them at their word, not-trade makes a place piss poor.
Trade really is one of those bits of economics which are dead simples. If somebody else is doing it better, faster, cheaper, then go buy it from them. And that really is all - no, that’s everything about it - trade is. It’s something so obvious and simple that we grasp it every time we go for a pint. But it’s still something that seems to evade politics. Or Naomi Klein, but that’s obvious.
Suppose an alien civilisation just turned up and dropped a method of making energy and whisky from dandelions, a most common and nuisance weed. Value of about 1/30th of our energy supply say. Despatchble. All the aliens wanted in exchange was a dozen places at public schools for a decade and 4 apartments in Salford to house the sprogs.
Of course you're going to say yes.
If there is a problem incoming it's because UK underproduces apartments in Salford and public school places.
Imv of course
How much credence do you attach to the argument that there are some things (not solar panels or Burberry coats obvs) where there is a national security aspect which means that it would be imprudent to put the country at the whim of Johnny Foreigner Ltd’s government and one should therefore accept a security premium in the cost of keeping some local production rather than buying Johnny’s cheaper alternative?