That's a long and detailed reply! TVM!
animist wrote: Nick wrote:
animist wrote: not a straw man because not an argument, just an introductory comment!
He's making a specific claim, which is untrue, and then attacking it. Classic straw man tactics.
what claim? (Actually your definition of a straw man is a bit odd - surely you mean "irrelevant" not "untrue")
Straw man does depend on irrelevance. In this case, he is set up a claim, which was untrue, and then tried to demolish it. Since it was untrue, then any such argument is irrelevant. If you'd prefer to call it something else, then I'm cool with that.
(The claim was "For the last few weeks, senior Brexiters have had a very specific script")
animist wrote:and the difference is?
That JRM (and others) were not saying tht 21% would be saved from imports from the EU, but only from outside.
you have lost me here. We don't pay tariffs on EU goods, so presumably all the tariffs are on those from outside??
Indeed, but ISTM, that is what Dunt was claiming JRM believed.
animist wrote: which is? Are you arguing with the IFS or with Dunt? Let us get this out of the way first, can we? Dunt may not be an economist in your eyes, but the IFS is very much a respected organisation
I am saying that the IFS is being misrepresented by Dunt. ISTM he doesn't see the difference.
have you read the IFS paper? What is the difference between it and Ian Dunt? I have not read it myself but looked at the summary, which seemed to saying what Dunt was saying
Haven't read the paper itself, but ISTM Dunt is taking the overall effect (as cited by the IFS) and claimed that is the marginal effect of the changes.
animist wrote:yes maybe, but that is not the issue here is it? We are talking about prices facing UK consumers, are we not?
We are talking about whether it is a good or bad thing overall. If a balance of payments crisis harms Britons, then that is a lot worse than a one off fall in sterling, which may in future be reversed. Just ask the Greeks (whom you, as a good Remainer) seem determined to blot out of your memory!
but surely it is falls in sterling which avoid the sorts of BOP crises we suffered under fixed exchange rates. I doubt whether sterling will recover - obviously, since I think that the future will be one of continuing uncertainty
We disagree. We'll just have to wait and see. Of course, what neither of us will know is what would have happened under any alternative scenario.
Nick wrote: So what is a "good" echange rate? There's no such thing, in and of itself. Only in terms of what benefits the UK citizens. And there is a huge difference between general everyday variations and sudden uncertainties caused by shock
I don't know exactly what a good rate is, but a seriously falling exchange rate, which I feel is the future post-Brexit, is NOT good, surely. Exports have increased since the referendum, but are they seriously closing the BOP gap?
Yes, together with import substitution, that is indeed what's happening. And I see no reason why the exchange rate should necessarily continue to fall, just because of Brexit. If that were true, then we would see the Euro continuing to strengthen against all other countries, which clearly isn't the case. And note, the recent strengthening in the Euro is as much the result of their appalling past performance as any current strength.
animist wrote:no indeed, but it may not be worth the costs to employment and so on.
So why would a cut in tariffs lead to higher unemployment?
it wouldn't, but what I meant was that this idyllic future that you propose will have been obtained via Brexit and loss of the access to the Single Market which we currently enjoy, and THAT is likely to lead to higher unemployment
...except that the supply of labour will not be as bountious as before.
animist wrote:You constantly point out the threats which immigration pose to society despite its economic benefit, but the costs of free trade seem a lot more obvious - a very strange sort of doublethink and special pleading
What costs of free trade? And how is it comparable with the arbitrary change in asset prices caused by immigration which hit the poor so very very hard. Never mind a couple of percentage points, we are talking tens of percentage points!
but - and I assume that you mean house prices - this is a matter which government could and should tackle by increasing housing supply.
Yes, I did mean house prices. Unfortunately, people rather dislike that suggestion overall. NIMBYism is a real thing.
Government can deal with housing shortages,
but it cannot easily increase the number of economically active members of the UK population, and that is a demographic problem affecting not just Britain but much of the rich world.
It's done so in recent years, perhaps at the expense of growth, so there's some scope for improvement. But can we in all honesty continue by depriving the rest of the world? When all it does is to kick the can down the road for a generation?
Yes, population growth, whether from immigration or not, is obviously going to increase pressure on housing prices, but then, the consensus is that we need immigation because we are an ageing population with too many oldies - like me, and your good self in good time!
We can choose to allow carers in if we want to, but it doesn't resolve the problem in the end, does it?
animist wrote:I really don't know whether all costs are passed on, but can you justify what you say?
As Alan has said so often, its not for me to justify, it's for Dunt. He doesn't. But at its simplest, if a reduction in tariffs wouldn't reduce prices by a corresponding amount, why don't the suppliers increase their prices now, since by doing so, they would increase their marginal revenue, even if sales fell by volume. It's all to do with the slope of the curves. So! Evidence please!
I cannot provide proper evidence, but I remember that soon after the referendum, supermarkets were attempting to shield consumers from the fall in the pound by taking the shock themselves. God, Nick, you really believe this stuff about curves, don't you?
Short term loss leaders by supermarkets, eh? Doesn't last.
animist wrote:surely he is talking about two different things: the impact of tariff removal on import prices, and the impact on employment
...which are linked.
in some way no doubt, but it does not follow that a significant adverse effect on employment needs a significant fall in import prices - simply because we live in an economy which is in a sense competitive and in which marginal changes in prices can have substantial effects on decision making. If domestic producers are believed to be unable to compete with foreign ones on a continuing basis, then decisions may well be made which will affect investment in those industries, and hence employment.
Certainly, in the short term but that is how economies grow, by getting people to move to other economic areas where they are needed. Or should we have protected the jobs of telephonists, say? If technology had remained at 1945 levels, BT would have to employ every single school-leaver! Great for employment, but....!
animist wrote: maybe, but how much of this dividend would come to us?
Certainly exports need to be won, but a sure way of losing exports is to protect your own market, thus stifling competition and innovation, which is what tariffs do.
cloud-cuckoo-land thinking. Look, I read enough of Paul Samuelson all those years ago to be convinced that in cloud-cuckoo-land we would all be better off without tariffs. I happen to think that Ian Dunt's argument, in his book rather than the article, has some merit - this is to the effect that for Britain to unilaterally drop all tariffs is equivalent to a duellist dropping his gun and then challenging his opponent to fire!
ISTM that Dunt is defending tariffs as a suitable policy in the long term, without seeking to make trade freer. Not good.
animist wrote:did we?
Yes, yes, yes!!!
good in every way. But it is a very very old lesson. I am amazed that you have delved so far back, but well done, and I do not dispute that reducing tariffs increase employment and income OVERALL
I went that far back, not to demonstrate my knowledge, but because it is such a good, and such an early example.
It's an old lesson!
animist wrote:BTW, I don't have any personal attachment to tariffs, I just doubt that Brexit is the way to remove them -
How can we remove tariffs imposed by the EU without leaving? We've suffered their tariffs for decades, and haven't been able to shift them. Cameron demonstrated they remain fundamentally deaf to reform.
I dunno about the EU and tariffs. I think that they are bothered about them, but tariffs are less important than other impediments to trade, and the EU have gone far in this direction.
Not nearly far enough! Not only have they failed to achieve free trade within the EU in services, but their ever increasing regulations continue to throttle trade, besides their anti-free trade practices (French passports for example).
They have also concluded many deals with other countries, and given some concessions to poorer producers. Not enough, I'm sure. But look, you here seem to move towards a very unpatriotic concern about poorer countries.
So concern for my fellow human is "unpatriotic" is it? You little Englander, you!
Besides which, it should be a benefit for both; it's not a zero sum game.
As I have said on TH many times, Britain will not be thinking about benefiting poor countries when and if we leave the EU.
We'll see, won't we? Would you vote to cut our UN level overseas development budget? (Which precious few of the EU manage).
Can you not see the limitations of economics?
Certainly! That's one reason I am pro-Brexit!
All sorts of interests will come to the fore to protect their interests
...and should be resisted!
(we already see the disappointed fishing industry doing this, and Brexit is nowhere near yet even happening!).
Rather rich, when you think of how effective they have been in protecting their intrests in the last 45 years!
(More to say, but elsewhere, maybe...)
It will be chaos, with social and political strife due to the disappointed hopes of those millions who, we are constantly reminded, voted to leave in the largest number ever to vote in a British political contest, and the last people to benefit from this chaos will be the poor producers.
So where is the social and political strife at the moment? In the UK or on the continent?
The EU, in contrast, is rich enough to survive an inconvenience like Brexit.
They haven't decided how to replace the UK's contribution yet, have they...?
animist wrote: Please read the latest Brexit Blog, which discusses something I have already mentioned on TH: the strange bedfellows among the Leave votership of Little Englanders who want their jobs protected and the Hannan-type extreme globalists.
No more than the strange bedfellows on the left. Have you taken a good look at your fellow travellers...?
just so irrelevant - and anyway, this is not a left-right matter. Look, it really does not matter if rich bankers voted Remain. A vote to stay in the EU was kind of a non-vote because it simply said, no change - a bit like if I decide NOT to spend any money I have on some expensive holiday or a golden gambling craze. The vote to leave, in contrast, has already opened huge cans of worms, whether economic, political, or social. Are you blinded with your pet topic of economic theory?
It amuses me how Remainers on the left play the economics card, right up until it means that they will have to abandon some of their economic principles! Still, it's nice they are now caring about bankers in the City!
ut in the fina analysis, I voted for Brexit because I beieve the structure of the EU is fundamentally flawed, is incapable of reform, and will end badly, not because the UK will profit in the shoort term. But economic theory is nevertheless important in evaluating what is likely to happen.
animist wrote:well, surely this depends on what one calls a product. "Cars" is rather a large general term for items which are very much different branded products
Of course, but there is substitution between them, isn't there? Dunt seems to think there isn't!
I do not think that is the case, and if you read his book you'll see that he recognises that expensive car brands will still be bought by those who want them and can afford them, despite tariff increases due to Brexit
Then he's a clot! No-one says no cars will be bought, but fewer! Fewer people will want them, both because of worsening affordability, and because other alternatives will be relatively cheaper.
animist wrote:because these are unknowable
Imprecise, yes, and individually yes, but collectively, and pari passu, they are knowable. Just look at the growth (and recent stalling) of international trade. Practice backs up the theory.
What theory and practice?
That increases in world trade yields higher growth.
I think you mean "undisputable" rather than "knowable".
No. What I was driving at was that it is in practice unknowble if person A will respond in a particular way (income & substitution effects, for example) but we can make reasonable guesses in aggregate.
Of course there will be some benefit, but how can we know what a unilateral abolition/reduction of tariffs will produce?
There are some who go for a unilateral abolition of tariffs, but most Brexiteers think it is more that a desire for tariff-free trade is a good thing, whereas much of the EU (not least large sections of France) profoundly disagree. And remember too, that an abolition of a tariff directly benefits the buyer.
Dunt's book makes the point that unilterally doing this free trade thing is like throwing down your gun and demanding that the other side surrender! Surely the experience so far is that it is multilateral concessions on trade (as with nuclear weaponry) that produces results
Except that such an approach has produced no overall trade deals between the EU and the USA, India or China, and many others too.
I cannot be bothered to get into another spat about the EU. Really does not matter how gung-ho the Government is about deals outside the EU since it takes two to make a deal.
At least it will now be two, instead of 29!
I think there will be a spate fo new deals where none have existed before. We'll just have to see....
You continually misunderstand me because of your narrow obsession with economics: when I talk about "sacrifice" I was talking about the fishing industry, which because of its smallness may well be sacrificed in a deal with the EU in order to save other industries - absolutely nothing to with comparative advantage, it is all politics and not economics
What bother me, is when decisions are made for political reasons based on bad economics!! The anti-austerity rhetoric of UnCut, for example.
As for the fishing industry, here's my prediction: there will be international agreements on fishing quotas (fish move across international boundaries), but UK fishing fleets will be protected, subject to negotiated exchanges of quotas between nations.
Nick wrote:I agree that Trump is a loon, but the trend is still clear; that's what all the trade rounds (Doha, etc., ) are all about. As for The Donald, a) he can't last for ever, b) the tariffs haven't been imposed yet (but are causing uncertainty, see above) and c) are (at least I hope so!!) aimed at trying to get China to play fair (which it isn't up until now). A high risk strategy, not one that I would recommend at all, but.... you never know!
omigod, how can you be so naive and complacent? Trump will be there for at least the Brexit transition period, and his ideas seem to have awakened a certain nativism in US public opinion, so his approach may well survive him. When the US goes against the "trend" is there any great "trend" left?
You say naive, I say optimistic.
We'll just have to see.