Unilateral free trade is the only possible logical stance

So the mathematician asks the economist whether there’s actually anything at all in all of the social sciences that is not obvious nor trivial. Yes, Ricardo on trade.

Much of macroeconomics is the maths lads playing with their protractor sets. Most of microeconomics can be explained by Granny without taking the eggs out of her mouth. Raise prices and people buy less - Rilly? Sell cheap and you’ll get a queue - Well, We Never. Sting people with taxes and they’ll do less of what gets them stung with taxes - Gosh. Etc, etc….

But trade, ah, trade. Folk wisdom just doesn’t, quite, get to grips with the difference between absolute advantage and comparative advantage. The first is that they are better at this than we are so we should buy from them. The second is that we, ourselves, are better at this other thing so we should do that and buy the first from those others. This then goes on to insist that while others might have an absolute advantage in everything over us it’s never, ever, possible for us not to have a comparative advantage. For the comparison is always to our own abilities at these different things.

Comparative advantage really is - if we all do the things we’re least bad at and swap the results then we’ll be better off.

So, free trade it is then.

Now, obviously, there are exceptions. National security for example. It is necessary to be able to build a Royal Navy to repel the French if we are to remain this silver girt isle, this realm, this England. But beyond such very limited cases free trade it is:

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As we say, this is where actual economics diverges from folk economics. This is also one of those few times that The Man in Whitehall does know best. Or rather, where we’d hope that the expensive education received by those Rolls Royce minds should come into play. For, as Joan Robinson pointed out:

The logic of embracing free trade unilaterally, that is, no matter what policy any other national government adopts, is well expressed in an adage attributed to the economist Joan Robinson: Even if your trading partner dumps rocks into his harbor to obstruct arriving cargo ships, you do not make yourself better off by dumping rocks into your own harbor.

Which is, actually, a good test of that right of Whitehall to rule over us. We have here that one grand test of whether they do know better. Whatever Trump does, the EU does, China does, the correct answer for the United Kingdom is to declare unilateral free trade.

Will it? No, obviously it won’t. Which neatly destroys the whole case for us to be ruled by those Rolls Royce minds, doesn’t it? For they cannot even get the one interesting finding in all of the social sciences right. The one time we actually need them to deploy that know better they don’t.

There’s really no point at all in paying them 40% of everything if they can’t even get this right. It’s tumbrils on Tower Hill time if they drag us into this trade war.

Tim Worstall