MYTHS
Another myth that has been advanced during the credit crunch, is that the 1930s slump was exacerbated by, if not a caused by, protectionism - something which we are now told we must avoid at all costs.
It might be true to not regard protectionism as a solution to the present economic crisis, but it was not a causal factor of the 1930s slump. In reality, trade between different countries from different social, economic and political systems has always tended to be regulated to some extent and this has involved tariffs.
What did happen in the 1930s, is that Britain was forced, due to a variety of factors [the exit from the Gold Standard, the collapse in industry and the attendant unemployment, the devaluation of the currency and competitive devaluations], to abandon its simplistic theoretical laissez-faire free trade policy, and introduce tariffs to protect its industry from unfair competition [the damage done to British industry by returning to the Gold Standard was substantial - see the English Rights Campaign item dated the 18 December 2008].
This abandonment was long overdue and the reluctance to respond to the gravity of the threat posed to our industries by foreign protectionist measures was a major factor in the decline of British power. For example, in 1904 the average tariffs on industrial goods imported from Britain were: 25% in Germany, 34% in France, 73% in the USA and 131% in Russia. The British tariff on manufactured imports was zero.
It was impossible for British industry to compete successfully on such a basis and it is little wonder that our rivals and competitors not only caught up with us, but overtook us economically and then militarily.
The introduction of a more protectionist stance by Britain in the 1930s led to a fivefold increase in the output of machine tools, and a boom in chemicals, steel, aerospace and many other industries. Without this re-industrialization, Britain would have fared even worse against the Nazis in the Second World War than we did. Fighting wars is dependent on industrial production - not City speculation.
Today, those industries which are facing competition from the Far East, where they are free to exploit Western technology without any accompanying Western labour costs and other regulations, should be able to expect a more supportive government and would be more successful if they did not face unfair competition. On leaving the EU, our fishing industry would boom as we retook control of our own territorial waters.
A more pragmatic approach is needed and should be welcomed.
It might be true to not regard protectionism as a solution to the present economic crisis, but it was not a causal factor of the 1930s slump. In reality, trade between different countries from different social, economic and political systems has always tended to be regulated to some extent and this has involved tariffs.
What did happen in the 1930s, is that Britain was forced, due to a variety of factors [the exit from the Gold Standard, the collapse in industry and the attendant unemployment, the devaluation of the currency and competitive devaluations], to abandon its simplistic theoretical laissez-faire free trade policy, and introduce tariffs to protect its industry from unfair competition [the damage done to British industry by returning to the Gold Standard was substantial - see the English Rights Campaign item dated the 18 December 2008].
This abandonment was long overdue and the reluctance to respond to the gravity of the threat posed to our industries by foreign protectionist measures was a major factor in the decline of British power. For example, in 1904 the average tariffs on industrial goods imported from Britain were: 25% in Germany, 34% in France, 73% in the USA and 131% in Russia. The British tariff on manufactured imports was zero.
It was impossible for British industry to compete successfully on such a basis and it is little wonder that our rivals and competitors not only caught up with us, but overtook us economically and then militarily.
The introduction of a more protectionist stance by Britain in the 1930s led to a fivefold increase in the output of machine tools, and a boom in chemicals, steel, aerospace and many other industries. Without this re-industrialization, Britain would have fared even worse against the Nazis in the Second World War than we did. Fighting wars is dependent on industrial production - not City speculation.
Today, those industries which are facing competition from the Far East, where they are free to exploit Western technology without any accompanying Western labour costs and other regulations, should be able to expect a more supportive government and would be more successful if they did not face unfair competition. On leaving the EU, our fishing industry would boom as we retook control of our own territorial waters.
A more pragmatic approach is needed and should be welcomed.
posted by erc @ 4:37 pm
<< Home