19 2 mins 9 yrs

I’m truly aghast. The Telegraph reports of a looming EU/China trade war:

China-EU trade war a risk for UK growth

The beginnings of a trade war between China and the European Union could escalate into a damaging battle that might hurt the UK, economists have warned.

Meanwhile, the BBC reports on Sino-Swiss relations:

China seals first free-trade deal with Switzerland

China has signed the framework of a free-trade agreement with Switzerland, which could become Beijing’s first such deal with a major Western economy.

Being in the EU, instead of isolated like those Swiss with their wacky low unemployment rates, we can’t do anything about trade with China, It’s an EU (in)competence. The truly mental thing, is that the “trade war” was sparked by EU anti-dumping tariffs on solar panels, to which China responded with a levy on European wine. Well hang on, the Chinese were subsidising their solar panels so they’d be cheaper for us. Protesting this is like protesting when the car salesman chips in his own money to help you buy a motor. You just wouldn’t! The result so far is that (mainly) French wine exporters have been penalised because of a measure designed to protect German manufacturers.

We are truly governed by morons.

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  1. //when the car salesman chips in his own money to help you buy a Motor//

    The EU is not only consumers; still quite a few workers there too.

  2. As a risk specialist I advocate informed and managed risk taking and the perils of isolation outside the EU are something I’d risk.

  3. Can anybody here make a tangible (repeat: TANGIBLE) case for remaining in the EU?

  4. Well hang on, the Chinese were subsidising their solar panels so they’d be cheaper for us.

    Sorry Pete, I think you left out a word after Chinese, and of course that word is “government”. A tad disingenuous? You seem to be arguing that it’s fine for the Chinese government to subsidise its solar panel manufacturers. And that the employees of unsubsidised solar panel manufacturers in Europe and elsewhete who lose their jobs should suck it up.

    For someone who constantly harps that governments are evil it seems strange that you should be so relaxed about this blatant government interference with free trade.

  5. Protesting this is like protesting when the car salesman chips in his own money to help you buy a motor.

    How about – you’re a Vauxhall worker at Luton but, instead of buying your usual Vauxhall from the local dealer, you buy a cheaper Hyundai. You then lose your job because sales of the cars which you made have declined – but at least you got a cheaper car!

  6. Peter –

    Not disingenuous, I just want to keep the post within screen height. It’s economically dumb for any government to subsidise any goods, but it’s China’s business.

    Peter, Allan@Aberdeen –

    What about the people put out of a job, or whose job was never created, because goods are more expensive than they need to be? They’re just as real as the jobs we can see go.

    The man who buys a cheaper Hyundai hasn’t put all his savings into a car. He now has spare capital to save (which ends up invested) or spend on something else. So what about the florist or shoemaker or farmer who loses his income because the car buyer blew all his savings on an overpriced Vauxhall? They’re just as real as the Vauxhall worker.

    We can’t see them as clearly as the Vauxhall worker. They the unseen, but they’re just as real.

    The upshot is that the car buyer has his car as well as flowers, shoes and food too, instead of just a car. He’s got more goods for the same capital inputs. This is the very definition of economic growth.

  7. It’s economically dumb for any government to subsidise any goods, but it’s China’s business.

    Agreed, but that begs the question, how should other governments respond? Should they lie down and accept it or retaliate to discourage it? I know which side I’m on, do you?

  8. “Agreed, but that begs the question, how should other governments respond?”

    They shouldn’t respond. There’s nothing to respond against.

  9. Pete (sigh)

    If one government uses tariffs to destroy the producers in the territory of another government, it is not “natural advantage” in free market terms, it is a declaration of nercantilist state-sponsored economic war. And if the other government fails to respond in kind, it is guilty of treason against its own people. That’s how I see it.

  10. Peter –

    You see it wrong. China proposed to make us wealthier by subsidising goods at the expense of the Chinese and by damagng the Chinese economy. If China wanted to spark an economic war, that’s a pretty dopey way of going about it.

    I take back the statement that other governments should do nothing. They should send Don Boudreaux’s letter to the WSJ to the Chinese government.

  11. So Pete, to be clear:

    You have no problem with Chinese-government subidised solar panels putting the German solar panel manufaturers’ lights out. But you have strong objections to the UK government subsidising green energy through the feed-in tariff for home-owners who have solar panels?

  12. Peter –


    So to be clear: you have no objection to the UK government putting some Britons’ lights out by subsidising taxing them out of a job to subsidise monopolistically high prices to advantage “green” energy investors, some of whom are multi-millionaires.

  13. Pete would see no harm in having the Chinese build the UK’s submarines, satellites, and critical communications infrastructure.

    What could ever go wrong with that?

  14. I don’t remember discussing these items before, but let’s go on.

    You don’t think that any airline / manufacturer / provider of a service has ever lowered their price in a predatory manner so as to put a competitor out of business, after which they could raise prices more easily?

    This has never happened? And it is something that we should never worry about or ever seek to prevent?

    Be very careful how you answer this one.

  15. So American Airlines lowered the price of your flights – what are you complaining about? Why should I complain if some airline or manufacturer lowers the price it charges me? Good grief.

    If the firm then raises prices then competitors will again swarm in. This is the real value of prices. They’re not what you have to pay for something, their real value is to signal to providers when to enter and when to leave markets.

    Hey Phantom, I’m building an idiot. Can I borrow your brain?

  16. That isn’t always how it works, certainly not in the short term. Which anyone who follows that industry will tell you.

    Notice the immediate, annoyed insult from the great economist.

    I assume that with such a vast knowledge of money you must be a multi billionaire by now.

  17. http://articles.chicagotribune.com/1998-10-02/business/9810060069_1_northwest-airlines-kiwi-spokesman-rob-kulat-continental-and-northwest

    Pete has his mind made up, and no facts can change it, but for anyone mildly interested in the arcane subject may review the above.

    That’s the game as played by the big boys – to suffocate a smaller competitor, drive them away and or into bankruptcy, and then raise the fares back up. It is often a long, long time before competitors come back, since they know how they will be greeted by the muscular players.

    Coordinated action by big airlines has been happened many times in the US in order to strangle little competitors in their first few years in the business to the extreme detriment of the consumer.

    Pete is fundamentally a corporatist, despite furious protestations to the contrary. There is nothing that a corporation could ever do – other than submit to regulation by the evil gummint – that he would ever oppose.

    There is competition, but there is not as much as their should be – especially in secondary cities such as Cleveland or Cincinnati. The lack of competition harms individual travelers, but it also harms business in general. They get fewer business or corporate travelers.

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