How important is free global trade to your living standards? The answer can be easily illustrated with reference to a sandwich made by one Andy George late last year. Worried that Americans are increasingly clueless about how food is produced he set about making a single chicken and cheese sandwich from scratch on screen.
He made his own cheese, harvested his own wheat, collected honey to sweeten his bread, killed a chicken himself, evaporated sea water to get salt to pickle his homegrown cucumber and grew his own sunflower seeds for oil. The whole thing cost him six months and around $1,500 or 300 times the cost of the average sandwich.
George is clearly now a tad more in touch with food production in America than he once was. But his experience also exemplifies how ridiculously inefficient it is to do things without trade. And while it is (obviously) an extreme example, it is also a reminder that getting blas about the benefits of free trade to the world as a whole is a bad idea something that makes the recent trend for demanding that it be curtailed rather worrying.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Look to the US. Trump has made it very clear that his is an anti-free-trade agenda. He wants US firms to be made to invest their cash reserves in the US, notes The Guardian: he reckons that their global investments have been made at the expense of the American worker. He thinks that the North American Free Trade Agreement (Nafta) has meant that jobs that should be located in the US have moved to Mexico. He is anti the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership and just for good measure he reckons that there should be a 45% tariff on anything imported from China.
Hillary Clinton doesn't agree with him on much. But it looks like she is coming round on this. Earlier this month she told a thrilled audience in Detroit that "I will stop any trade deal that kills jobs or holds down wages including the Trans-Pacific Partnership". Then there is the UK. Here many are hoping that Brexit will result in policies that protect UK industries from external competition (something that isn't going to fit well with the fact that Brenaissance is currently winning our competition as the word we will use to replace Brexit).
This isn't just electioneering talk. The World Trade Organisation released a report back in June pointing out that over the previous year, G20 economies had rolled out new protectionist trade measures at the rate of eight a week. It makes sense that populations are demanding change in the wake of years of stagnant wages. But this isn't the change they need (see this week's cover story and City View for alternative routes to growth). Modern history can be quite neatly divided into periods of globalisation and periods of protectionism. The latter have not been the good ones.
-
FTSE 100 hits record highs – why is it rising and will we see more gains?Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
-
How to invest in copperIt may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
-
Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
-
Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
-
Why we need to get a grip on our governmentEditor's letter Our government is trying to do too much, enacting policies that are destructive to the private sector. It needs to drop the the feel-good nonsense and create policies that lead to long-term wealth, says Merryn Somerset Webb.
