Oh dear. I hope you don’t use oil, if you’re going to claim that it is morally unacceptable to finance the oil industry.

Do you truly believe that the Canadian oil sands project means “we have no chance of avoiding runaway climate change”, or is that just emotive and unscientific nonsense?

Edward,

1) there is enough oil in known reserves to push us over the widely agreed climate tipping points, so yes, I think prospecting and drilling for new oil is a bad idea.

2) It depends on how you look at fossil fuel reserves: it’s true that we could burn a proportion of each of all the fossil fuels we have. But this would be foolish. The emissions per unit of energy are much higher for some than the other. They are very high for tar sands. Thus, for that oil we can get away with burning, we get many many more bangs for our buck with gas & with ‘sweet’ oil than we do with tar sands & coal. If you think such complaints about tar sands are ‘unscientific’, then take your case up with the chief scientist at the NASA Goddart institute, has said many similar things, and writes about the case here:

http://www.guardian.co.uk/commentisfree/cifamerica/2009/feb/17/barack-obama-canada-climate-change

“Students at universities across the UK have been pressing the issue. RBS have been banned from advertising on campus by their local student union – the Edinburgh University’s Students’ Association. Student unions up and down the country – and NUS – have passed similar motions.”

Bless. Well, every generation of students has had a group of bankers to shout at before they graduate and become bankers. Back in my day it was Barclays’ about S Africa. Not that it made a blind bit of difference to what happened in S Africa but made lots of people feel righteous shouting about it.

Back in my day it was Barclays’ about S Africa. Not that it made a blind bit of difference to what happened in S Africa

Mmmm… yes history does seem to be missing constantly from your analysis Tim.

Globalisation/international neo-liberalism, whatever you want to call it, has, over the last few decades, been causing the largest reduction in poverty in the history of our species.

Industrialisation has indeed made richer by allowing them to sell to richer countries, but the idea that China and India are ‘neo-liberal’ or even classically liberal is rather funny, and it’s amusing of you to try the ‘I told you so card’ while knowing that even a puff of wind would blow it down.

Good stuff this neo-liberalism, innit?

Actually I’ve got a paper and an article from the economist here that says government policy played the biggest role in reducing inequality and poverty. D’oh!!
As you yourself say, correlation doesn’t equate to causation.

“Industrialisation has indeed made richer by allowing them to sell to richer countries, but the idea that China and India are ‘neo-liberal’ or even classically liberal is rather funny, and it’s amusing of you to try the ‘I told you so card’ while knowing that even a puff of wind would blow it down.”

Are you trying to say that globalisation, that neo-liberal project (you know, tear down the tariff barriers and all that, Washington Consensus etc) hasn’t had anything to do with industrialisation and the ability to sell things? That India and China aren’t more liberal now than they were a few decades ago as well as being richer?

And in more detail, I did tell you so.

http://www.adamsmith.org/blog/international/so,-what%27s-it-all-about,-this-neo%11liberalism-stuff,-then?-200910264344/

“Actually I’ve got a paper and an article from the economist here that says government policy played the biggest role in reducing inequality and poverty. D’oh!!”

And I would suggest that that paper and article is talking about within country rather than global inequality.

Tim,

1) I don’t think anyone is pretending that passing a few motions in a few student unions will change the policy of one of the biggest companies on earth. That’s why, among other things, we have taken the treasury to a judicial review. But students are a massive markets for banks, and so have some leverage. Denying RBS access to 27,000 potential customers at Edinburgh alone is not insignificant.

2) It is those countries who protected their borders most who have grown most (S. Korea?). Those who were forced to open their up (remember Haiti, anyone?) which have suffered through an inability to foster indigenous industries. Western countries developed through supporting these industries. Forcing open developing markets does not and has not led to poverty reduction.

Thanks,

Adam

“It is those countries who protected their borders most who have grown most (S. Korea?). Those who were forced to open their up (remember Haiti, anyone?) which have suffered through an inability to foster indigenous industries.”

It is? Wow, you’d better write that research paper up then because you’re a sure fire for a Nobel Prize you know. No one else has ever been able to find even a correlation like that let along a causation.

“SOUTH KOREA

? Duties 7.9% (avg.)

? VAT 10%

? Excise tax 15-100% (luxury items, electric goods) ”

Those look like quite low levels of duty to me really.

“UNITED KINGDOM

? Duties 0-15% (avg. 4.2%)

? VAT 17.5%”

Oh look, not too different from our own.

And Haiti seems to have higher tariffs:

The WTO’s Trade Profile for 2009 reports Haiti has relatively low import tariffs compared to other developing countries. For agricultural goods the simple average bound tariff is 21.3 percent with the average applied tariff at 5.7 percent. For non-agricultural goods tariffs are somewhat lower with bound tariffs at 18.3 percent and applied at 2.4 percent.

Not quite sure what “bound tariffs” as opposed to applied. But even if it’s the lower numbers then we don’t see that any of the three countries have wildly different import tariffs now, do we?

Tim – industrialisation is different to neo-liberalism as you well know. The Soviet Union was industrialised but it wasn’t neo-liberal was it? I thought such an obvious point was within your grasp.

And I would suggest that that paper and article is talking about within country rather than global inequality.

What do you think global inequality is a sum of? Actually it compares different countries and shows that the countries that have done well aren’t necessarily the ones that opened up, but the ones that had targeted govt intervention at alleviating poverty and inequality.

Shame that kinda destroys your thesis eh? I shall blog about it soon. I’ve had the article sitting here for ages.

“Tim – industrialisation is different to neo-liberalism as you well know. The Soviet Union was industrialised but it wasn’t neo-liberal was it? I thought such an obvious point was within your grasp.”

Sure, industrialisation is different from neo-liberalism. It’s also different from free (or freer) trade, reduction of tariffs, reduction of economic regulation and reduction of state monopolies. But those last four are all parts of neo-liberalism (at least as I understand it) and yes, those four are what has been driving the increase in wealth and the reduction in inequality.

“What do you think global inequality is a sum of?”

It ain’t the sum of within country inequality, that’s for sure.

The Vox EU paper that the other post links to is in fact by the bloke, Sala i Martin, who helped us all understand this.

There are three different ways of measuring global inequality.

Concept 1. This is take the average income (or GDP per capita) of each country and calculate. However, this gives great weight to small countries. The 900 million of Africa for example are 54 data points, while the 2.4 billion of India and China are two. On this measure global inequality is increasing as Africa stagnates.

Concept 2. OK, weight the averages by population size then calculate. On this global inequality is falling. For Brazil, India, China and Indonesia are storming ahead, even is the 900 million in Africa ain’t. (This originally came from Sala i Martin’s work)

Concept 3. Take the entire global population and measure inequality that way: don’t use country averages. Difficult to do but yes, inequality is falling by this measurement although more slowly that by Concept 2. (From Branco Milanovich’s work.)

Please note that none of these various measures even take account of within country inequality let alone use them or are the sum of it.

Tim,

You’re looking at the wrong figures. The point is, what were Britain’s tariffs during the period in which we industrialized? I don’t have the time to check the figures now, but from memory, we had massive tariffs on the export of raw textile materials, and the import of developed textiles through much of the 19th century. Similarly, the US had import tariffs (again from memory) of up to 100% throughout the late 19th and early 20th centuries.

Your point about correlation and causation is a somewhat ridiculous one. It is impossible to prove causation. If I could find a way to prove any one thing had led to any other, then I would definitely deserve a Nobel Prize. But lots of people who argue for tariffs have – Stiglitz, Sen, etc, etc, etc.

Adam

“But lots of people who argue for tariffs have – Stiglitz, Sen, etc, etc, etc. ”

You’ll have to direct me to where they do argue for tariffs. And please do, I’d love to know where they have.

“Similarly, the US had import tariffs (again from memory) of up to 100% throughout the late 19th and early 20th centuries.”

I would here refer you to “Power and Plenty” by, among others, Kevin O’Rourke. He points out that tariffs are not, of course, the only barriers to trade. Transport costs are pretty important too. And during that supposedly high tariff period in the US (a period, we might add, when they were the largest contiguous free trade area on the planet) transport costs were falling so fast (steam ships and all that) that trade barriers were falling even as tariffs rose.

But maybe they don’t teach that at universities these days. Only a decade old, the research, far too knew to be taught to young and impressionable minds.

“new”, not knew……

Stiglitz talks about Tariffs loads, a quick google search reveals this example: http://www.globalexchange.org/campaigns/afta/3547.html

And your point about the speed of travel isn’t really that relevant. Similarly your point about the US being a large free trade area is not that interesting. In neither circumstance were we talking about the economies of some areas trying to become wealthier in a context of globalised capital. Also, there are areas of the US which still qualify for USAID funding, and the infant mortality rate in downtown Detroit is higher than that in Libya, so it’s hardly the best example.

and sorry to go for the cheap point, particularly, given my dyslexia. But if you are going to patronise me because of my age, please spell the word “new” correctly.

oh, sorry, I didn’t spot your correction

There are also lots of scientific and medical beliefs that we had in the 19th century that we now know to be wrong. We would not expect the developing world to repeat the same errors just because they are at the same stage of their development. They build upon knowledge already learnt. Just because we had tariffs is not an argument that everyone should do the same when our gained knowledge tells us that they must lead to a loss. Most of the big political battles in the 19th century in Britain was over free trade. The Tories were protectionists and the Liberals free traders. Some people gained through British tariffs but when free trade won, prosperity began to be relatively shared. Some people will always gain through tariffs but there must be a net societal loss.

I doubt anyone would consider Paul Krugman as being anything other than on the Left.

“If there were an Economist’s Creed, it would surely contain the affirmations ‘I understand the Principle of Comparative Advantage’ and ‘I advocate Free Trade’.

Most of the arguments against are implicitly Mercantilist and assume if one person gains another loses. Whereas we know in the absence of tariffs both sides gain. To advocate an export-oriented industrialisation through tariffs and an undervalued currency is indirectly to argue that people in the developing world should be poorer. The minority who work in the export sector will be better off but the majority who do not will be worse off.

Imposing a tariff will raise the price in the domestic market. Domestic consumption will decline. This will also increase domestic production. However, the loss by consumers will always be greater than the producer+ government revenue gain. Therefore, there is a net loss to that society. On the other side the producers who have a tariff imposed on them lose but the consumers in their economy gain. If Malaysia impose tariffs on British goods what they are really doing is transferring wealth from the majority of their population to their producers and British consumers. There will always be winners and losers but the net effect will be a loss compared to free trade.

The protecting infant industries and import substitution industrialisation argument is valid. However, it does not alter the fact that you are making the majority worse off. It is just that protectionists do not like admitting that is what they are doing. Moreover, it assumes that others will not respond by imposing tariffs on the protectionists.

“And your point about the speed of travel”

Ir’s not speed of travel. It’s cost of travel. The barriers to trade will be the costs of doing that trade, fairly obvioulsy. This can be thought of as having two components. The cost of the shipping and the man made costs like tariffs. The costs of shipping from the US to England (or vice versa) were very different indeed in 1850 (around that date that the ocean going steam ship first made it’s appearance if I’ve remembered correctly) and 1890 when such ocean going steam ships were commonplace.

Now it’s true that the US had high tariffs during this period and I think they raised them as well. However, the fall in shipping costs was so great that the total barriers to trade were falling over the same period. We can actually test this through what is called “price convergence”. If prices for a commodity in two different places are wildly different then we assume that there’s not much trade: or that trade is expensive (for transport of tariff reasons). Because if there weren’t such costs people would buy cheap, ship and sell expensive, something which would tend to equalise the prices. And if we see prices equalising then we qassume that people are trading in larger amounts and numbers.

And we have records from various commodity markets over this period that show us that prices were indeed equalising. We also have shipping records wshowing us how much trade was going on. And it was increasing hugely. So we have to assume that the real costs of trade were falling. And indeed they were, tariffs were high and rising, sure, but shipping costs were falling so far and so fast that total costs of trade were falling.

Which is why looking simply at US tariff levels to see their level of trade protection isn’t all that useful.

“Similarly your point about the US being a large free trade area is not that interesting.”

Erm, no. If we want to talk about whether free trade boosts economic growth then pointing to a place which is the largest free trade area on the planet having high economic growth is very useful indeed.

“In neither circumstance were we talking about the economies of some areas trying to become wealthier in a context of globalised capital.”

Actually we are. Late 19th century capital was quite possibly more globalised than it is now. The Latin American railways were almost all built with British capital by British engineers, just as one example (my own G grandfather actually being buried by one of them). The countries that became extant after the Bolivarian Revolutions all raised bond issues in London. Try reading some Keynes for how London’s financial markets spanned the globe.

The lessons of economic history do rather depend upon the details of that economic history.

“If this project goes ahead, we have no chance of avoiding runaway climate change.”

A very brave assertion to make now that the AGW hypothesis is starting to fall apart as it get examined by real scientists….

I don’t know if I could dislike them anymore than I do but with Tim W making excuse for all and sundry I think I will eek out a bit more hate.

Back in my day it was Barclays’ about S Africa. Not that it made a blind bit of difference to what happened in S Africa

Mmmm… yes history does seem to be missing constantly from your analysis Tim.

If you think it was student protests about Barclays bank that brought down apartheid, I suggest you read up a bit.

The point is, what were Britain’s tariffs during the period in which we industrialized? I don’t have the time to check the figures now, but from memory, we had massive tariffs on the export of raw textile materials, and the import of developed textiles through much of the 19th century. Similarly, the US had import tariffs (again from memory) of up to 100% throughout the late 19th and early 20th centuries.

Quick historian spiel – define your terms. I’m more or less in agreement with Hobsbawm about the economic impact of the industrial revolution in Britain – that although many of the basic technological innovations were in place in the late 18th century, it was not until 1830 or so that the effects were fully translated into the economic sphere (the 2nd industrial revolution had a more immediate impact).

The second point is that, following the repeal of the Corn Laws in 1846, British trade was made about as free as trade has ever been. The replacement of tariffs and duties with the income tax as a source of revenue saw the effective end of import duties – by 1880 there were only 20 commodities that bore duties, and 95% of the income from these was from tobacco, tea, spirits and wine. The argument that Britain retained any significant financial barriers to trade after about 1850 is simply incorrect. What duties remained were effectively luxury taxes on products whose demand was deemed particularly inelastic.

So, short answer – during the first period of industrialisation Britain had a generally high level of protectionism. During this period, economic growth was sluggish. During the mid nineteenth century, a combination of the second period of industrialisation and the near-abolition of protectionist policies led to very rapid economic growth. Britain is a bad example to use for the economic advantages of high tariffs.