The EU values political correctness more than jobs.

The result was a collapse in support for Angela Merkel, and the rise of AfD and FDP in Germany. Let’s not forget Marine Le Pen in France, Beppe Grillo in Italy, and the far right in Austria.

For the sake of political correctness, the EU is bound and determined to punish the UK for Brexit even though new studies suggest that a Hard Brexit Will hurt the EU More Than Britain.

The European Union will lose more than twice as many jobs as Britain after a hard Brexit, research by one of the world’s leading universities found as tough UK-EU divorce talks begin in Brussels.

Hard Brexit describes what will happen if the UK and EU fail to reach a divorce deal by 29 March 2019. Britain would revert to WTO tariffs on imports and exports to and from the EU rather than the zero tariffs afforded by membership of the bloc.

The return of tariffs to goods and services would cost 526,830 British jobs and 1.209 million jobs in the remaining 27 EU member states, according to researchers at Belgium’s University of Leuven, one of the top 50 global universities. The damage would lead to a 4.48% drop in UK GDP and 1.54% in EU GDP, researchers found.

Free Trade Benefits

As I have pointed out previously, a free trade agreement can fit on a napkin. Her is my proposal once again: “Effective immediately all subsidies and tariffs cease regardless of what any other nation does.”

The first nation that adopts that policy will see an enormous economic benefit.

Very few people fully understand free trade. Even fewer politicians understand free trade. One of the few who does understand is British MP Daniel J Hannon.

In a Telegraph Op-Ed Hannan writes By embracing free trade, we can use Brexit to make everyone better off.

Free trade is actually between individuals, not nations.

The following caption is correct.

Institute for Free Trade

On September 27, Hannan launched the Institute for Free Trade (IFT).

We want to use Brexit to boost global commerce. We have an International Advisory Panel made up of statesmen who successfully pursued liberalisation in their own countries, from Spain’s José María Aznar to Australia’s Tony Abbott. Brexit, after all, shouldn’t just be about having an engaged and global Britain; it should be about reviving a stalled world trading system.

Why does such an institute need to exist? Largely because, however successful free trade has been in practice, it remains counterintuitive.

In rich countries, people fear being undercut by lower wages. In poor countries, conversely, they fear being overwhelmed by superior technology. Logically, these worries cannot both be justified; and, in truth, neither of them is. Free trade between a rich and a poor country, as between any two countries, benefits both.

Excellent Set of Hannan Tweets

Better Deal For Everyone

Hannan’s last Tweet is my favorite of the group. Why not a better deal for everyone?

The EU is a customs union, not a free trade union. It promotes clean energy but puts tariffs and restrictions on solar panels and countless other items.

EU Hypocrites on Free Movement of Goods

Think goods move freely? Then think again. Please consider French Farmers Dump 90,000 Bottles Worth of Spanish Wine Because…Spanish!

EU Hypocrites on Free Movement of Services and Freedom of Establishment

In Germany, a license to bake cupcakes does not allow one to bake pretzels or donuts.

Freedom of movement is a downright lie. A prime case in point is Germany’s Apprenticeship System.

After 18 months of study, $2,200 in tuition and three exams, Ewa Feix is now permitted by German law to bake two variations of cupcakes.

“Not pretzels, not Black Forest gâteau, not bread,” said Ms. Feix, a Canadian who moved to Germany in 2009. Becoming a professional bread baker entails a three-year apprenticeship and more exams.

Germany’s thicket of rules and standards shields roughly 150 professions from competition, from ski instructors to well-diggers. Stiff fines await uncertified practitioners. German authorities conduct thousands of enforcement raids each year.

Ridiculous EU Rules

There are a lot of claims and counter-claims over Ridiculous EU Rules but Business Insider investigated. Here are the ones labeled true.

  1. Banana’s cannot be too bendy.
  2. It is illegal to claim water hydrates you on a bottle of water.
  3. Prunes cannot be promoted for a bowel function effect.
  4. Turnips cannot be labeled “swedes”, except in one place.
  5. Diabetics are banned from driving (passed but not enforced).
  6. Eggs cannot be sold by the dozen, they have to be sold by weight.

In regards to prunes, the EU ruled “The evidence provided is insufficient to establish a cause and effect relationship between the consumption of dried plums of ‘prune’ cultivars (Prunus domestica L.) and maintenance of normal bowel function.”

In regards to eggs, they can be packaged by the dozen, but the package has to include the weight. This is nothing but needless red tape.

The UK does not need any of this madness.

Fair Trade is Unfair

In response to every article like this one, I get slews of emails and comments along the lines of “I support fair trade”.

Such arguments are presented by people who want to drive up prices or protect their jobs at your expense.

Here is my counter-reply: Fair Trade is Unfair; In Praise of Cheap Labor; Are Bad Jobs at Bad Wages Better than No Jobs at All?

The unions howl they want “fair trade”. Fair to whom? The answer is fair to their self-interests, damn the enormous costs to everyone else.

China Doesn’t Play Fair!

Also consider Reflections and Reader Comments on Free Trade: “China Doesn’t Play Fair!”

My inbox and comment box are filled with reader comments and emails telling me “China doesn’t play fair”.

As part of that allegation, many point out Chinese pollution. I’ve written about that many times myself. Yes, it’s disgusting.

Let’s assume for a second that China is the one and only nation that plays unfair, or if you prefer plays the “most unfair.” Let’s also assume China subsidizes its manufacturers.

Who Benefits, Who Loses?

The logical conclusion of such an arrangement is the Chinese government is robbing its people for the express benefit of citizens of the United States.

There is no other logical conclusion. To subsidize exports, every person in China has to pay a cost, via taxation, pollution or both.

The winners are US consumers.

Reader Stuki eloquently explained the math in response to one of my free trade posts. He writes …

In order for a foreign government to subsidize one sector, it must necessarily pull the money from others, rendering them less competitive. Conversely, by subsidizing steel, the Chinese government is indirectly subsidizing each and every industry that uses steel as an input, in the US and elsewhere. While simultaneously taking that subsidy back from their home market companies, in order to pay for the steel subsidies.

So, the net result is the Chinese government subsidizing a low value add, albeit politically well connected, industry at home, while disproportionately subsidizing higher valued add industries abroad. Any way you look at it, it’s a better deal for foreigners than for the domestic Chinese. Which shouldn’t come as a surprise, because, as Friedman has pointed out, the Chinese government is taxing it’s own people, in order to pay for free gifts to foreigners.

If we would only be so lucky…… Of course, the Chinese collectively aren’t nearly stupid enough to not understand that. So the whole “subsidize” gift we’re supposed to be getting from China is, in reality, nothing more than the figment of some congressman-on-the-take’s imagination, planted there by the lobbyists for whatever LBO shop happens to have bought the steel maker that paid for his campaign.

Problems with Free Trade?

There are no problems with free trade, but there are two rules that prevent free trade.

  1. Every country wants free trade for exports
  2. No country wants free trade for imports

“Fair Trade” is a concoction by industries that seek or need protection via tariffs and import restrictions, to the damage of everyone else.

It is absurd to have everyone pay triple for underwear to “save 500 underwear manufacturing jobs” but that is precisely what the “fair trade” advocates seek.

Steel tariffs, Trump’s current hot button, constitute a similar story.

Steel tariffs may protect a small percentage of jobs in the steel industry (at best), but that is at the expense of auto manufacturing, fence manufacturing, etc. jobs, as prices rise everywhere else.

Fair Trade Irony

Finally, think of all the trucking, shipping, and shelf-stocking, and refueling jobs lost when trade slows because of protectionism.

Ultimately, the only “fair trade” is “free trade”.

Mike “Mish” Shedlock