Let's have fewer dumb, mercantilist ideas from our populist politicians!
Thursday, March 18, 2010
Public spending isn’t going to drive economic growth, but increasing exports will, according to the UK’s Secretary of State for Business, Peter Mandelson. He’s right about the former but not the latter because the most competitive UK firms thrive because of cheap imports. Cambridge Audio is a good example.
All the high-value and high-paid design and engineering happens here. And the cheap, low-value added assembly takes place in China. Other firms in the audio-visual market, where the UK has developed a competitive niche without complicated government plans, follow a similar production model.
Were low value-added manufacturing to take place in, and be exported from, Britain as per Mandelson’s plan, Cambridge Audio’s products would instantly be priced out of the marketplace. A modern, diverse economy in a globalised world benefits as much, if not more, from imports as it does exports. Here’s a call for fewer trade barriers – and fewer dumb, mercantilist ideas from our populist politicians.