Protection racketeering

I have just been engaged in a correspondence in the FT. I argued that Brexit needs to begin by getting ourselves outside a tariff wall. I was challenged with this comment

“The EU’s tariff wall is what is protecting us. Countries like the US can decimate the British wheat farmers. Japan can decimate the UK car industries (by switching the production back to Japan from the UK) and the US can do the same. New Zealand can destroy the British sheep and dairy farmers. You wouldn’t remove your firewall from your computer. Why should the UK remove our EU’s tariff wall?“

My response was

“You have eloquently made the case against living inside a tariff wall. If countries like the US can decimate the British wheat farmers, 10% of British wheat farmers are uneconomic and should go over to some other production, which would probably be animal husbandry or forestry. Amongst other things, this would protect soil fertility. It is not environmentally sustainable to force grain production on land for which it is inherently sub-optimal. A further gain would be reduced prices ie cheaper bread in the shops. How could that be a bad thing? There is no more justification for protecting uneconomic production of wheat than there is for protecting uneconomic production of coal. You could use the same argument for reopening deep coal mines producing at above world cost, even if it would mean everyone having to pay more for their electricity.

“You say that Japan can decimate the UK car industries (by switching the production back to Japan from the UK) and the US can do the same, but why would it do that? Labour costs are higher in Japan – with the reduced price of sterling, production in the UK is advantageous. Car production worldwide is also partly geared to the markets for left-hand and right-hand drive cars. There is more likelihood of a switch to Eastern Europe or India.

“To claim that New Zealand can destroy the British sheep and dairy farmers is saying that people are being forced to buy expensive lamb, beef, butter and cheese when cheaper food is available. How can that be a good thing? It also means that land is being over-exploited, when there are more economic uses such as forestry, or else the land is sub-marginal and should not be used for anything at all. Keeping marginal land in use results in an overall economic loss.

“A firewall is to prevent harmful unwanted material from getting into a computer. Wheat, cars, lamb and butter are products that people want. You would not disconnect your computer from the internet, or deliberately put in a low-speed modem.

“So why should the UK remove our EU’s tariff wall? To give UK customers, both consumers and manufacturers, access to the best value products and raw materials available on world markets. To do otherwise results in damage to the UK economy and results in an overall economic loss. This cripples the ability of the economy to perform as it could and should. Where retail prices are higher than they would otherwise be, the effect is to put pressure on wages and makes UK manufacturers less competitive.

“What is described as protection is protection as in ‘protection racket’. The only beneficiaries are the handful of uneconomic producers referred to.”