poolie wrote:I agree the theory of competitive advantage is working well for the EU in its trade balance with the UK providing a lot of jobs and wealth for those with the Trade surplus.
You still need to make your point clearer. Simply pointing out the trade imbalance isn't enough. As you note, we benefit from a services surplus; I presume you think this doesn't matter? The issue with a trade deficit is what this means for capital flows. But capital flows for a number of different reasons, not just trade. And as any economist will tell you, to judge the performance of any economy on one simple measure is a false judgment. Economies can, and do, thrive on a trade imbalance. No economy operates with all the major indices in the black; the aim, from a macro-economic perspective, is to find some balance that leads to a healthy economy. Focusing upon one measure is just daft.
On the trade deficit, you're making it sound like we're developing country who needs to take a protectionist stance to protect our vital industries. If you know anything about macro-economics, you'd know fine well the converse to the theory of competitive advantage; it leads to the most efficient allocation of resources. To put that in simple terms, stuff costs less and/or is of a better quality. As Bluestreak jokes above, we may not have an indigenous car industry like we had, but that could well be simply because others do it better. As consumers, we get a better product. From an economic perspective, the theory of competitive advantage suggests that we focus upon what we're good at, facilitate cross border trade (you know, that free market in goods, services, and free movement of capital stuff) and deal with the problem of capital loss in other ways in a global economy.
And there's the other side to your stats on the EU trading pattern; what's going to happen to the prices of those good we import post brexit? If we crash out on WTO terms, who ends up paying the increase in prices due to tariffs? Please don't just say we'll buy them from elsewhere, as the same WTO tariffs will apply. And more importantly, we have huge supply chains that focus upon our current trading arrangements. They can't be replaced overnight. And what about the goods and services we export; will they remain competitive in the EU market when tariffs have been added to them?
I think we can agree that I don't need to look up what deficit means.
I work in a Uni yer knar. Someone has to empty the bins.