Belfast Telegraph

View from Dublin: What Jonathan Swift would say about Brexit

Jonathan Swift
Jonathan Swift

By Brendan Keenan

Were he still around, Jonathan Swift would surely be furious that he has been left so much out of the Brexit debate. As well as being easily offended, he was a mighty warrior when it came to matters of trade.

He had much to be furious about at the turn of the 17th century. The ever-changing constitutional question gave Ireland and England the same king - which meant government then - but two kingdoms. The English used that difference to try to kill any Irish products which competed with theirs, even in overseas trade.

Swift's call for retaliation - "Burn everything English, except their coal" - may be his best-known quotation . We have not heard it used much this time, although it was the popular mantra during the Anglo-Irish "economic war" of 1932.

Of course, we do not have a trade war - yet - just patriotism. A better quote for current Irish policy might be John Healy's description of the economic war: "When the farmers killed the calves for Dev."

The Anglo-Irish "war" was not about trade either. It was about who should pay compensation to landlords for purchase of estates in the 19th century, but it ended in trade retaliation .

If the UK should leave with no deal and end up under World Trade Organisation rules, it would not be because of a trade war between Britain and the EU. But the effect would be the same.

Elsewhere in the world, trade is dangerous politically. Those 17th century English merchants may have been unkind, but they used what seems like common sense - protecting their business against foreign competition. Today, Donald Trump and Xi Jinping would agree with them, one openly and the other surreptitiously.

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Standard economic theory holds that, on this at least, common sense is misleading. Overall, it says, we are better off if trade is not restricted by tariffs, quotas and regulations.

The EU has applied these ideas to a unique degree with the customs union and single market - although it was inspired by much more than free trade theory. The consequences are the same though, whatever the motivation. Some of them overturn common sense a bit too.

The controversially topical speech by Irish President Michael D Higgins sees a bias in favour of business and finance in the make-up of the EU. He seems to regard this as a deliberate choice, inspired by the power of money. Some of it undoubtedly is, but much else is unavoidable. One cannot have free markets without a lot of freedom for business, or have free movement of workers without some freedom for employers to hire and fire.

The system for keeping markets open and fair is tried and tested. But turn the glass one way, and it looks like rampant capitalism; turned the other, a great Brussels bureaucracy is stifling enterprise.

There have been relatively few attacks on the EU system itself in the UK debate - it's been more a case of whether Britain needs Europe more than Europe needs Britain.

The best Brexiters can come up with is that Britain will do better outside the EU, rather than a ridiculous claim that it has been harmed by the single market.

Outside Europe, 17th century common sense is re-asserting itself. Free trade is being seen as foreigners taking advantage of one's generosity. The old slogans of buying less abroad and making more at home are back in vogue.

Those slogans had their heyday in the 1930s and into the 1950s. Since then, freeing up trade has been a great agent of change. IMF analysts believe that trade integration - in particular the growth of multi-national supply chains - has been the biggest factor behind the falling prices. The extraordinary integration of the EU has been laid bare by the attempted Brexit dis-integration but the same process has been at work everywhere.

The arguments over the effects of free trade and globalisation often miss one important point - that they have been of enormous advantage to those on lower incomes. In rich countries, the dramatic fall in the real prices of manufactured goods has been a major boost to living standards.

In developing economies, especially in Asia, the effects have been even more dramatic. Tens of millions have moved from near-starvation subsistence to western standards of prosperity.

But no one now disputes there have been losers as well. The doughty champions of free trade at the IMF concede that globalisation must be accompanied by enhanced social protection and training for displaced workers to mitigate the downside.

There may be more to it than redundant industrial workers. The market power of large companies has increased, not diminished.

The single market and the single currency disguise imbalances between member states and keep them out of political debates.

Actions since the euro crisis have reduced those imbalances through changes in domestic polices, since tariffs are not allowed. However, they have largely been policies of restricting consumption in the deficit countries rather than improving productivity.

That may not be sustainable. It is a great achievement that one EU country cannot deliberately restrict sales from another. It would be an even greater achievement if surplus member states could be persuaded that the others need to be given competitive advantages to enable them to sell more.

On that basis, perhaps Dean Swift should have said "burn English coal more efficiently" - only he would have found a much better way to say it.

Belfast Telegraph

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