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| Version 1 | Version 2 |
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| Europe is not declining, the rest of the world is catching up | Europe is not declining, the rest of the world is catching up |
| (about 1 month later) | |
| Terry Smith's denunciation of the EU raises more questions than it answers (Lose the ball and chain, 2 March). He asserts as a "fact" that the EU is "the least competitive trading bloc in the world", yet also tells us that the UK has a trade deficit with the rest of the EU of £55.7bn. If these countries, despite being so uncompetitive, have managed to export so much more to the UK than we have exported to them, what does that tell us about the UK's competitiveness? Presumably, it means that the UK is even more uncompetitive than "the least competitive trading bloc in the world". | Terry Smith's denunciation of the EU raises more questions than it answers (Lose the ball and chain, 2 March). He asserts as a "fact" that the EU is "the least competitive trading bloc in the world", yet also tells us that the UK has a trade deficit with the rest of the EU of £55.7bn. If these countries, despite being so uncompetitive, have managed to export so much more to the UK than we have exported to them, what does that tell us about the UK's competitiveness? Presumably, it means that the UK is even more uncompetitive than "the least competitive trading bloc in the world". |
| If this is correct, the only advantage in leaving the EU would be that we could then shelter our inefficient domestic producers by imposing import restrictions against our former EU partners. However, quite apart from any retaliation that this might provoke, it is generally accepted that import restrictions, by reducing competitive pressure, tend to reduce the efficiency of domestic industries. Probably not the outcome Smith wants. The underlying and fundamental problem with Smith's analysis is its implicit assumption that the competitiveness of a nation is analogous to the competitiveness of a corporation or an industry. The fallacy in this regrettably common approach has been exposed with wonderful clarity in many writings by Nobel laureate Professor Paul Krugman. Just type Krugman national competitiveness into your web browser. Geoffrey Renshaw University of Warwick | If this is correct, the only advantage in leaving the EU would be that we could then shelter our inefficient domestic producers by imposing import restrictions against our former EU partners. However, quite apart from any retaliation that this might provoke, it is generally accepted that import restrictions, by reducing competitive pressure, tend to reduce the efficiency of domestic industries. Probably not the outcome Smith wants. The underlying and fundamental problem with Smith's analysis is its implicit assumption that the competitiveness of a nation is analogous to the competitiveness of a corporation or an industry. The fallacy in this regrettably common approach has been exposed with wonderful clarity in many writings by Nobel laureate Professor Paul Krugman. Just type Krugman national competitiveness into your web browser. Geoffrey Renshaw University of Warwick |
| • The population of the world is somewhat over 7 billion. Over 4 billion live in Asia, but only 500 million in the EU – about 7% of the world's population. If we are collectively achieving 19% of global GDP, then that is pretty good. One reason why Asia and some other parts of the world now take an increasing share of GDP is that they are catching up with Europe which experienced, in the main, its industrial and commercial revolution in the 19th and early 20th century. Most people would consider it a good thing that more of the people in those parts of the world were being lifted out of poverty. | • The population of the world is somewhat over 7 billion. Over 4 billion live in Asia, but only 500 million in the EU – about 7% of the world's population. If we are collectively achieving 19% of global GDP, then that is pretty good. One reason why Asia and some other parts of the world now take an increasing share of GDP is that they are catching up with Europe which experienced, in the main, its industrial and commercial revolution in the 19th and early 20th century. Most people would consider it a good thing that more of the people in those parts of the world were being lifted out of poverty. |
| This, of course, entails them having a larger (and fairer) share of global output. After all, in 1905 nearly 100% of cars would have been owned by the upper class. These days they would only own a tiny percentage of the total. No one would seriously consider this as a premise for arguing that the upper class had lost virtually all of its money and power though. Kevin Cunnane Norwich | This, of course, entails them having a larger (and fairer) share of global output. After all, in 1905 nearly 100% of cars would have been owned by the upper class. These days they would only own a tiny percentage of the total. No one would seriously consider this as a premise for arguing that the upper class had lost virtually all of its money and power though. Kevin Cunnane Norwich |
| • City broker and fund manager Terry Smith informs us that membership of the EU damages competitiveness because "we are forced to import the labour practices and regulations" of Europe (if only this were completely true), and recommends aligning ourselves with Singapore and the US. Europe has given British workers the right to four weeks' paid holiday each year. In Singapore, the entitlement starts at seven days and rises to 14, while in the US there is no right to paid holiday. As with David Cameron's demand for repatriation of powers over employment rights so that they can be reduced, these claims by a member of the rich 1% are an attack on the 99%. Christopher Clayton Waverton, Cheshire | • City broker and fund manager Terry Smith informs us that membership of the EU damages competitiveness because "we are forced to import the labour practices and regulations" of Europe (if only this were completely true), and recommends aligning ourselves with Singapore and the US. Europe has given British workers the right to four weeks' paid holiday each year. In Singapore, the entitlement starts at seven days and rises to 14, while in the US there is no right to paid holiday. As with David Cameron's demand for repatriation of powers over employment rights so that they can be reduced, these claims by a member of the rich 1% are an attack on the 99%. Christopher Clayton Waverton, Cheshire |
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