Thursday, 9 April 2020

Self-Sufficiency: Good or Bad?

Our old friend Sackerson and I have periodically debated between ourselves what attitude one should take as regards national self-sufficiency.  On the one hand, to be dependent upon imports for any vital need is to offer a hostage to fortune in difficult times.  The very concept of the nation-state is often identified with this situation.  Only when man (or proto-man) existed in isolated and self-sufficient communities could reliance on trade be thought of as irrelevant.  On this analysis, nation-states exist when, and because of, the move to specialisation and trading, which requires the thus-extended and non-independent communities to organise in such a way as to (attempt to) make this a viable state of affairs.  Sometimes, typically in warfare or conditions of famine etc, such arrangements fail.  History is littered with case studies, Germany in WW2 being a fine example: suppose the Third Reich had been self-sufficient in raw materials ..?  Today, China is endlessly nervous about its own dependencies on imported raw materials - just as we are about their monopoly on rare earths.

On the other hand: given this potentially fatal outcome, why do people surrender their self-sufficiency in favour of specialise+trade at all?  Because it is a thousandfold more efficient to do so - in "normal" times!  Even George Monbiot rapidly tired of life as a subsistence farmer; and many on the green-left reject what is termed "deep adaptation" (= living in caves).  All capitalist instincts (and not just doctrinaire capitalism either) speak in favour of doing what we're good at, and buying those wonderful things someone else excels at.

So - how is the balance to be struck?  How does a government decide what percentage of, say, the country's electricity should be generated within its own borders, or (a similar problem) how many rarely-to-be-used snowploughs should litter one corner of Heathrow airport?  How much Risk Capital should a bank hold?  How high should the Dutch dykes be?  Or how big should be our armed forces, to rectify matters when "normal" affairs get out of hand?  In the abstract:  how much of our resources should be tied up, how much potential comfort should we forgo today, against adverse future contingencies?

Let's cut to the chase: we are on a continuum and there is no definitive socio-economic calculation to be done.  There is indeed a ton of maths and modelling we can do, with Nobel prizes on offer for advances in technical Risk Management analysis - but the basic inputs include critical and wholly subjective judgements**.  So nobody should get hung up over what can be portrayed as, or mistaken for, a science.  Only towards the very ends of the spectrum can anything strong be stated, e.g. (a) the Vatican isn't a viable state, and needs to be embedded in something a lot bigger;  (b) Canada is very fortunately placed, and very unusually so (and even Canada is somewhat parasitic on the USA for defence);  and (c) the dykes had better be higher than the average high-water mark.

Covid-19 makes this otherwise rather academic debate ultra-real; climate change ditto.  (For example: we may note that in some quarters it seems to count as wicked not to be self-sufficient in ventilators and virus testing chemicals; but just fine to depend on migrants to staff the NHS ...)  And when it comes to reordering the world in due course, some highly motivated parties will be competing for control over those "critical and wholly subjective judgements".  

We can at least be grateful they won't include Bernie Sanders^^ or John McDonnell.

ND
____________________
**  Another post, maybe.  I can bore for England on this
^^ Definitely another post!  There are fascinating developments on the lefty front

32 comments:

Sackerson said...

And we got rid of our strategic food reserve in 1995. I've tried to find confirmation online for my memory of an old Greek saying, 'There is no borrowing a sword in time of war.'

Also, Ricardo's theory of comparative advantage goes out of the window (from the top floor) when you trade with someone who can undercut everything you do, especially when they hold down the exchange value of their currency.

DJK said...

Ricaro assumed that trade was always balanced, but we've run a trade defecit for may years now. We gave up trying to grow all our own food about 200 years ago, and so far, that's been the right decision, with great prosperity resulting.

If reports are true then it seems the govenment has finally given up on trying to buy ready-made C19 antibody tests from China and is encouraging British manufacturers to develop a proper home-grown test. I don't think this will be the last aspect of the "buy everything from China" policy that will need to be reversed.

Mark Wadsworth said...

a. This is the "efficiency vs resilience debate". Which has you say has not absolute right or wrong answer. But is interesting to think about.

b. As to 'self-sufficiency', as you might expect, there is an inverse ratio between size of a country and the % of its GDP that relates to imports/exports. Farage often boasted that Norway and Switzerland do more trade with EU member states (per capita) than the UK does. Well duh. Austria does more trade with Germany (per capita) than Germany does with Austria.

Brazil is actually the extreme opposite of the Vatican, being very large and fairly isolated, imports or exports are a tiny % of GDP.

Sackerson said...

@DJK: We have run a trade deficit with the EU for all years since joining the 'Common Market' in 1973, except for 1975 when we had the first referendum (and I suspect that figures were carefully massaged to look unthreatening in that year.) The results, I expect there are many others who will be more able to enumerate.

If we strip out the increase in public and private indebtedeness that has funded our prosperity perhaps the latter will appear illusory, or at least very fragile.

Thud said...

Companies will of themselves reduce dependency on China and the Govt will belatedly act accordingly. After a few years not all will be as should be but certainly better than now. I'm not sure how individuals not buying Chinese made goods will impact supply lines but I doubt I'm alone in trying to not buy shoddy crap.

Bill Quango MP said...

WW2 throws up great examples for study. Imperial Japan being the best one. In 1938, demolished wooden buildings in japan would have their nails removed, for scrap metal value. For national stockpiling. That’s a pretty desperate place to be. Scrounging around for rusty nails.

The uk adopted a Time vs Risk approach, pre war. Rearmament went Royal Navy. RAF. Army.

The UK went into WW2 with a chronic shortage of convoy escort ships. A problem that had been so acute during the previous war, it should have been unthinkable that it could happen again.

But it was a deliberate policy. The time, materials and capability risk.

A battleship construction project was at the very top end of an industrial nation’s abilities. Requiring huge investment in manpower. Materials. Scientific work. Arms manufacture. Ship building engineering, navigation, fuel systems, propulsion, naval ship design. Armour manufacture and on and on.

In its day a battleship was the most expensive of any military project. Most demanding and took the longest time to complete.

He’s Prince of Wales was a brand new design battleship , laid down on 1/1/37. Completed and ready for active service, on 31/3/41. At the time of her encounter with Bismarck, two months later, she was still far from ready for action. And suffered many mechanical and technical failures on that action.

HMS Penn, a P class destroyer, was one fortieth the tonnage of HMS POW.
Laid down on Boxing Day 1939, she was one of the first ships to be built under the wartime emergency program. Being largely the same as the preceding O class destroyer class, she could be built very quickly in shipyards.
Commissioned fully into fleet service, February 1942.

A battleship took four years to build and deploy. A destroyer, two years, on average. And forty destroyers could be built for the same materials as a battleship.

So the Royal navy had ready to fight its largest ships, and rapidly built the smaller vessels. Which was far easier to do throughout the empire and commonwealth. Who could not build ships much larger than a cruiser. But managed a very successful small ships construction program.

So it is with ventilators. If we need them. We can build them fairly quickly. Quick enough that stockpiling them would not be beneficial over the longer term. The time factor should play a significant role in risk management decisions.

Raedwald said...

Yep. There is a sort of basic level of expertise you need in the country - how to machine steel, how to extrude plastic, how to grind lenses - that can seed the expansion of war or crisis industries, and Germany post-1943 was a good example of how a country can survive on ersatz if it has technical skill.

And there will be minimum levels of everything. What could we scrape by with in utmost emergency? 1,000 calories a day each? 1,200?

But one key attribute we must ensure is hard-wired into our people is the sort of agility, endeavour, ingenuity and inventiveness that would allow us to adapt rapidly in time of warfare or other great stress. Again, the German army set an example in ensuring that every sergeant could do a lieutenant's job, every corporal a sergeant's job and every private soldier a corporal's job. We've lost some of that ability; new professionals in construction and civils have learned to apply cut and paste standard solutions from the codes rather than work stuff out (partly I have to say because no one is prepared to take the risk of designing something themselves because of the risks of tortious liability) with the consequence that if you face them with a novel challenge not provided for in the standard designs they're buggered.

In the end it comes down to how good our people are, not how comprehensive our resources.

dearieme said...

"with Nobel prizes on offer for advances in technical Risk Management analysis": counterfeit Nobel prizes, surely?

"the Vatican ... needs to be embedded in something a lot bigger": oi, cut out the filth, son!

As for autarky surely it's the art of the possible. If you are thinking of war a la the Second German War then our undersea gas and oil pipelines would presumably be destroyed by the enemy PDQ. So what should we do? We could, for example, have huge stores of coal at coal-fired power stations. But we've destroyed these stations ourselves, and we know we couldn't depend on coal mined in Britain because (i) there's not much left, and (ii) the miners proved in the 70s and 80s that they'd blackmail all the rest of us in such circs.

And so you'd have to inspect case after case, for scenario after scenario, asking what we could usefully do. I don't have any objection to that except that it would be done by civil servants and there be done badly.

E-K said...

Surely the size of your population is key to this.

The size of ours - combined with the growing dependency on globalisation (in fact impossible *without* globalisation) - has caused me much anxiety over how we'd manage with a black swan looming over us.

We are not yet getting real about our choices over Covid 19. That we don't actually have any choices.

We (the West) will be forced out of lockdown - *because* of globalisation - before we are ready.

Otherwise we in the UK are a bit fucked.



------

The Tory bashing over lack of PPE etc...

The Left present a total and utter reversal of the truth as usual. The NHS was not underfunded, funding went up and up under the Tories. The NHS was wildly successful - too successful for both our and its own good.

It had kept alive a huge population both aged and with life threatening illnesses. As it turns out Covid 19 preys on these very illnesses.

I'm not saying the NHS shouldn't have saved people (though I dislike it enabling poor lifestyle choices.) All I'm saying is please don't tell us that Germany,China,Sth Korea are better.

The NHS could have stocked vast amounts of PPE (with a short shelf life needing replacement if used or not) and test gear but it's likely that granny and Billy Bunter would have had to go long before Covid 19 arrived because of that expense.

Nessimmersion said...

EK, the BBC puff piece below is an example of how the NHS/BBC class sees our health service, as you we will see we come top in all the outcomes apart from one - mortality or the chances of surviving your encounter with the wonder of the world.
In terms of ONS stats on Covid so far, Hector Drummond is doing some really good work and not finding anything to indicate other than our over reaction so far to the Great Panic has been driven by hysterics and doom mongers.

https://www.google.com/amp/s/www.bbc.co.uk/news/amp/health-40608253

https://hectordrummond.com/2020/04/08/what-can-we-expect-from-the-weeks-14-and-15-graphs/

In terms of NHS spend, the annual pissing away of 4.5 billion by PHE and its equivalents could have been spent a lot better, even if returned to the taxpayers pockets.

E-K said...

Nessimmersion - I'm talking about the vast numbers propped up on drugs issued by GPs and clinics. Not necessarily those who go in for surgery and become fatally infected or die through accidents.

E-K said...

The Toby Young links in that Drummond blog are worth some consideration !

BlokeInBrum said...

The hollowing out of our manufacturing industry by the Chinese et al is going to come back and bite us in the arse. Perhaps this may prove a wake up call to those in power that outsourcing some pretty fundamental aspects of a modern economy to our competitors is possibly not the best idea in the world.
We keep on being told that we are a knowledge and service based economy now, which is all well and good. But we invite hordes of foreigners to our universities to learn how we do things, and the Chinese simply steal what IP they want anyway. Without an advanced manufacturing base, with all the concommitant know how, how are we to generate the future knowledge to keep us ahead of all the other economies nipping at our heels?
At one point in time, questions were asked in the House of Commons when our balance of trade was out of whack. Today we seem happy to run immense deficits and to be in hock to some unsavoury and unpleasant regimes.
We have been coasting for some time on past glories, perhaps it is time for our betters to stop navel gazing and feathering their own nests, and maybe act to secure the long term future of the uk.

Carl Edman said...

Perhaps there is a case to be made for protectionism in certain goods that will be vital in emergencies and would otherwise be blocked by hostile powers; just as there is a case to be made for protectionism in infant industries. And there is a case to be made against it.

But these arguments are largely irrelevant because such schemes are unachievable in democracies (or any other form of government than that mythical benevolent dictator).

Invariably protection will be given not to those confined categories. Domestic suppliers in these areas either don't yet exist or are "infants." They don't have employees across the country to pressure representatives. They don't have money to lobby them or launch public relation campaigns.

Instead, protection will be given exclusively to exactly those decrepit, but wide-spread and existing, industries which have the least justification. That is why even a relatively well-governed country like Canada has a Strategic Maple Syrup Reserve but no Strategic Face Mask Reserve.

So the argument is moot. Let's try to hold the door on protectionism shut as much as we can for everybody. And let's deal with the potential for shortages during emergencies by mechanisms less susceptible to capture, like stock-piling if necessary, and above all by allowing the price system to function by abolishing stupid, counter-productive, popular laws like those against "price gouging."

Carl Edman said...

I should add that laws against price gouging are a cause of the lack of private, voluntary stockpiling of emergency supplies.

Why would I stockpile any emergency supplies beyond the immediate needs of my business? I just incur the unneeded expense of carrying the inventory, capital, storage, spoilage, etc.

The only reason a rational person would stockpile emergency supplies against such a rare contingency is that they could sell them at great when such a rare event occurs. And the rarer the event, the greater the premium has to be.

But in almost all of the US (and much of the world, I believe) such private provision at a premium during the event is illegal. And everywhere extremely unpopular, likely to get you lynched or robbed (by mobs or the state).

Of course, when the event occurs the lack of private stockpiling will just be one more proof of failure of the market system and the need for the Courageous State to take even more action.

Nessimmersion said...

Agreed on Toby Young in the critic, much more needs to be done for the people taking a hit in the pocket for this shutdown.
Perhaps all those on secure taxpayer funded pensions should donate 20 % of their pension to those less fortunate?

E-K said...

Agreed. I spoke to a police officer's wife the other day. "We're alright. We're on a police pension."

My earlier point, Nessimmersion

My mum was crippled by the NHS aged 50 and is kept alive in a poor condition on a cocktail of drugs. My dad was misdiagnosed with prostate cancer but was kept alive in a pitiful condition on a cocktail of drugs.

In the end I was screaming "WHY IS HE STILL ALIVE ??? HOW IS HE STILL ALIVE ???"

I did not go out to applaud last night. The NHS is now politically weaponised.

Your links point out correctly that the Govt has put £500,000 per year of extended life into COVID-19 (excluding lives lost to other illnesses now being ignored, the cost of the economic depression to come)

NICE only ever put £30,000 per year of life extended - and no-one ever complained about it.

We are in a pissing competition with other countries to not be the worst COVID-19 death rate.

This is all about egos.

Raedwald said...

Good idea, Nessimmersion. I'll ask the ex-dinner lady down the road who gets a £5k a year pension for her 40 years of work.

Or those like my late father who had an army / war disability pension after putting their lives on the line in combat.

Or did you have a minimum annual value or other conditions in mind?

Nessimmersion said...

Raedwald how about any amount over state minimum, as the bloke who used to drive a forklift for the local feed mill, on a Defined Contribution Scheme, was due to get 4K a year but now it's 2K.
Actually the simplest way to do it would be to value all public sector pensions on the same basis as DCS, i.e. what it would cost to get that pension from L&G right now.
That would end the bizarre situation where the private sector poor are working longer to fund early retirement for the privileged Higher ranks of the public sector.

YDG said...

BQ

I always enjoy your historical pieces, and I think you make a particularly
good point with ...

"The UK went into WW2 with a chronic shortage of convoy escort ships. A
problem that had been so acute during the previous war, it should have been
unthinkable that it could happen again."

This is all too relevant to where we are now. Covid-19 is not a black swan
event. We've already had SARS, MERS and Ebola - that I know of. So, we also
have to expect that even when/if the current epidemic is brought under
control, it won't be _that_ long until the next one eg less than a decade. The
UK's abject failure to prepare for the easily foreseeable U-boat war of WW2
does not inspire confidence. I fear that we are a year or two away from Blair
like creatures crawling out from under their stones to insist that Covid-19
was a once-in-century event and we mustn't let that never-to-be-repeated event
jeopardise globalisation and open-borders.

Timbo614 said...

@E-K,
On the other hand, I would have buried my wife of nearly 50 years at 65 recently if it wasn't for the NHS. True I had to "keep on at them" especially the GP who didn't seem to be able to see what I could see happening in front of my eyes.
Eventually I gave up with the GP and took her to A&E. True again, it took 12 hours waiting for each doctor, specialist, test or scanner in turn but at the end of that day we had a diagnosis, terrible though it was.
After that the "system" took over and I don't have any further complaints.
That awful day was now 8 months ago and my now healthy wife and I was out clapping (and blowing my air-horn) last night. Damn right I was!
I don't give a sh*t for the politics. Given the choice of the economy or just the one person closest to me, goodbye economy.

Sorry Kev for your bad experience, but take a wider view.

Anonymous said...

YDG - to paraphrase the US Army Chief Of Staff after 14 of his men were shot dead by a Muslim officer

"Tragic as these deaths are, if globalisation became a casualty, I think that's worse"

Anonymous said...

@kev - seen, and had, similar occurrences in both the public and private sectors.

That's not an issue with the NHS, it's an issue with medical professionals full stop. Private healthcare practically crippled an in-law, arses were covered, evidence was "lost"

There's an arrogance that needs tackling, and a genuine enforcement of rules along with heavy consequences.

I get that being in medicine isn't easy, there can be umpteen reasons behind symptoms, you don't see people at their best, and being human, mistakes will happen. There's just a misplaced view that owning those mistakes, admitting that sometimes the outliers happen, would damage confidence. So "lessons learned" is spoken, and rarely ever are.

Personally, I have more confidence in people who accept they can be wrong, accept they can fail, and choose to learn from those errors rather than adopting the stance many in the medical profession do, and we keep seeing the same mistakes getting repeated.

The NHS does need depoliticising, and would serve the government well to take advantage of the current situation to do just that. But that also means being prepared to justify things, and stop offloading responsibility and redirecting blame.

Let's not forget the likes of NICE are there so the government can tell people it's not *their* fault. Same with so many quangoes.

The British government has a recent history of evading governing, offloading such things to Brussels and any organisation they can dream up so as to reduce the number of things voters can hate on them for.

We even moan about Ministers being "captured" by the civil service, but they don't seem to be trying to evade capture very hard.

There is a deep rot at the heart of politics, and it appears to be our politicians.

Anonymous said...

As for the question of trade vs self sufficiency, surely it's not an either/or proposition?

The sin would appear to have become so reliant on single sources, which has many sources of blame, including the "lowest price" mentality.

Perhaps it's time to start have rules on what %age of a good can be sourced from a single, foreign, nation or economic bloc? Security, after all, comes from plurality. Self sufficiency just changes *who* can take you hostage, rather than remove the threat.

Add to that a minimum amount sourced internally, even it means having a nationalised source, with the capability of scaling up where possible, allows for flexibility and security of materials?

BlokeInBrum said...

The point of having a mergers and monopolies commission is to help the free market operate properly by preventing individual institutions become overly dominant. On a global scale, we used to do similar with tariffs etc to stop foreign competitors from undermining and undercutting domestic companies. Of course what happened then is that it overlapped with protectionism and inefficient and poorly run companies were allowed to continue to bumble on with tax payer protection to all our detriment.
There has to be some happy medium surely, where domestic industries are allowed to grow and prosper and given proper protection from foreign companies without it becoming a corrupt midden with political connections determining the winners and losers.
Already we have kissed goodbye to our domestic energy industry, our steelmaking industry and a whole lot more besides. I don't believe it's a good idea to sacrifice our country and our culture on the altar of globalism. There is more to life than simply pursuing ever greater GDP figures (which are massaged anyway) at any cost.

Anonymous said...

"There is more to life than simply pursuing ever greater GDP figures (which are massaged anyway) at any cost."

Our real GDP has gone up by 50% since 1997, but real median male wages are down, and real house prices up 250%.

As GDP and standard of living become more decoupled, so does the press concentrate more and more on the former, and less and less on the latter. When did you last hear a politician talk about standard of living?

Nick Drew said...

Anon @ 11:11 - As for the question of trade vs self sufficiency, surely it's not an either/or proposition?

Just so: another post on this to follow

BlokeInBrum said...

It's nice that we are all richer due to a sustained increase in GDP. We certainly all own nicer stuff, plenty of gadgets and hi tech gear, and have had the advantage of cheap travel etc.
But I grew up in the 70s and 80s, I never felt in any way impoverished. Dad was able to support a stay at home mum and kids on one salary at home. We never had a luxurious lifestyle, but again we never knew any better. Stripping away all the baubles, are people better off today? I think in many ways we have gone backwards as a society. Here in Brum I have genuine concerns about the safety of my kids as they grow older and become more independent. Never mind the risk of becoming saddled with enormous debt just to get a third level education. A minimum prerequisite to get your foot in the door of a profession nowadays.
Corona is hopefully going to kick off a sustained series of reckonings which arguably the whole Brexit debacle started. First with the accountability of our politicians and civil service.
Secondly with the uselessness of our media. Also with the fact that we are saddling future generations with enormous amounts of debt.
Many crows are coming home to roost and it's about time that we dealt with them instead of kicking the can down the road yet again.

Anonymous said...

"But I grew up in the 70s and 80s, I never felt in any way impoverished. Dad was able to support a stay at home mum and kids on one salary at home."

Agreed -- think how common that was back then, and how rare it is now. Likewise with being debt-free (apart from a mortgage). Yes, you can buy a smartphone now and spend all day on instagram. Woohoo! But your kids rarely see their Mum, your neighbourhood's community is dissolved because the women are away from home making their employers rich, and you're renting until you're 40 (if you're lucky). Is that progress?

GDP growth, without context, is as meaningful as tractor production figures. And in terms of having what is needed in order to live a good life, we're seriously impoverished compared to a generation ago.

Unknown said...

Houses have gone up in price because of the huge numbers of immigrants, who all want somewhere to live.

In the 70s and 80s, we had the oil shock(s) and massive inflation. This left many people paying off mortgages on houses that had cost them a few thousand pounds, well below the then current prices. Those who had bought before the inflation were quite well off.

I grew up in the 40s and 50s, and although my father had quite a good job, money was very tight indeed. When he tried to buy a house, the repayments proved to be more than he could manage, and we went back to renting. And there were very few gadgets. No car, washing machine or dishwasher.

So things go up and down. England is certainly over-populated, and nobody likes tower blocks.

If the next pandemic has a 30% or 50% death rate, houses will get cheaper. Living standards rose after the Black Death, although the baby boom soon restored the population.

Don Cox

BlokeInBrum said...

It's not only because of immigrants that house prices have risen.
The other half works for a property company that sells off plan apartments to foreign investors. Frequently they purchase 10 at a time, cash, no questions asked, then let them out to students and young couples who can barely afford them.
Is this a sustainable long term model for future prosperity?

E-K said...

I AM taking the wider view Anon 11.03

Putting it bluntly. This was the Boomer's D Day. Time to step up.

They didn't.

So the generation that was lucky enough to have their fathers storm the beaches for them have now allowed their grandsons to become the slaves of Beijing to save them.

How lucky !

Except it will prove futile. Covid 19 is going to run rampant anyway.

The only effective way to deal with a pandemic is at gunpoint. And we can't do that.