The problem with politicians

I have just finished reading an e-book on my phone, called The Undercover Economist by Tim Harford. It is a good read and I throughly recommend it. In it he basically explains how economics works in everyday life. After reading this I've decided that economist's would run the country much better than any politician would.

To give an example, he talks about import taxes. Let's say that the UK textile industry is losing ground big-time to the sweatshops in Indonesia and Vietnam. A politician would say this is a bad thing, as people in the UK are losing jobs in the textile industry, and the conditions in sweatshops are very poor compared to western standards. Therefore to solve this problem we'll impose a tax on imported goods. You might say that this makes sense, it's a perfectly reasonable thing to do, and might be popular with the public. However, to an economist it makes as much sense as taxing exports out of the UK.

First lets talk about comparative advantage. For example, David Beckham could be better at plumbing than my local plumber. However, David Beckham doesn't make money from plumbing, as its much better at football, therefore my local plumber will get more money from plumbing than David Beckham, even though David Beckham is better. In this situation Vietnam's strongest industry is textiles. We could be better at producing clothes than Vietnam, but the UK is better in other industries (e.g. pharmaceuticals) than textiles, so it's better to import our textiles from Vietnam. Obviously I have over-simplified the situation, but I hope you understand the general point.

Next it has to do with sweatshops. Obviously these are horrible places, but people work there voluntarily, with a low staff turnover. This is because the alternative is more horrible, like sorting out rubbish in a rubbish tip for recycling, or drug dealing/prostitution. If we imposed import taxes, the sweatshops would disappear, leaving the workers no choice to go into more horrible jobs. Also we deprive the Vietnam workers the chance to make money, which in turn could be used to buy British exports.

You could say that import taxes protect British jobs, but the Undercover Economist will tell you that on balance it will cost more jobs than it saves. It stops other countries making money, hence stopping them buying British exports in industries which we are good at (e.g pharmaceuticals), which in turn costs jobs in the UK pharmaceutical industry, even though our pharmaceutical industry is better than our textile industry.Hence we might as well have an export tax on medicines.

The worrying thing is that most economists agree protectionism is bad for the UK economy. But it still goes on. The EU is very protectonist of agriculture, with its common agriculture policy. This policy means that effectively pay twice for our food, via the prices in the supermarkets and our taxes. It also increases the price of food, by preventing competition from agriculture from outside countries, like Africa. It also directly hurts developing countries, as these countries cannot make money by selling their produce competitively to Europe, so it affects the poorest in the world the most. This shows why we need more economists in our governments, and less self-serving retard politicians whose sole purpose in life is to keep the lobby groups happy.