THE ECONOMY

Importing is fun; exporting is for fools

JOCK BRUCE-GARDYNE

During the week before Easter I was rung up by the men from Thames TV's This Week programme. They were, they told me, planning a programme about the balance of payments. The pundits had told them, they informed me, that Nigel was whistling in the dark. You couldn't run a payments deficit of £14 billion for two years in succession (and maybe more): you just couldn't. It wasn't done. Besides, sooner or later — sooner, in fact — those wily foreigners would have had enough. They'd up sticks and away. And Lawson would be in the soup. Did I agree?

Well no, I told them, I didn't, actually. I thought that all those pundits were stuck in a time-warp. They were living in the days of Harold Wilson, in the halcyon days when neo-Keynes was King and the aforementioned pundits ran the Prices and Incomes Boards. Then it was true that a series of bad trade figures led to such unmentionables as devaluation — even the electoral defeat of Labour Governments. But those were the days before floating exchange rates, the abolition of exchange controls, and the globalisation of capital markets.

Nowadays, I said, the smart thing to do was to run a thumping great trade deficit. Needless to say the This Week boys are not in the business of lending pulpits to dyed- in-the-wool atheists, least of all at Easter- tide. I heard no more. So let me tell the readers of The Spectator instead.

On Palm Sunday, you may perhaps have noticed, the Observer ran a genuine, old- fashioned scoop. Not another description of luncheon at the Garrick (and incidental- ly was it not lovely to see Loony Longford exploding with righteous indignation at the spectacle of Garrick conversations being repeated outside the walls of our beloved Club, and business being discussed inside it? One day I must tell him about the Garrick conspiracy case, currently being fought through the American law courts.) No, this was your real McCoy. The Obser- ver had got hold of copies of a correspond- ence between Mrs T and Chancellor Kohl, revealing just how expensive those mega arms contracts with the Saudis and the Jordanians were going to be to the British taxpayer.

It is perfectly true that the arms trade is, as you would expect, an unusually rough one. It is also perfectly true that, in private family companies such as Saudi Arabia, contracts go to those who have danced with a girl who danced with a boy whose girlfriend danced with the key member of the local ruling family. Yet there are, I suggest, some conclusions of rather wider implication to be drawn.

Japan's enormous trade surplus shows every sign of continuing to grow exponen- tially. The Japanese were breathtakingly successful, in 1987-8, in switching sales from overseas to their home market; also in overcoming the vertiginous rise in the value of their currency. Yet its impact on their exports was little more than pardon the word — a 'blip'. But there's only one way that it can go on. And that is by the Japanese posting off enormous anonymous donations to the likes of Uncle Sam and John Bull. Without such dona- tions, Sam and John can't buy.

So the Japanese work their fingers to the bone making goods that all the world is ravenous to buy, and then they have to hand over their savings so that the rest of the world can do just that. In other words, like sales of arms to Saudis, sales of Japanese computers, chips and suchlike also need a 'slush fund'. The only differ- ence is that the rest of us can actually use and benefit from those Japanese artefacts, whereas God knows what the Saudis and Jordanians would do (or maybe would have done) with all those ground-to-air and air-to-ground do-dahs.

No doubt the famous pundits would point out that sales of arms and Japanese computers are special cases. Other exports do earn their keep. But of course it isn't so. If we want to sell a complete cotton-mill to Pakistan — or China, or the Soviet Union, for that matter — we have to 'give 'em the money, Barney', first. It's called 'soft loans', or 'extended credit', or 'reciprocal trading' (i.e. we give them the latest piece of our technology, and have to take back in return cases and cases of Siberian cham- pagne which commercial buyers have the sense to turn their backs on).

It was, I think, that arch poseur the first Earl of Stockton who coined the phrase `exporting is fun'. If he didn't, he should have done. It was his style. But exporting is not fun. It is a very hard grind. And above all it is consumption forgone. The Japanese work far longer hours than we do, and not for that much more pay than we get either. Then they have to find recipients for their products. As a result things they could enjoy in their own homes are enjoyed in the homes of Butte, Montana. And the hapless Mr Watanabe is permanently lock- ed into US Treasury bonds, with no way out. We, by contrast, work the shorter hours, and enjoy what we produce (well, OK, we enjoy what others produce a good deal more). But at least we enjoy it. It may be naughty, but it's nice.

Ah yes, say the pundits, but you can't sustain such self-indulgence for long. And meanwhile, what is happening, they ask rhetorically? What is happening is that the `industrial heartland' of Britain (or Amer- ica, as the case may be) is being 'laid waste'. We are being made 'import depen- dent'; and 'the jobs, once gone, will never return'.

`Never' is not a word that sensible people use in politics and commerce. Nevertheless it must be true that the travesty I have produced above will lead to higher import penetration, and its very Ugly Sister, protectionism. This is because politicians are remarkably bad at identify- ing the right way to pursue their own self-interest. Their own self-interest is, of course, to get re-elected. Nothing more and nothing wrong in that in a democracy. But unfortunately they have for years been fed the guff that the way to the voters' hearts is through their P46s and P15s. And they have come to believe it. If you want his vote, you had better take care to give him a job first.

I don't believe it's true. During the last election I fought, I argued that if a bloke had to choose between having a job and being able to buy an Italian washing machine, he'd most probably — and rationally — choose the Italian washing machine.

I expect that was why they took my seat away. How stupid can you get? they asked. If he ain't got a job, he can't afford an Italian washing-machine. But he can, you know, he can. For the British, or Italian — or Japanese — taxpayer will foot the bill for him. On the other hand the price of giving him a job, or keeping him in a job could very well be that in due course he could not buy that Italian washing machine, whether because the lira had been revalued (to hold on to that job through devaluation of the pound) or because the import of Italian washing machines had been banned.

Happy All Fools' Day!