This really rather confuses me, this piece from Bob Kuttner (Via).
Adam Smith observed in 1776 that economies work best when governments keep their clumsy thumbs off the free market’s "invisible hand." Two generations later, in 1817, the British economist David Ricardo extended Smith’s insights to global trade. Just as market forces lead to the right price and quantity of products domestically, Ricardo argued, free foreign trade optimizes economic outcomes internationally.
Reading Adam Smith in Copenhagen — the center of the small, open, and highly successful Danish economy — is a kind of out-of-body experience. On the one hand, the Danes are passionate free traders.
Now I agree, there is indeed something different about Denmark but their attitude to trade isn’t anything to do with it. Because, you see, they’re members of the European Union. Trade with the other 26 members is by definition free as it is between any pair or more of the 27 members.
Trade with countries outside the European Union is nothing to do with Danish attitudes or domestic politics. It is a sole competency of the European Commission itself: doesn’t matter a damn how much the Danes like (or don’t) free trade. They don’t get to make the decisions.
You’d hope that someone writing 5,000 words on the subject would note that point but from the extracts I can see he doesn’t.
Ho hum.
1 response so far ↓
1 Luis Enrique // May 7, 2008 at 5:58 pm
well maybe when he’s talking about Danes being passionate free traders, he’s talking about their attitude to economics and how they manage to combine that attitude with a high taxes and welfare. He isn’t necessarily saying this attitude directly affects actual trade policies, which is the interpretation you seem to be making.
It’s a reasonable line or argument, to highlight a contrast between Denmark and, say, France, which is also part of the EU, but not often described as ‘passionate free traders’. Or are you really saying that Denmark’s attitude towards trade has nothing to do with how its economy differs from that of France, and there’s no sense in highlighting different attitudes to trade because their both part of the EU so it doesn’t matter?
Just because an author doesn’t focus on one of your pet peaves within the first few paragraphs (which is all you’ve read) is hardly cause for complaint.
NB if anybody has full text of that article, I’d love to read it.
Also Tim are you so sure that there are no differences at all in trade restrictions between EU member states? Doesn’t sound very likely to me … there’s always wriggle room in practice isn’t there?
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