A familiar gripe from an unexpected source. The Guardian’s Julian Glover, usually a sensible liberal voice in the wilderness, thinks it’s bad that the new Thameslink trains are to be Made in Germany rather than Made in Derby.*
There are two objections to make to his protectionist position. The obvious one is from the consumer perspective: why should already hard-pressed passengers and taxpayers have to pay more just so the trains can be made in Britain? Why should the interests of Bombardier and it’s workers be put above those of the passengers who have to squeeze into Thameslink trains for their daily commute?
Growing Hondas. There are two ways we can produce automobiles. We can build them in Detroit or we can grow them in Iowa. Everyone knows how we build automobiles. To grow automobiles, we begin by growing the raw material from which they are made – wheat. We put the wheat on ships and send the ships out into the Pacific. They come back with Hondas on them.
From our standpoint, “growing Hondas” is just as much a form of production – using American farm workers instead of American auto workers – as building them. What happens on the other side of the Pacific is irrelevant; the effect would be just the same for us if there really were a gigantic machine sitting somewhere between Hawaii and Japan turning wheat into automobiles. Tariffs are indeed a way of protecting American workers – from other American workers.
The argument is simple: in order to import German trains, we have to export something in return (it’s now too late to demand them as payment in kind for Germany’s reparations for World War I). In order to export goods or services to Germany, we have to produce them here – and so employ people to do that work.
Assuming that the entire £6 billion price tag of the Thameslink Programme is the cost of the trains (which it isn’t), there are plenty of ways Britain can “grow trains”. We can assemble them in Cowley and Sunderland: Britain exported £23 billion worth of motor vehicles last year. We can brew them in Tadcaster and distil them in Scotland: foreigners downed £5.6 billion worth of British beverages in 2010. We can even create trains in law firms and in film studios: Britain exported services worth £10.6 billion to Germany alone in 2010. We exported £159 billion worldwide. (Sources: Goods exports from HM Revenue & Customs, services exports from the Pink Book 2010, page 132.)
From our standpoint, “distilling and filming trains” is just as much a form of British production as building them in Derby. If the government decided to court popularity by insisting on the Thameslink trains being built in Britain they would create jobs (and profits) at Bombardier but destroy them in every industry that exports to Germany. And we would get worse value for our money. That would be reason to be miserable.
*Actually, some of the components will be made in Hebburn, Tyne and Wear. The Department for Transport estimates that this will create 600 jobs.