Looking back at an interview of Nigel Farage at the IEA in 2010, it was striking to see him give such a direct, unambiguous, principled argument in favour of free trade:
“If we are going to be a successful nation …, part of the 21st-century global economy, then protectionism [is] a disaster. With protectionism, you fall behind, in terms of innovation. You don’t modernise, you don’t move with the times … we’re seeing this with Italy. We saw tariffs on shoe imports from Vietnam, on bras from China – protecting Italian business. It’s perfectly clear that those businesses are going to go bust in a globalised world; because people have sheltered themselves behind tariff barriers, they haven’t innovated and moved on.”
He recognised that free trade produces both winners and losers, but that in the long run, society overall is better off when industry is open to competition.
Watching the interview now, five years later, it is unfortunately evident that the clarity of thought he demonstrated then has been lost in the pre-election scramble. Here are four ways in which he and his party have lost their way on free markets.
1. UKIP’s rhetoric on profit-making has become deeply confused
UKIP has released a policy statement opposing aspects of TTIP on the grounds that it “will strip away obstacles to large corporations making profits” – suggesting that obstacles to profit-making are in some way inherently desirable. In removing these obstacles to profit-making – hardly a bad thing – TTIP will make it more likely that anachronisms like the US’ ban on Scottish haggish will be lifted.
The policy statement goes on to object to private companies “motivated primarily by profit rather than people’s needs” providing public services. This sweeping statement suggests a discomfort with the fairly uncontroversial and well-functioning status quo in the UK, in which private companies participate in public service provision through, for example, delivering parcels, creating medicines and building buses. The statement highlights the long-running tension within the party on healthcare provision, with Farage in January advocating private insurance as a replacement for the NHS and then committing to, and backtracking from, increasing NHS spending by £3bn a year.
2. UKIP, on leaving the EU, would replace the Common Agricultural Policy with a British Single Farm Payment
The Common Agricultural Policy, a set of subsidies to agricultural production in the EU, is highly distortionary and incredibly expensive: in 2013, direct farm payments (subsidies) were worth around £35bn, or 30% of the EU’s overall budget. This policy leads to food oversupply and artificially high prices, and its benefits accrue to a small subset of the European population. This is just the sort of wastefulness in Europe that UKIP has legitimate grounds to criticise. By proposing to replace the European policy with a similarly damaging British one, UKIP undermines its own argument.
3. UKIP would allow employers to discriminate in their hiring on grounds of nationality and race
Aside from the fact that this proposal may encourage racism, allowing employers to hire less able staff for such arbitrary reasons would make firms less productive, and worsen the quality and price of goods available to consumers.
4. UKIP has made a dramatic reduction in immigration a key plank of its election offering, with consistent strongly anti-immigrant rhetoric
From the target to cut net migration by 90%, to the frankly ludicrous suggestion that children don’t play with their neighbours in the streets because of immigrants, it has been made quite clear that UKIP’s Britain would be considerably less welcoming to foreigners. Severe cuts to immigration would inevitably cause labour shortages, making British production more costly and less efficient.
Furthermore, advocating free trade while maligning immigration is an inherently contradictory position: when you buy, say, a shirt from China, you effectively bring the labour of the maker to the UK. In a meaningful sense, free trade is immigration.
These four policies are exactly the kinds of inhibitors of innovation that Mr Farage was concerned about in the idealistic days of 2010. It is clear that Nigel the Free-Market-eer has been sacrificed at the altar of political expediency.