A Trade Deficit is the result of people buying goods and services from outside their communities on credit. It is a social phenomenon. It happens because local and national government is weakened and becomes the dispenser of benefits rather than the shepherd of wealth.
Imagine what could happen if somewhere like Sunderland had an innovative Local Government with real economic power. It would deal with its local economic problems by cutting Business Rates for local companies that used local goods and services, perhaps refunding a fraction of local rates on obtaining copies of local receipts. It would ask local business to produce lists of goods and services that it could not obtain locally and circulate these to local businesses and budding entrepreneurs with contact details of potential customers. It would create strong local business groups, with financial incentives to attend, perhaps merging with Chambers of Commerce. It would encourage local business consumers to discuss with suppliers how missing goods and services could be provided. It would commission local ISPs (Internet Service Providers) that would offer free Internet services locally, all Internet Services would flow through the local node and they would provide a sales platform for local business. Local Government would give new businesses a holiday from all taxation during the first two years. It would wherever possible avoid employing any companies from outside its area of governance so that its taxes were used to stimulate its economy.
The local government would be a business leader, seeing local production as the source of local revenue. It would not just be the dispenser of benefits obtained from an amorphous taxation revenue. It would engage the whole business community in the idea of local enterprise.
Turning Local Government into centres of enterprise could be achieved fairly easily. To encourage enterprise Local Government should have two elected Chambers. The Enterprise Chamber and the Benefits Chamber. The Enterprise Chamber would provide funds for the Benefits Chamber to spend. This division of responsibilities is essential because those who enter public service to provide benefits are not usually backers of enterprise.
How did production become detached from locality? Over the past two centuries large businesses realised that local control was damaging its potential profits and so removed local customs tariffs and other impediments to trade. There can be no doubt that some trade liberalisation was a good thing but the modern mantra that local people should be entirely excluded from the control of trade is absurd. Large business is continuing this destruction of local control globally. It calls this “globalization” but globalisation is actually a result of Western Culture spreading globally and the concomitant growth of Multinational Corporations is just a side effect of it. (See Globalisation, Global Trade and Internationalism – Who Benefits? ).
Multinational Corporations are the opposite of Localism. They appeared in force in the seventeenth century with the various “East India Companies” and spearheaded the growth of European Empires and war. They allowed individual nations to use far more resources than they could obtain from their own land and so began the path to unsustainable economic models for global growth. There is a role for multinationals but they should not be so favoured that we remove local, sustainable, governance by Nations and Local Government.
The world is on a knife edge that cuts in many different ways: some believe that there is a threat of nuclear war, others that global warming will destroy us, some that AIs will decimate economies, yet others that cheap genetic manipulation will allow viral terrorism etc etc. In response many people dream of global government, presumably largely run by enlightened Chinese people, curiously this solution – Chinese Capitalism, Capitalism without democracy – is also the preferred solution of multinational bosses who believe that CEOs of Multinationals know what is best for us all. Adults realise that the only sensible solution is for the people in each viable economy to govern themselves and to respect other peoples’ independence.
The UK-EU Trade Agreement 