The Hard Road to Economic Security

The most reliable route to economic security is through economic strength. If economic strength is there, there will be less worry about the current account of the balance of payments, or about the impact of foreign imports on domestic employment. If it is not there, it is not easy to be certain how to get it there. In the worst cases a high degree of dependence on international charity will follow. A government may reduce exposure to confidence factors by restrictive fiscal and monetary measures. It may thereby show a better face to the world’s financial markets. But economic strength depends on economic performance. Economic performance is beyond the command of government because there is no economic theory that reliably prescribes the way of achieving it. The sources of economic growth are not well understood. There is no clear relationship between economic performance and government attitudes to free trade. The USA, Japan, Germany, France, Hong Kong, Korea, Singapore and Taiwan, all have different attitudes to foreign trade. Some have been relatively liberal. Some have been exceedingly protectionist. All have performed well. The UK has tried protection and it has tried relative openness. Neither has done much for its economic performance.