Currency vs Brexit: GBP Losses

Discussion in 'Random Chit-Chat' started by Agent-347, Jun 24, 2016.

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  1. serpantino

    serpantino Straw Hat Pirate

    I'm not sure where you're getting the whole we're a joke on the continent for Brexit from... That's not what I hear from friends & family who work as long distance lorry & van drivers who go over there every week.
    Neil.T and Jaysgba like this.
  2. HellCat

    HellCat Straw Hat Pirate

    News reports and associates who work in other businesses.
  3. serpantino

    serpantino Straw Hat Pirate

    Maybe the opinion is very much split by class. Never underestimate the power of the plebs, I think a lot of people in this country did.
  4. HellCat

    HellCat Straw Hat Pirate


    And as for us being a large economy, good luck with that when retail spending is in nosedive and EU is taking back all their financial institutions which were key to our economy.

    Hence why I say people should be concerned. Those of us struggling to get by are going to have it even worse when the economy tanks, basic costs skyrocket, the NHS is privatised and the Tories throw away all our workers rights.
  5. ayase

    ayase Godhand

    Well I think maybe we should wait and see what happens with France before we consider ourselves too much of a pariah in Europe. Conventional wisdom says Macron will take it but the polls have not been that reliable lately, especially with underestimating support for the hard right. There seems to be a clear anti-establishment feeling on the other side of the channel as well, with not only the support for Le Pen but how fast Mélenchon has been rising, and I wouldn't bet on all of his supporters rallying behind an establishment centrist former Rothschild investment banker like Macron. Radical change can come from either end of the political spectrum, and if one end is no longer and option...

    And Trump can put the EU ahead of us in the queue - Given their litigious, multinational loving, union hating culture I wouldn't vote for a "free" trade deal with the USA if you bribed me.
  6. kuuderes_shadow

    kuuderes_shadow Vampire Ninja

    I really don't get this argument that globalisation is bad for the poor.

    Take clothing for example - one of the most globalised industries there is. Lets imagine that you scrap all of globalisation's impact on this industry. First off, no more cotton. Can't grow the stuff in this country. You can probably forget about synthetic fibres too. Most of these are made from oil, and the UK's reserves of the stuff are dropping fast. Luckily we have more wool and leather than we know what to do with right now, and more than all bar a handful of other countries in the world too. So we'll take wool as an example. We rear the sheep in the hills of Wales or Cumbria or wherever. So far so good. But wait. These farmers are using all sorts of products sold by multinationals. Can't be helped - we'll have to push up the prices to get them locally. Second problem - this is a long way from most people. We then have to take it to a mill town. Lots of jobs from the wool mills? Forget it, they'd all be operated by machinery, and still be far more expensive. How do we get it there? Well, we won't be using lorries. Horse and cart is more likely. Mmm, very expensive. Still, gives some work for all those lorry drivers who've lost their jobs because you don't want to import that oil because that would be globalisation which is evil. Then the wool gets taken by steam train (powered by good old British coal! Can't afford to waste electricity on transport - the total loss of nuclear and near-total loss of gas power has made reliable access to the vast amounts of electricity necessary far too precious to waste on stuff like that) down to smog-filled London (very expensive), where the merchant unloads it by hand from the train and takes it -again by hand, most likely, and quite possibly walking- to sell T-shirts for perhaps £300 or so each. All this is assuming that everyone in the process makes a decent wage, which is what you were after, wasn't it? Although it's far more likely that the minimum wage would be scrapped, sweatshop labour set up in the UK to make the clothes just like it was before the stuff went abroad in the first place and products would be far cheaper. But people would have far less money as well. Particularly the poor.
    And the supermarket shelf-stacker or cleaner at the local hotel? How much extra income are they getting? Well they aren't. Food is too expensive for people to buy more than they absolutely need as the UK can't import any of the stuff from abroad as that would be globalisation. Lots of hunger and starvation as a result, and far less of the stuff being sold, which means less jobs going around and more people desperate for money. And the hotel has gone out of business as they were catering to foreigners who were coming on business trips, or tourists on holiday, and the country wants nothing to do with those thank you very much.

    Still, at least the big landowners do well out of it, as the value of farmland has just skyrocketed.

    But don't worry, the people would soon start uniting in a pro-globalisation revolution to take them back to the glory days when they could actually feed and clothe themselves cheaply and easily.

    Yes, this is a somewhat extreme example. I've yet to come across more than a couple of people who have thought that all the impacts of globalisation should be abandoned. But the thing is that every bit of globalisation contributes to this. Here I am, wearing clothes made in Bangladesh, sitting on a chair made in China, typing onto a laptop made by a Japanese multinational, attached to a screen made by a Korean one, powered by electricity a large portion of which comes from Norwegian gas (and partly from uranium from Kazakhstan) and using the internet, which has perhaps the strongest ties to globalisation of any invention within the last century. On the desk in front of me is a book that was originally Japanese, but translated and printed in the US by a company part owned by a big publishing firm based in France. I don't even know what nationality the logistics company that brought it here was. I really should get around to putting it back on my Swedish bookshelves. And every one of these companies will have firms from still other countries in their supplier chain. All of these things are me benefiting from globalisation. I'm eating breakfast mainly made from rice. When was the last time you saw that growing in the British countryside?

    The thing with globalisation is that everyone, whether rich or poor, is getting huge benefits from it, all of the time. But they don't even think about that. Instead they only see the harm that it causes. And it does cause harm, yes. But this harm is short-term, affects relatively few people and is dwarfed by the benefits. This means that it would be relatively easy to negate the vast majority of this harm without putting more than the slightest dent into the overall advantage. It's not globalisation's fault that UK governments have either not done this at all or gone about it a less-than-half-hearted way.

    The real problems that have hit the less well off in recent years are exploitative contracts and the ever growing wage gap between the people at the top of companies and those in the middle and bottom. This has nothing to do with globalisation or multinationals, as it could easily be prevented and rectified within a globalised world, and is every bit as likely (if not more likely) to be present in the UK's firms than those based overseas. Austerity doesn't help matters, either, but again this is not a result of globalisation.
    Oh, and the other thing is rising costs of housing, of course. Globalisation, meanwhile, makes house building cheaper.
    Last edited: Apr 22, 2017
  7. Watanabe Ken

    Watanabe Ken Adventurer

    The article doesn't name a source it just says a key German official said that Merkel convinced Trump in a private dinner I call bull crap especially when Paul Ryan clearly said he wants a bilateral trade deal with the Uk as soon as possible source Paul Ryan announces US is ready to forge a new bilateral trade deal with UK 'as soon as possible'[​IMG]
  8. ayase

    ayase Godhand

    @kuuderes_shadow Simply importing isn't globalisation. I don't think anyone's suggesting we import nothing or never again touch anything foreign. Globalisation is the removal of all trade barriers so that a multinational can pay someone 10p an hour to make a shirt in the far east and import it to the UK with no or negligible tariffs, then sell it on to someone here for £5 and make let's say, £4 profit.

    If that shirt had been made by a company here in the UK here it would have cost them £7.50 an hour in labour, so if the company making it wanted to make £4 profit they'd have to sell it for at least £12.50. But because of globalisation, someone can make them abroad cheaper and undercut the local company, so no-one is buying the locally make shirts and all their workers are now unemployed. And the ones they've been replaced with are virtual slaves with no rights. But hey, because we're importing cheap consumer goods, good news! When the find a job again their employers here can get away with paying them less.

    I don't think I could disagree more. Globalisation has been sold as some kind of utopian fantasy of bringing everyone together and helping enrich each other. What it's actually doing is exploiting poor people and poor countries and forcing workers in developed countries to give up their rights and accept lower wages so they can compete with non-unionised sweatshop labour half way around the world. Who's actually benefiting? The people who own a stake in the multinational corporations that can increase their profit margins and screw over their workers.

    We had a steel works not far from here. It was very productive (not least because the workers knew they had to try and compete to stay afloat) and produced very high quality steel, and had been doing so for over a century. It still couldn't compete with Chinese imports. It's shut down now, and all the former workers at the largest employer in a town that was already suffering from high unemployment are now on the dole. The government did nothing to protect these people's (the British people they are meant to serve, whose interests they are meant to look out for) jobs, they did nothing to help the company stay competitive (they'll bail out Lloyds for 20bn quid though). But hey, cheap Chinese steel right? Result for globalisation.

    Even if globalisation does make building materials cheaper, what the hell does it matter if the land and the planning permission are the costly parts, and the builders ratchet up the sale price to market levels (with the help of the banks who are more than happy to trap more people into debt slavery)? Yeah, I reckon it probably costs Wimpy about 20k to build a house, which they then sell on for 200k.
    Neil.T likes this.
  9. Buzz201

    Buzz201 Mad Scientist

    Other people seem to be confusing irrelevant things for globalisation too.

    Without trade deals and such, everything becomes more expensive. From the food you eat to the Blu-rays you watch. And I seriously doubt wages will increase to cover it. Without globalisation you don't have anime, you probably don't have the internet, you probably don't have the device on which you are currently reading this. It would be wrong to say globalisation and the world being brought closer together hasn't significantly improved most people's lives, regardless of whether they realise it or not. The idea that globalisation was never good for anybody who isn't rich is silly.

    Leaving the EU doesn't solve the underlying issues people have, it just blames foreigners on a national scale...
  10. kuuderes_shadow

    kuuderes_shadow Vampire Ninja

    Free trade is the removal of barriers to trade. Globalisation is an effect of this removal. The more you remove these barriers, and the more globalisation you have, the more trade you will have. It's all a sliding scale, and the benefits accrue continuously as you go along the scale. The net benefits do tend to get lower as you go along, though, albeit only because the easier stuff is generally what gets freed up first.

    To get rid of globalisation you need to get rid of international trade.

    I admitted that the example I was using was an extreme case one, but so is the one you are using. Even the most ardent of advocates for free trade and globalisation will admit that there are situations in which putting up barriers to trade is appropriate. One of these justifications for protectionism is as a short-term measure in response to dumping - when a country produces way too much of a resource for whatever reason and deals with it by flooding the world market with the excess at far below both the cost of production and the going market rate. This is exactly what China was doing in the steel industry a year or two back (and still doing to a much lesser extent now, although it isn't in the headlines as much as it was then). This is not an effect of globalisation so much as an abuse of it, and there are known and accepted methods of responding to it, which - I agree - the UK government was too reluctant to engage in.

    Lets take a look at the shirt example. Firstly, it's wrong to say that the main beneficiaries are the shareholders. The main beneficiaries are the people who buy cheap clothing in the UK. Who spends the highest proportion of their incomes on cheap clothing in this country? That's right, it's the less well off people. So if the price of cheap clothing goes up, the people who would be hit hardest would be those in relative poverty within the UK.
    Moving on from that... Firstly, the wages. Let's say our shirt is made in Bangladesh, which is the origin of a large proportion of our cheap clothing. 10p per hour seems like a fairly accurate figure - no objections to that. And it is a disturbingly low figure, yes. But it isn't quite as low as it sounds, as purchasing power parity is a better measure than official exchange rates. Any given amount of money will buy you about 3 times as much in Bangladesh as it does in the UK. So that 10p per hour is actually about 30p per hour. Still terrible, of course. But if the person in Bangladesh was earning £2.50 per hour they would be being paid the same as the person in the UK earning £7.50 per hour, but at substantially less cost. This difference is any area where globalisation does bring in benefits - even without giving the Bangladeshi worker any different a lifestyle to the British one, the company can make considerable savings shifting the labour to Bangladesh. Of course if every textile worker in Bangladesh saw a 25-fold wage hike then local prices would go up, thus reducing the PPP advantage, but whatever.
    As for the ludicrously low wages, yes, that is gaining Britain's relatively well off citizens (especially its poor) at the expense of the considerably poorer Bangladeshis. There's not much to say against that other than this - historically this effect has always reduced over time, and the more globalised the economy of the country, the faster the transition occurs. Without globalisation, the increase doesn't happen at all. And most of these people would be even poorer than they are now.

    On the other hand it isn't right to just point to wage cost differences. If you buy your shirt from a Primark in the centre of town or such then the single biggest cost of your shirt is that taken by the retailer, and their biggest cost that this goes to pay is taken by the cost of land. Likewise, if you move a factory to the UK, the single biggest increase in the cost of production will not be wages but the cost of the factory. And the machinery to replace all the workers as it makes far more sense to replace UK labour with machinery than it does to replace Bangladeshi labour with machinery*. And the fact that cotton is actually relatively expensive to transport compared to the finished products. Unless you're using wool to make the shirt which, despite currently selling for less than the cost of sheering the sheep, still costs more than cotton does. And there's the fact that quite a few costs that are calculated proportionately to the price, so if you increase the prices in the early stages then you also increase the later stage costs too. Just look at the price difference between fairtrade chocolate and ordinary chocolate. Do you really think that the extra wage costs for the cacao growers and the cost of tracing the product amount to anywhere near that much? Forget it. Companies aren't going to destroy their profit margins just because the cost of goods goes up, at least not in the long term, and especially not if their sales figures go down substantially as a result of the cost increases, which they would.

    And yes, you can buy clothes made in the UK. I bought my dad a pair of socks made in the UK a couple of years ago for a Christmas present. They costed £8 for a single pair. Compared to about 40p per pair in Primark. Apply this ratio to your £5 shirt and you end up with £100. Yes, this would be reduced by economies of scale, and by the fact that the transport cost of a shirt is a lower proportion of its price than that of a single pair of socks. I'd be very surprised indeed if your £5 shirt came to less than £30 at the end of the day, though.

    So who is benefitting? Everyone who buys these shirts, of course. Or any other product that is produced as part of a global supply chain, which these days is the overwhelming majority of goods we buy, and a large and ever increasing proportion of the services as well.

    *quite a lot of this transition would happen even with the increase to £2.50/hr wages, thus losing a huge number of jobs, which is one of the main reasons why the wages are as low as they are in the first place.
    Last edited: Apr 22, 2017
  11. Watanabe Ken

    Watanabe Ken Adventurer

    People seem to think you can't have free trade without all the the others parts of Globalism which is nonsense the UK joined the EU for the tariff free trade long before it turned into the elitist globalism machine it is today
  12. kuuderes_shadow

    kuuderes_shadow Vampire Ninja

    And what "other parts of globalism" that are not generated by free trade are these? Everything that has been mentioned so far will happen in any sort of free trade unless you implement strict rules and regulations across the free trade area at huge cost in order to prevent them from happening.
  13. Watanabe Ken

    Watanabe Ken Adventurer

    Increase in immigration, Interventionism and Global Governance
  14. Watanabe Ken

    Watanabe Ken Adventurer

    Uncontrolled Imigration lowers wages and puts a strain on local service like Hospitals, Housing and Schools.

    Interventionism isn't a bad thing in theory but most cases of interventionism have been for selfish reasons and have led to suffering and death throughout the world.

    Global Government just doesn't work just look at the EU.

    Free trade is just trade on a bigger scale people will always pay the lower price for the things they want.
    Neil.T likes this.
  15. kuuderes_shadow

    kuuderes_shadow Vampire Ninja

    A lot of "global governance" is directly related to free trade. The World Trade Organisation is perhaps the most obvious example - setting out rules of what is deemed acceptable and unacceptable to do when it comes to trade. The situation with responding to dumping I mentioned earlier is one such example.
    It occurs on a much smaller scale as well, though. By far the trickiest parts of negotiating trade deals is agreeing to standards so that when a person in country A buys product Z they are buying the same thing whether it was made in country A or country B. Things like subsidies need sorting out so that one country can't destroy an equally or more viable industry in another country just by outsubsidising them. This is the bulk of EU legislation, with most of the rest being in policy areas where the more international cooperation you have the better (eg. environmental issues, or transport standards so that a lorry or freight train can drive across a border without having to unload and reload its entire cargo as it does so). Almost all of this works, and works well. So well, in fact, that you don't even realise it's there for the most part.

    I'm not sure what you mean by "interventionism". In economics this generally means when a government interferes with a market, and is thus generally less abundant the more globalisation you get?

    As for migration (not immigration - in a closed system like the human population on Earth you can't increase or decrease immigration)... I will admit that as I typed that post that was the thing that sprung to mind. Yes you can have free trade without free movement of people, although having the latter aids the former significantly. But migration is a good thing just as free trade is. Providing there is no significant information failure*, it always benefits the migrant - obviously, or else they wouldn't do it. It benefits the country that they migrate to - migrants are usually migrating to work, and are usually among the most productive members of the economy and often society as well. And it can benefit the country they come from. There are actually countries around the world where a significant portion of "exports" is remittances from labour, and should some natural disaster strike the country they came from anyone working abroad will often be the biggest contributors to the relief funds. Alternatively workers travelling to other countries enables the spread of technology, knowledge or efficient methods of operation between both the country they move to and back to their home country. Overall, the effect of increased migration is definitely positive, just as that of free trade is. But yes, it isn't the same thing.
    Then again, when people talk of globalisation they rarely mean free movement of labour around the entire world, largely because such a thing is so very far from existing.

    *Sadly there often is, although usually not enough to change the net effect on the migrant. But globalisation in the form of the free spread of information helps reduce this.
  16. Watanabe Ken

    Watanabe Ken Adventurer

    There's a town in France on the border with germany EU legislation literally moved the the factory which employed most of the people in that town across the border to the neighbouring town in Germany they can literally see where there jobs have been moved to. Tell them that globalization works, tell that to the average person who can't feed there family because mass low skilled immigration has undercut them. Globalization benefits the rich and powerful elite that's why London was the only part of the UK who voted to remain in the EU that's why middle America voted trump.
  17. kuuderes_shadow

    kuuderes_shadow Vampire Ninja

    Bloody hell, London's been expanding if it includes the Shetlands, County Fermanagh and Gibraltar now.
  18. thedoctor2016

    thedoctor2016 Dragon Knight

    Free movement of people was in the ECC. It just became a issue when smaller countries well less off ones joined it in 2005 when it was now the EU. So Obv if these countries were poorer the U.K. would look a better option. And their business who exploit workers and they don't just exploit imported workers I feel zero hour contracts are exploitation and I'm the "students" that Cameron loved mentioning.
    And this NHS squeeze yes the population increasing it is everywhere, people are getting older they are in every western country it is the lack of funding to lee with growing demand because quite frankly people want a better funded NHS but then don't want to pay for it.
    kuuderes_shadow likes this.
  19. Watanabe Ken

    Watanabe Ken Adventurer

    You know what I mean Shetland don't get a lot off mass immigration
  20. kuuderes_shadow

    kuuderes_shadow Vampire Ninja

    On the other hand, Gibraltar has a far higher proportion of its workers coming from another EU country than anywhere else in the UK and almost anywhere else in the whole of the EU. The counties near the border with the Republic of Ireland also get a lot.
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