Read the full transcript of a debate on the topic titled ‘Do Protectionist Trade Policies Make Us Poorer?” at ARC 2025. Peta Credlin is the moderator. And the speakers are Tony Abbott, Michael Gove, Daniel Hannan and Oren Cass.
TRANSCRIPT:
Introduction
PETA CREDLIN: Good afternoon, I hope you all are re-caffeinated and fed well and settled in for an exciting debate about free trade, which of course, with the new President in the United States, has become very topical again. The debate about free trade around the world is evolving. For years, free trade has been hailed as the driving force behind global prosperity, enabling nations to thrive by allowing citizens to freely engage in markets with minimal government intervention.
Yet increasingly, critics argue that this very free trade framework has contributed to the decline of industries, weakened national economies and exacerbated inequalities, as some regions are left behind in the wake of globalisation. Advocates of protectionism assert that shielding domestic industries can secure jobs and strengthen national security. In this debate, we will hear from both sides of this divide, with one side arguing that protectionism, far from making us wealthier, could actually diminish our economic opportunities.
The Motion and Speakers
We will invite our audience to vote on the motion “This House believes that protectionism makes us poorer.” Let me bring in our distinguished speakers. On the proposition side, arguing that protectionism indeed makes us poorer, we have Lord Daniel Hannan, a prominent British politician, writer and former member of the European Parliament.
Alongside Dan Hannan is the Honourable Tony Abbott, former Prime Minister of Australia, who during his time in office secured three free trade agreements between Australia and China, Japan and South Korea, started the India FTA and the EU FTA, as well as the Trans-Pacific Partnership, and until recently served on the UK Board of Trade post-Brexit.
On the opposition side, arguing against the motion, we have the Right Honourable Michael Gove, former longstanding British Cabinet Minister, who served for almost two decades in the Commons and now, post-politics, is the editor of the very distinguished Spectator magazine. Alongside him is Mr Oren Cass, founder and chief economist at American Compass and a former Republican Party campaigner.
Debate Format
Before we begin formalities and hear from our speakers, let me outline the rules of this Oxford-style debate, because there are plenty of rules. We will begin to hear first from Lord Hannan, who will speak for the motion, followed by Mr Gove, who will speak against the motion, followed by Tony Abbott in the affirmative, and finally, Mr Oren Cass, who will speak against the motion. Each speaker will have six minutes.
I am the boss lady. I’ll be quite tough on time. After that, they will conclude. We’ll then break for questions from the floor. There is an app. You can submit your questions via the app. Every speaker will have a question. The questions will be done and spoken to within the two-minute time frame. After that, there will be a rebuttal, closing remarks.
That’s another two minutes per speaker. And then there will be a final vote from the floor. Now, we want to see if the arguments you hear from the podium changes your views.
Initial Vote
So to do that, we’re certainly going to vote at the end, but we need a benchmark at the start. So I’ll ask you now to cast an initial debate on the proposition. If you go to the app, the details are there.
And the proposition is, this House believes that protectionism makes us poorer. If I can have your indication, we’ll have about two minutes to do that now. We’re on the app. I’m told it’s all very simple if you follow the prompts. Yes, these things always are very simple, except for the technophobes. Someone at backstage will come and instruct me if I’ve got that wrong, but that’s how they sit, just onto the app.
There should be a prompt on the screen. Those guys there aren’t allowed to vote. They’re trying to rig the debate already. So you need to vote for, against, or abstain via the app. If you go to the event schedule, I understand you’ll find it on the event schedule.
So I’ve got some numbers in already. This house believes that protectionism makes us poorer. 56% are for the motion, 29% against the motion, and 13% are sitting on the fence. They’ve abstained. So let’s move to the debate proper.
First Speaker: Lord Daniel Hannan (For the Motion)
PETA CREDLIN: The first speaker for the proposition side who will speak for six minutes to argue the proposition that protectionism makes us poorer. Please welcome Lord Hannan.
DANIEL HANNAN: Well, thank you, Peta, and thank you, ARC, for putting this debate on. Ladies and gentlemen, I’d like you to join me in a little thought experiment. Suppose that somebody invented a magic pill that would allow us all to live to the age of 120 in perfect health and then die painlessly.
Such a pill, I put it to you, would put a lot of people out of work. Right? Be bad news for doctors and nurses. Be catastrophic for the medical insurance industry.
A lot of care home workers would lose their jobs. Would anyone in this room see those as arguments to ban the pill? Now, here’s the kicker. Does it make any difference whether that pill is invented in your own country or in somebody else’s? Because every attempt to restrict the flow of ideas or good things that people want is a variant of trying to ban that pill.
It misallocates blame. Instead of seeing that technological progress make some jobs obsolete, it tries to outsource responsibility to trade. Look, I was an elected politician for 21 years.
I represented what had been a shipyard in Chatham in Kent. I used to see the people who had, if you like, the body shape of men who had once been active and had then suffered this catastrophic loss, often at the worst time in their lives.
They would still rage at me about the evil witch Margaret Thatcher. She hated the working class. I understood it.
But it’s only fair to tell that story right through to the end. There are now more jobs where that old shipyard was than when it was a shipyard. And what are they? Well, some of it is a university. Some of it is kind of tourism. But the biggest employer there is the audiovisual sector. The way in which we restore the areas that have been hit by technological change is by being open to investment.
My maternal grandfather was a shipyard worker in the West of Scotland. He had a very typical unhealthy West of Scotland lifestyle. He smoked very heavily. He died when he was 61, so I never met him. So I never got the chance to ask him whether he’d have wanted to keep that industry going at all costs. But I think if he could see what my cousins and I do for a living, see us tapping at screens instead of bashing metal, he would not hesitate.
I can’t help noticing that the biggest exponents of protectionism are never offering to bash the metal themselves. It’s always on behalf of somebody else. Now, I’m aware that what I’m saying to most people is counterintuitive, right? The big advantage that Michael and our inside have here is that we are not designed for this world of skyscrapers and superabundance.
In our genomes, we are still on the savannahs of Pleistocene Africa. And a lot of free trade is, in the exact sense of the word, counterintuitive. It runs up against instincts and intuitions buried deep in our DNA.
So, for example, it seems counterintuitive that a country can get rich while running a large trade deficit. But it’s true. The US has had a substantial trade deficit since 1976, and I can’t help noticing that it’s done OK.
It’s certainly outperformed Europe. And the reason it has a trade deficit is because people want to invest there. And in order to have dollars to build up industries in the US, there has to be a balance in trade to make up for it.
Similarly, our inner caveman is always very worried about relying on imports for certain key things. If I tell you that this country imports 40% of its food, our first reaction is a kind of, ooh, you know, it’s a natural unease. But, my friends, we’ve been a food importer since the 1720s in this country.
And again, I can’t help noticing we’ve done OK. We’ve moved up the production scale since the 1720s. It doesn’t persuade the inner caveman who still wants to get through the winter and wants to have a stash of food nearby.
But specialisation is what has made us wealthy. This, I think, is what P.J. O’Rourke was getting at when he said that trade is really an IQ test rather than an ideological test. We all start with protectionist hunches, right, because they are intuitive and therefore popular.
Some of us look into it and see that free trade always and everywhere makes people richer. And some stick with their hunches and say, well, this seems to make sense. It seems to stand to reason.
But I have one question that I’d really like to put to the opposition today. When did politicians become wise enough to trust their judgment on picking which companies deserve protection? Oren has been close to government. He’s seen it at first hand.
Michael was in it. He was Secretary of State for Agriculture, among other things. Given the record of politicians and bureaucrats when it comes to installing telephones or running airlines or building cars, what makes you think that they would be the best-placed people to choose which industries deserve protection? What gives you confidence that they would be swayed by some wise and disinterested assessment of the national interest rather than being liable to being lobbied by politically connected organisations or industries that have strong trade unions?
My friends, just come back and look at the big picture. We have had 200 years of unprecedented prosperity. And that prosperity has rested on the spread of supply lines, the lowering of trade barriers, and the recognition of the rights of contract. If you want to sell me something and I want to buy it, there needs to be a very good reason to criminalise our transaction.
The fact of you being in another country is not such a reason. Free trade has been the ultimate spreader of social justice, of poverty alleviation, and of peaceful progress. In the time that I’ve been speaking, 550 people have been lifted out of poverty.
That’s 550 reasons to vote for us on this side.
Second Speaker: Michael Gove (Against the Motion)
PETA CREDLIN: That is the first speaker for the proposition. We’ll now move to arguments from the opposition. Of course, we welcome here the Right Honourable Michael Gove.
MICHAEL GOVE: Peta, ARC, thank you. The last time I was in this building was at the launch of Rishi Sunak’s re-election campaign last year.
We were facing, as we are today, impossible odds. We were facing, as I suspect we will be today, almost inevitable defeat. But our arguments were right then, and Oren and my arguments are right now.
Dan’s argument is beautiful. The conception that he put in front of you of the magic pill of free trade is bewitching and enchanting. But his argument, like that magic pill, is an illusory invention that does not exist in the real world.
Universal free trade, like the brotherhood of man, nuclear disarmament, the League of Nations, or the idea of from each according to his abilities, to each according to his needs. All of these are beautiful ideas, but they run up against the brute reality of human nature in a world of competition and in a world where it is the responsibility of all of us to protect that which is dearest to us.
Lowering trade barriers between political allies who are broadly at the same level of economic development generally makes sense. But the sort of unilateral economic disarmament that Dan and Tony are arguing for, lowering all trade barriers, that is ahistorical, unconservative and geopolitically naive.
Now, if in this room you think history is no guide, if you think conservative instincts have no value, if you believe that the only competition that exists in this world is between firms and not between nations, if you believe that, not only have I got a bridge to sell you, but you should vote for the other side. But if you pay attention to history, consider this.
Throughout history, every country that has developed economically has done so by making sure that it is capable of protecting vital economic interests. From Henry VIII and the way in which he imposed duties on wool and flax in order to build up our Tudor economy, to the way in which during the period of the Industrial Revolution, Britain achieved greatness behind a tariff wall, to the way in which Alexander Hamilton and William McKinley ensured that America achieved industrial supremacy by the use of protection. On every occasion you can look in history, when a country has developed industrially, it has done so by using protection to nurture those infant industries against predatory competition.
There was one brief period in the lifetime of this country when we had free trade. Unrestricted free trade, broadly between 1870 and 1914, when we believed, along with Richard Cobden, that where goods cross borders, troops will not. But again the brute reality of national competition in 1914 meant that that experiment crumbled.
And the world since then has been a world in which all of us have known that that liberal dream comes up against the reality of human nature. And that takes me to the second point, how unconservative my opponents are. They believe in a desiccated, ultra-liberal view of all of us as homo economicus.
We are units of production, utility maximising consumers, the slaves behind the screen that Dan hemmed. Actually, we’re not like that. We are people who love particular places, who find dignity in labour, who recognize that our national economy is not a series of lines on a graph or dots on a screen.
Protectionist Trade Policies Debate (Continued)
It’s about real people doing real jobs. If we had unilateral free trade, what would happen to our farming industry? What would happen to those who provide our food and steward our landscape and give our country character? We would say goodbye to them. What would happen to those industries that we still have? We’re already seeing our steel industry, our hydrocarbons and energy industry, undermined as a result of folly when it comes to energy.
How much worse would it be if we were to allow them to disappear altogether as a result of economic naivety? And talking of naivety, the greatest naivety of all is to assume that free trade continues to work in our interests. When we consider the greatest act of trade liberalisation in the last two decades, what was it? The accession of China to the WTO. What has been the result of that?
Well, we have seen that China has produced its own form of magic pill, which it’s provided to us. Electric vehicles, solar panels, all the paraphernalia of net zero. And the reason it’s provided that is it wants us to be hooked on that magic pill. It wants us to become addicted to its economic dominance.
The idea that in a world led economically by the People’s Republic of China and its predatory economic approach, that we should open our borders and our markets in an unquestioning way to that predation is spectacularly naive. And the other side know it, because it was Tony who signed a trade agreement, a free trade agreement with China. An agreement he now repudiates and says was a mistake.
Let us learn from history. Let us respect human nature. Let us recognise that we are more than simply economic units.
We are proud, responsible citizens who owe an obligation to the past and to the future, and that is why we must protect that which we cherish.
Tony Abbott: The Case Against Protectionism
PETA CREDLIN: Thank you Michael Gove. Let’s take the second speaker now for the proposition side, who will continue the argument that protectionism ultimately makes us poorer. Please welcome the Honourable Tony Abbott.
TONY ABBOTT: Well, ladies and gentlemen, of course protectionism makes us poorer. Just look at East Germany, which had Trabants rather than Mercedes-Benz, and just look at the United Kingdom in the 1950s, which drove around in Morris Oxfords rather than in Range Rovers.
And Michael, you might have been here before as part of Rishi Sunak’s campaign. Don’t think that that plea for sympathy is going to win you any votes today. Now, when British schools were failing, you, Michael, did not try to close down the good schools.
You encouraged them. You didn’t try to protect the bad schools. You tried to make them better, and it was that that made you one of the great British education secretaries.
So why not take the same approach to trade? Let the best flourish, and if the best happens to be from overseas, well, why not? Let’s be absolutely clear. A tariff is a tax, and the only reason some people sometimes like tariffs is because they think it’s a tax on foreigners. But no, it’s not a tax on foreigners.
It’s a tax on every local person who wants the best when the best happens to be something from overseas. And by imposing this tax, the government means that its own people have to pay more, or it means that the best becomes unattainable. And don’t think for a second that tariffs produce some kind of an industrial nirvana.
No, tariffs produce the kind of industrial archaeology that was all too prevalent in Britain in the 1960s. If British steel cannot compete with foreign steel, the answer is not to throw a massive tariff on the foreign steel. The answer is to make it easier to make steel in Britain.
Like abolish the insane net zero policy. Like abolish the insane diversity, inclusion and equity rules that mean that you can’t pick the workforce on its merits. Use coal, Michael.
Wonderful British coal that created the industrial revolution in the first place, that built the wealth of this great country once and can build the wealth of this great country again. Now, Michael talked about the social fabric case for tariffs. Why do we want to preserve a country living like the Amish? Why, what decent British craftsman would want to preserve his artisan lifestyle by prohibiting some other craftsman from preserving his? Then we get the so-called strategic argument for tariffs.
Well, this idea that somehow a tariff wall will protect us against China, complete nonsense. What protects us against our strategic rivals is not making our own consumers pay more. It’s not protecting inefficient industries at home.
It’s a strong military and strong alliances with a dynamic economy. That is what will keep us safe from our strategic competitors who want to destroy our freedom. I want to deal briefly with this argument that somehow globalization has made us poor.
You know, in 1990, more than 30% of the world lacked access to safe drinking water. By 2020, it was under 10%. In 1990, more than 30% of the world lived in absolute poverty.
By 2020, it was under 10%. In 2020, more wealth had been produced in the last 25 years than in the previous 2,500. Why did this happen? This happened because there was freer movement of goods, people, and ideas.
And sure, globalization has also led to equalization. It is true that as a result of globalization, Indonesia and Vietnam are relatively richer compared to the United States, Australia, and the United Kingdom. But what decent person would begrudge poor countries a chance to get richer just because they might be getting richer more quickly than us? The decent person revels in the good fortune of those less fortunate than ourselves.
Now, I know something about free trade because when I was leading Australia, I did free trade deals with our three biggest trading partners. I helped Australia and Britain to negotiate a free trade deal. I helped Australia and India to negotiate a free trade deal.
And I wish I’d had the chance to help India and Britain negotiate a free trade deal. I want to say to Michael, do not cower behind your trade barriers. Be grateful that thanks to the Trans-Pacific Partnership, there is now a free trade deal uniting Britain, Canada, Australia, and New Zealand.
Let, with free trade, yet again, poor benighted Britain, yet again, let the new world ride to the rescue of the old.
Oren Cass: Making Things Matters
PETA CREDLIN: Thank you, Mr Abbott. Let’s now hear from the final speaker for the opposition side who will argue against the motion. Please welcome Mr Oren Cass.
OREN CASS: Thank you very much. I apologize. I’ll be less passionate than my politician friends here up on the stage.
But I do appreciate the example of the magical pill because, of course, it starts with the word magical. Ah, it’s telling that there was not a wonderful story of an actual product that we’ve chosen to offshore and rely on foreign sources of that made the case for free trade. And I actually like the pharmaceutical example even better than that because, of course, let’s think about where a magical pill would come from if we were so fortunate.
It would only come to be at all if we maintained a strong patent regime. If we promised that whoever invented the pill was, in fact, entitled to some fairly significant period, I would suspect, of protection. Because, of course, it would not be in the interests of Britain or the United States and our corporations to invent something that could simply be copied by anybody who wanted at no cost.
And so it’s actually the case that we all recognize that markets require protection of various forms if we want the prosperity to emerge from them. We recognize that if we want people to invest and build things in our countries, there is going to have to be an effective market system in which they can do so. And we don’t run around with our hair on fire declaring this the punishing of free exchange between consenting individuals.
We realize it’s part of capitalism working properly. So it seems to me that the problem with the motion as stated protection makes us poorer is that it is simple-minded and it is unreflective. Yes, there are times, absolutely times, when protectionism would make us poorer.
But will it always make us poorer? No, of course not. We need to know who or what we are protecting from and we need to know how we are doing it. And the case for doing it, ultimately, rests on a very simple proposition.
That proposition is that making things matters. I want you to recognize if you think about all of the economics of free trade, Adam Smith, David Ricardo, all the way up through Paul Krugman, a fundamental premise of the argument for free trade and dropping all trade barriers is that making things doesn’t matter. That it doesn’t matter what we make.
That Australia should be indifferent between excelling in semiconductors and excelling in kangaroo meat. It further assumes it doesn’t matter whether we make anything at all. To Dan’s point about the trade deficit, if someone else will make everything for us and we can buy it on credit, we should simply be grateful and enjoy the free stuff.
But I think most of us intuit at this point, especially after the past 25 years of deindustrialization, that making things does matter. What we make matters because it matters for innovation. An Australia excelling in kangaroo meat is not going to have the same growth prospects of one excelling in semiconductors.
But if it simply drops its barriers and invites Taiwan to heavily subsidize its own semiconductor sector, then Taiwan will make the semiconductors. We also care what we make for security. As we are learning now in the US and the UK, you cannot simply deindustrialize and protect your defense industrial base.
You can’t just be good at making submarines and aircraft carriers. If you are not good at making steel, you will not make good submarines and aircraft carriers. And if you say, well, China makes the steel cheaper, not because they’re better at it, but because the Chinese Communist Party pays the cost of it, then you will in fact find yourself weakened in a way that no amount of higher defense spending is going to solve.
And finally, it matters because in fact the jobs matter. I appreciated Dan’s example of the wonderful audiovisual industry that has apparently popped up. I appreciated the skyscrapers and the superabundance.
It turns out that the people who lose the jobs are not the ones who take those new jobs and enjoy the skyscrapers and superabundance. David Autor, who’s probably the leading economist on this, has just released a new paper that found particularly in the US that most trade-induced job reductions in manufacturing reflect a loss of mid- and high-earning jobs, that jobs that do comprise the eventual rebound are disproportionately found at lower-earning terciles, and to the extent that trade-exposed areas do see net gains in high-premium employment, it occurs among college-educated workers only. Non-college employment falls in high-premium industries and rises in low-premium industries.
And so I suppose one way, actually, of engaging this motion is to ask, what do we mean by us? Do we mean us in this room? Protectionism probably would make us in this room poorer to some extent, to the extent that we rely upon financial engineering in our large, superabundant skyscrapers, computer programming, earning the premium from shifting other people’s jobs overseas. It may also mean us if we’re speaking about the future of the third world, and unquestionably, free trade has raised many people there out of poverty. But if we’re speaking about our fellow citizens at this Alliance for Responsible Citizenship conference, then the us needs to be everyone, and particularly those least fortunate among us in our countries, who we have cost so much with this policy.
And so I don’t think anyone here is proposing protectionism across the board, but we are asking for more nuance than the free traders have granted in recent years.
Questions from the Audience
PETA CREDLIN: Thank you, Mr. Cass. Well, thank you to both sides for your arguments. We’ll now move to some questions from the audience. There’ll be questions, obviously, to all speakers. Two minutes each to respond, please, and then we’ll move to closing arguments.
First question is to Lord Hannan. Lord Hannan, you were a great advocate for Brexit. What has been the UK benefits for free trade since leaving the EU?
DANIEL HANNAN: We’ve joined the Trans-Pacific Partnership, as Tony said. We are close to negotiating an FTA with India, but the big game will be a bilateral between the US and the UK. The US is our single biggest market. We sell more to the US than to our second, third, fourth, and nearly fifth biggest markets put together.
That would have happened long ago had we not been bound by protectionist, defensive interests on the continent. While I have a little bit of time left, I’d like to say one other thing about what we just heard from Oren. The idea of steel being important to our national interests, I agree.
I agree. China has never been in our top 10 overseas sources of steel. We’re our own single biggest producer and our other big sources of imports are Germany, the Netherlands, Turkey, Spain.
And this makes a really important point, which is the difference between self-sufficiency and security. Because I think Oren was aligning the two things together, at least by implication. But if you think about it, they are very different things.
Real security, whether of steel or food or of anything else, means being able to source from the widest variety of suppliers so that you are not vulnerable to a local disruption or shock which might as easily happen on your own territory as anywhere else. The most self-sufficient country in the world is North Korea, which has elevated Juche’s self-sufficiency to its ruling principle. It’s the last place that still has man-made famines.
And if we make steel needlessly expensive, what are we doing? Even if we accept that it’s propping up a few jobs in steel, how many more jobs is it destroying in construction, in car making, in electronic appliances, in rail and all the rest of it? Who gets to decide who’s worthy and who isn’t? I don’t trust the politicians to make that decision any more than I trust them to run our economy across the board.
PETA CREDLIN: Thank you, Lord Hannan. Michael Gove, your question from the audience.
If the Skills in an Industry Have Gone
If the skills in an industry in a country have gone, what is the point of protectionism? Well, the tragedy is if we do lose those skills, the tragedy is, as we discovered, for example, in our nuclear sector, that for years in the period after the Second World War, we developed, trained and showed global leadership in nuclear power and energy. And then we carelessly abandoned that. Our nuclear power stations are now designed, built and provided for us by the Chinese.
Do people feel more secure as a result of that? So when you lose an industry and you lose its skills, you also lose a crucial capacity to defend your own interests. And this is the critical point about Dan and Tony and the argument that they made. We’re not arguing for autarky.
We do believe that it is a good thing, as we mentioned earlier, to lower trade barriers between countries that are politically friendly and economically broadly at the same level of development. But the reason that we invoke China is that China is deliberately choosing to subsidize its own industries in order to ensure that it can undercut every other competitor. And according to Dan and Tony’s logic, you go for the cheapest option every time.
Anything else would, of course, be protectionism. But what happens when you see a power like China or indeed any other potentially malign and rivalrous power exercise effective monopoly control over something that is vital to your defense, national security and indeed the flourishing of your industry? What happens when it is Chinese steel that is in your cars, Chinese steel that is in your buildings, Chinese steel that is in your submarines? You’re over a barrel, captured, lost. The sovereignty that you lose when you lose strategic industries is a sovereignty which allows you to determine your own future and better to defend your own people.
Outsourcing to China Without Protectionism
PETA CREDLIN: Thank you, Michael. Tony Abbott, how can the West reverse the increasing trend of outsourcing supply chain and production to China without protectionist measures?
TONY ABBOTT: Well, I think we simply appeal to the sense of duty and patriotism of significant people in our big businesses. Now, I do have to say that a lot of people in big business have put very short-term economic interests ahead of the long-term national interest.
I do think it’s important to think of things other than simply short-term costs when you are considering the long-term flourishing of your business and ultimately of your country. So, if I were an Australian manufacturer, for instance, I would want my supply chains to be reliable. But I wouldn’t expect government to whack a tariff on China to make that happen.
I would think that my own sense of duty and honour would keep me to that right and just cause. Can I just take up a point that Michael made a moment ago? He says Britain has lost nuclear skills, the implication being that somehow protectionism is going to give Britain back its nuclear skills. Why did Britain lose nuclear skills, even though it was, as Michael said, the pioneer in civil nuclear power? It was, along with the United States, the pioneer in military nuclear power.
Well, first, because I suppose scientific education became unfashionable. Second, because of anti-nuclear paranoia fanned by so many members of the British establishment. Most of all, because of over-regulation.
Get rid of the over-regulation, get rid of the high taxes, get rid of the prejudice against the hard sciences. Britain then will be a flourishing nuclear power once more.
PETA CREDLIN: Thank you, Tony Abbott.
Protectionism and the Brain Drain
PETA CREDLIN: Oren Cass, your question is, do we need protectionism in order to fight the brain drain?
OREN CASS: Do we need protectionism to fight the brain drain? I think that’s a good question. I don’t know where we’re considering the brain drain. I suppose in the UK there is probably more of a brain drain problem.
And in that respect, I should say I agree very much with Tony’s point that better education, a better regulatory environment, and so forth is very important. At the end of the day, though, there will remain a question of what kind of jobs there are in Britain. Is there an opportunity to do cutting-edge engineering? And one thing you will find is that there is only going to be opportunity to do cutting-edge engineering in places where there is an opportunity to do cutting-edge manufacturing.
This is a point that Andy Grove, the longtime CEO of Intel, back when Intel was a great company, used to make. He watched what was happening in Silicon Valley and described very presciently we each in our own narrow focus are doing what we need to do to optimize cost. As a result, we are moving manufacturing overseas.
Not so much to China in the case of semiconductors as to places like Korea and Taiwan that were covering half the cost of building an advanced semiconductor fab. And when we do that, invariably the engineering is going to follow. And when we do that, the expertise is going to follow.
The incentive to study any of these things in the first place is going to follow. And then, by the way, we’re going to look around and see that nobody is doing it anymore and conclude we’re just not as good at it. That somehow Taiwan must have a, quote, comparative advantage in semiconductor manufacturing because, of course, a rocky outcropping off the coast of China is the ideal place to manufacture the world’s most advanced products.
But, of course, that’s not true. What we make in a given country in an advanced industrial economy is not discovered. It is determined.
And the countries that choose to determine it are the ones that will win.
PETA CREDLIN: Thank you, Oren Cass. We’ll now move to closing remarks.
Closing Remarks
PETA CREDLIN: Each speaker will have two minutes to address the proposition. I’ll remind you of the proposition again, that protectionism makes us poorer. Leading the argument first, please, Lord Hannan.
DANIEL HANNAN: Suppose we’d been having this argument 200 years ago, as indeed, as a nation, we were, right? And the Michael and Oren side of that time would have been saying, the real jobs are in land. Everyone knows that the real jobs are in food production. These so-called manufactories are never going to employ enough people, right? And the Oren of that era would have said, yeah, the clue is in the word magic.
What would the magic pill actually have been? It would have been cars and Netflix and smallpox vaccines and life insurance and all of the things that were unimaginable that people were released to do because we stopped trying to be self-sufficient and extended the opportunity of the entire world’s inventiveness and put it at the service of poverty alleviation and rising living standards. And by the way, we didn’t do that on credit. There was a little rhetorical trick there where Oren said the trade deficit is financed on credit.
No, there is a difference between a government deficit caused by spending too much money, which, of course, is on credit and which we’re all against, and trading. There is no relationship. There’s never been an established relationship between whether you’re in surplus or deficit and how fast your economy is growing.
It is all balanced by the investments made in your country. One more thing. Michael used the phrase unilateral disarmament and that, I think, goes to the heart of the problem.
Trade is not a war. As Ronald Reagan said, you shouldn’t call it protectionism, you should call it destructionism because it weakens your own industries. What we’re doing when we lower barriers is making things easier for our own people and raising standards of living at home.
And let me close with one observation. Why do we impose blockades on enemy countries in war? What are we trying to do when we impair the enemy? We’re trying to make them poorer, yeah, we’re trying to… Can we all agree that we’re not trying to nurture their infant industries? Can we all agree that we’re not doing it in order to make them more competitive on the world stage? So why do to ourselves in peacetime what we do to the enemy in conflict?
PETA CREDLIN: Thank you, Lord Hannan. Michael Gove.
MICHAEL GOVE: A sense of duty and patriotism. That is what Tony enjoined on all of us. But that sense of duty and patriotism, he believes, should be exercised only by business people who he’s arguing, in order to make sure that they’re not ensnared by foreign powers, should themselves decide to have lower dividends or to make lower profits.
But that sense of duty and patriotism shouldn’t be exercised by us collectively as a nation. So I’ll ask you this question. Do you think that it is more prudent to leave it to every individual business to decide how dutifully and patriotically they will resist the lure of cheap Chinese steel? Or do you think we as a country should overall ensure that all our businesses are protected? And by protection, I don’t just mean tariffs.
They can play their role. But we all know that there are other ways of ensuring that we can protect intellectual property. As Oren pointed out, we can restrict investment by other nations and by rivals in that which we consider to be either essential to our national security or critical to our future growth.
We’ve done it in the past. We do it to this day. And we accept that we may be, at any given point, missing out on a bargain basement offer from the Chinese or anyone else to supply this good or to acquire this technology.
But the reason we do so is that we do recognize that trade is indeed a weapon in the hands of our enemies. They subsidize and they acquire in order to ensure that they can essentially overrule us. What Dan and Tony are asking you to do is to say a little temporary profit is worth China and our enemies controlling our economy.
Is that a bargain that you wish to take?
PETA CREDLIN: Tony Abbott.
TONY ABBOTT: That’s not what we’re saying at all, Michael. We are saying that protectionism makes countries poorer.
That’s what we’re saying. And I’m just trying to imagine you, Michael, if I may, as I look at you on this stage. I’m trying to imagine yourself wearing a heavy leather apron, stoking a blast furnace somewhere in South Wales.
I mean, really and truly, if you could not see yourself doing that in some recreation of the era of the dark satanic mill, why do you want to inflict this on other Britons as some kind of archaeological industrial fantasy? Look, if we can be outcompeted by other countries in some things, there’s a very simple way forward. We do our best to make ourselves more efficient in those particular sectors or we find other things that we can do that we are better in other countries at. And that way, everyone gets richer together.
We get smarter and richer by doing different things and doing them better. Now, let me finish with this observation. If protectionism is such a good thing and if tariffs make the country imposing them stronger and the country suffering them weaker, why on earth would any sensible country impose a 25% tariff on its friend Canada and its friend Mexico and only a 10% tariff on its foe, China? The protectionists just can’t think straight.
PETA CREDLIN: Thank you, Mr. Abbott. Oren Cass.
OREN CASS: Well, Tony should study the news more carefully. The U.S. negotiated good agreements with Canada and Mexico and has imposed a tariff only on China. So, we’re doing something right.
I’m glad that we came back to the magical pill at the end, the 200-year-old magical pill that wasn’t a magical pill at all. It was industrialization. That, yes, that is what we would like to see, extraordinary domestic investment and progress that is absolutely good for everybody.
And today, that is what we would like to see, domestic investment in expanded capacity that create good jobs for everybody. And we don’t have it. And part of the reason we don’t have it, it’s because of a free trade regime that simply says, move to where you want to go, wherever it is cheapest.
I feel like we’re three to one at the end here by the time Tony got done telling us what Australian manufacturers are doing wrong, too focused on the short term, not thinking about the national interest. That is the problem. And I promise you, corporations are not going to change their behavior of their own volition.
So, I wanted to close with a quote from Adam Smith. You may have heard it. It is the paragraph where he uses the term invisible hand, the only time he ever does.
Back in those days, 200 years ago, here’s what he wrote. “By preferring the support of domestic to that of foreign industry,” did you know that that’s how the paragraph starts? “He intends only his own security. And by directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain.
And he is in this, as in many other cases, led by an invisible hand to promote an end which is no part of his intention.” If we have the conditions where businesses will prefer the support of domestic to foreign industry and where their produce will be of greatest value, we will have prosperity and become richer. If we accept this motion, we will continue down the current path.
PETA CREDLIN: Thank you, Mr. Cass. Thank you to our speakers.
Lord Hannan, the Right Honourable Michael Gove, the Honourable Tony Abbott, Mr. Oren Cass. It’s now your opportunity to vote on the basis of the arguments you’ve heard. I’ll remind the room that when we started this hour, the vote was 56% in favour of the motion, 29% against and 13% abstained.
The motion is that protectionism makes us poorer. If you go to the app, if you go to the schedule for today, open this item. In your calendar, there’s a voting mechanism.
Please vote for, against or sit on the fence and abstain. I hope you don’t do that. I’ll just pause for a moment while you’ve got the opportunity to do that. 35 seconds or so to go to get your ballot in. The politicians up here are nervous. Oren Cass is very relaxed.
He’s coming in, so I’ll remind you at the beginning that protectionism makes us poorer, 56% in favour of that motion, 29% against that motion, 13% abstained. Oh, we’ve had a shift. We’ve had a shift.
PETA CREDLIN: Goodness me, we’ve got now, the motion is that protectionism makes us poorer. 45% are for the motion, so 56 down to 45. Against the motion was 29, is now 46.
So a very narrow 1% win. And we’ve basically halved the abstentions. The abstentions have come from 13% down to seven. So thank you to our speakers. Please, thank our speakers. Daniel Hannan, Tony Abbott, Michael Gove and Oren Cass.
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