16 November 2017

Brexit Britain must channel Cobden and Bright

By Radomir Tylecote

Just over a hundred years ago, in the early years of the 20th century, tens of thousands of people gathered at a series of rallies. Their cause was free trade; they were there to commemorate Richard Cobden and John Bright’s successful campaign to abolish the Corn Laws.

These tariffs on imported grain had kept the price of Britain’s food punishingly high and their impact was dire – especially on the poor. In Sheffield in 1843, Bright saw “persons not more than twenty-five… appeared poor, decrepit creatures… How could it have been otherwise? They had never had enough of good or substantial diet.”

John Bright was perhaps the truly great liberal of his day, who led not just the campaign against the Corn Laws – which were repealed in 1846 – but also agitated for the extension of the vote in the Reform Act of 1867. Fundamentally, he believed that the only thing that would stop Parliament creating needless poverty was the ability of the man on the street to vote to make its laws.

Culminating in a ten-thousand-strong rally at Alexandra Palace, these Anti-Corn Law gatherings celebrated a Britain that, uniquely, put no tariffs on any import. This was eventually replaced by a system of subsidised food production and protectionism. After the Second World War, countries lowered their border barriers for industrial goods through the GATT system, but attempts to reduce behind the border barriers have not been successful at a global level.

This has resulted in the “new normal” of stagnant growth. Global economic output is now slowing, and the share of GDP made up by trade is falling. Taxpayers pay for protective subsidies that maintain unproductive firms, then they pay again through the higher prices that result. In agriculture especially, tariffs misdirect economic effort everywhere; they make everyone poorer.

What would Bright have made of the EU Common Agricultural Policy? The CAP ensures we buy expensive produce from wealthy European farmers, at the expense of both British consumers and developing countries’ producers. These agricultural barriers – the Modern Corn Laws – make the British household pay much more each year for food, disproportionately penalising our own poor. Although the CAP has improved in recent history, tariff barriers do remain, and the CAP continues to bar imports from many developing countries.

In a speech earlier this year, New Zealand’s former trade minister Sir Lockwood Smith said: “I do not think you British people see your country the way we see it from the outside. You are the fifth biggest economy in the world. You have a heritage of open trade.”

The Legatum Institute’s new report, The Brexit Inflection Point: The Pathway to Prosperity demonstrates that restoring our free trade requires complete freedom to negotiate with new partners: if any of our commercial regulations or terms of trade remain controlled in Brussels, the opportunity will be lost.

As Frank Trentmann recalled in his book Free Trade Nation, at Alexandra Palace that day, the Liberal future Prime Minister Henry Campbell-Bannerman told the crowd: “One road – a broad and easy one – leads to protection, to conscription, to the reducing of free institutions to a mere name… And the other road leads to the consolidation of liberty and the development of equity at home.”

The popular demand for cheap food and free trade was a product of Britain’s raucous and vibrant civil society – quite unlike the symbiosis between authoritarianism and protection in Europe at the time.

Free trade did not depend on empire: it depended on democracy. Its strongest support a century ago was on the East Coast, especially Yorkshire, Lincolnshire, Norfolk and Suffolk, in the North West and in the West Country. There, the poor who had seen the franchise newly extended to them, had the greatest interest in the social justice that free trade brought – and it is no coincidence that the map of support for free trade then is a virtual palimpsest of support for Brexit a century later.

The right decisions now by a British government can give the poorest people wherever they are in the world the chance to trade with us without punitive tariffs and other barriers, and rejuvenate world trade itself. Cobden and Bright would recognise the great liberal opportunity of our century – and so should we.

‘The Brexit Inflection Point: The Pathway to Prosperity’ is published by the Legatum Institute

Dr Radomir Tylecote is Senior Research Analyst of the Legatum Institute's Special Trade Commission