Alex Rubner - The Export Cult: A Global Display of Economic Distortions

A Global Display of Economic Distortions

Alex Rubner

First published 1987 by Westview Press

Published 2019 by Routledge
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Alex Rubner 1987

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LC 87-51219

ISBN 13: 978-0-367-29202-7 (hbk)

Unfortunately good economics is not always perceived to be good politics.

William Simon , US Secretary of the Treasury

My friend would reproach me angrily if I identified him by name and revealed that before the war he had been a member of the Young Communist League. This discreditable episode - as he would see it today - was revived some thirty years ago when he was short-listed for the post of managing director of the UK subsidiary of a renowned US firm. To finalise the appointment he had to present himself at the corporate headquarters. It was to be his first journey to the US and he went in person to the embassy to obtain a visa. In those days applicants were asked to declare whether they had tuberculosis, criminal convictions and/or had been (since the age of sixteen) a member of a subversive organisation. My friend's prospective employers had obviously not been told of his adolescent political infatuation and his wife advised him not to volunteer the truth about this youthful misdeed to the US authorities. Being of a somewhat nervous disposition he nevertheless disclosed what he apprehended might make him ineligible to receive a visa. The consular official - he had a sense of humour and facetiously addressed this budding business executive with right-wing views as 'comrade' - told him that exceptions were only entertained if an ex-communist's journey could be seen as bestowing benefits upon the US. Helpfully, he came up with an expedient solution. Granting the visa, he recorded in writing his reasoning: 'this visit might be the first link in a chain leading to the promotion of US merchandise in the European markets.' Surrounded with this halo my friend's subversive sins were cleansed and he had become respectable. The anecdote epitomises a characteristic disposition in post-war capitalist and communist societies, in developed and under-developed economies: exports are meritorious and by implication exporters are heroes.

The gist of this book was first set out in a short chapter of The Price of a Free Lunch (now out-of-print). There I mentioned in passing the alleged wickedness of Marks & Spencer (Britain's hallowed retail organisation) which had such a dismal export record, referred cryptically to the export of Brazilian bricks camouflaged as leather shoes, and derided the dogmatic assertion by a US Secretary of the Treasury (Michael Blumenthal) that paying bribes is 'simply not necessary' for the conduct of business overseas. Encouraged to elaborate on these themes, I organised further research into the multifarious forms of export promotion, interviewed both academic pundits and individuals who have dirtied their hands in international trade, and also drew on my own professional experiences.

The writing of this book owes much to my life-long interest in populist responses to economic maxims. The accent is on what people perceive to be true. Ophthalmologists and politicians play by different rules. The former are not obsessed with how patients evaluate their skills. The latter, however, depend very largely on the approbation of their constituents. Politicians sometimes feed sacred cows even when convinced that to slaughter them would be in the national interest.

The fable that exports-are-always-good is derided by economists of all shapes and sizes. Yet, in this instance, there is no intellectual disparity between the uninformed man-in-the-street and most sophisticated politicians. Almost intuitively they accept the validity of the legend which would have it that exporting, especially of merchandise, is a patriotic endeavour that ought to be promoted. Some regard exporting as such a laudable deed that they solemnly connive at concomitant breaches of international conventions.

The export epic is played on the world's stage and accordingly my examples have been drawn from all over the globe. The United Kingdom has provided me with a disproportionately large number of luxuriant stories. This is due to my having studied the export cult from London's watch towers. In addition the Harold Wilson administration demonstrated that the United Kingdom was adept at conceiving original, absurd and costly export incentives. In what other country would legislators have debated between midnight and dawn the intricacies of a proposed scheme to tax-exempt entertainment expenditure incurred to woo a certain class of potential buyers of British exports? More will be told of this nocturnal saga but suffice it to say here that these grown-up men and women sacrificed their night's sleep because they believed that such a trivial export incentive would be in the national interest.

A major excuse for artificially stimulating exports is the spurious argument that only heavy subsidies could improve the BoP. However, countries like Germany and the US have offered relatively few incentives and yet flourished - perhaps their prosperity was in part due to a muted enthusiasm for the export cult! Tokyo has provided overt and covert export subsidies and even in 1985 was still manipulating the exchange rate to help exporters. It would be wrong, however, to attribute the post-war success of the Japanese economy exclusively or even largely to governmental support for merchandise exports.