A GUEST POST FROM MARTIN
I have written several articles on British Grand Strategy in the 21st Century. Owing to many of the comments and criticisms of my ideas on Think Defence I have modified many of them to a more realistic and achievable level. I am a firm believer that without a goal beyond cutting NHS waiting lists the British people will become increasingly lost. I also believe that we are only limited by the power of our imagination and we should seek to constantly challenge the historical conventions and ask why we do things the way we do and whether or not we can do things better.
The next 50 years will present us with many challenges. However, it will also lead to many opportunities. If we take a bit of time today to think about things then we can shape that future world in a way that will benefit us, our children and grandchildren.
Contents
Total Defence
Over the past two decades the United Kingdom has become somewhat lost in its strategy towards the world. After the collapse of the Soviet Union, our foreign policy lacks a clear goal which has meant that our military policy has had little to follow.
Our current strategy is a mixture of desperately trying to hold on to our “special relationship” with the USA, while half-heartedly trying to foster some form of European Common Foreign Policy. Lack of a clear goal has seen our foreign and military policy become reactionary, which has been further enhanced by liberal interventionism leading to the disasters of Afghanistan and Iraq.
While it is difficult not to react to situations like Kosovo, Libya and the Global War on Terror it should not be our only aim as a nation.
The world of the near future will present us with challenges every bit as difficult and potentially dangerous as our forefathers faced. Shortages in basic natural resources, global warming, over population and the rise of new great powers will present us with possibly one of the most challenging periods in human history. Add to that the formation of a United States of Europe and we can see that UK foreign and security policy will be presented with challenges every bit as difficult as those of the Cold War or World War Two.
We need a strategy that covers all aspects of economic, foreign, military and security policy. This strategy must have one simple goal, to enrich the lives and enhance the safety of the British people while at the same time enhancing the lives of the people in the rest of the world. It must also guarantee our ability to provide for our people even in a world facing substantial constraints on its natural resources.
In order to meet these goals we will have to combine almost all aspects of government policy towards a common objective, while at the same time coming up with new and better ways to do things. I call this approach Total Defence.
Total Defence seeks to remove the economic and political levers others may use against us while at the same time enhancing the levers we can use against others. This increases the United Kingdom’s diplomatic and economic influence while at the same time enhancing the safety, security and economic prosperity of the country. It also seeks to make the United Kingdom more self-sufficient and give us more control over resources we can’t produce at home.
Historical Reference
From the 17th century, the United Kingdom depended on its Merchant Navy for wealth and the Royal Navy for defence. The Merchant navy allowed trade generating money to build warships. The warships of the Royal Navy protected the Merchant Navy and allowed it to conduct its trade, which allowed it to generate the wealth of the nation. The people of the United Kingdom understood the relationship between the wealth they received from the trading operations of the Merchant Navy, which meant that they supported spending on the Royal Navy. As time went on and trade grew so the country began to build an empire.
This is obviously a simplistic view of British Imperial policy, however it serves to illustrate a situation whereby British Military, Foreign and Economic policy were combined to enhance the economy and the security of the United Kingdom.
The resulting Pax Britannia guaranteed a relatively peaceful world from 1815 to 1914 and enhanced the lives of millions of people right across the globe.
Obviously we cannot do anything on the same scale as our ancestors achieved, however we can do something similar on a smaller scale.
Home Front
Total Defence begins at home. In order to begin such a strategy we must remove the levers that other nations can use against us, while at the same time enhancing our economic ability to influence others. We also need to become more self-sufficient, while at the same time reducing our environmental impact on the world.
In addition, we need a strong economy to pay for our military and foreign policy which can hopefully generate further income for our economy and so on.
Trade Deficit
The first thing we need to tackle is our trade deficit i.e. the amount of money we borrow from the rest of the world.
The UK has normally run at a trade deficit since the end of the 19th century. The fact that we have yet to go bankrupt proves in part that much of this deficit is caused by the invisible exports of our financial system.
However, becoming a surplus nation insulates us from economic controls others may choose to try to use on us. Indeed this is the method the USA used to force a back down from Britain over the Suez crisis in 1956. Nations such as China with large budget surpluses hold substantial amounts of US debt. This gives them the ability to a certain degree to influence US policy removing US independence. While currently 90% of UK debt is in UK hands we should not lose site of the influence that others can have on us even with just this small holding of 10%. As our debt to GDP level continues to worsen, the control others have over us increases.
In order to improve our trade deficit we must focus on three policies: removing the structural fiscal deficit; increasing exports; and decreasing imports. These three items are the holy grail of modern economic policy, however by thinking outside the box there are a number of things we can do to influence all three.
Fiscal Deficit
A major contributor to the trade deficit is the government spending beyond what it earns. Imposing a legally binding golden rule where buy the government cannot borrow more than it takes in over a five year period should allow for long term fiscal restraint.
The number one priority at present has to be getting the economy back to growth. If that means more short term borrowing and infrastructure projects then that’s exactly what we should do.
The UK was in a trade surplus the last time the government experienced a fiscal surplus which just goes to illustrate how critical government borrowing is to the trade deficit.
Energy Independence
Currently the UK is a net importer of energy. While we are still a relatively large oil producer, since the mid 1990s we have become a net importer of both oil and gas. Despite having large coal reserves, we import much of the coal we use and most alarmingly due to the the large amount of gas used in the UK for electricity generation we are rapidly becoming the biggest gas importer in the world.
While our government has sought deals especially with countries like Norway and Qatar to supply much of what we need, we are still open to the vagaries of price fluctuation on our economy. It is no coincidence that when oil has spiked above $100 a barrel in both 2008 and 2012 our economy has experienced a sharp slowdown. As resources become increasingly scarce in future we are likely to see more constraint on our economy by high energy prices.
Through price volatility, what happens in other areas affects us even when we don’t use the resources from that region directly. Just because we don’t import oil from the Middle East does not mean that our economy is unaffected by the geo-politics of the region. Just because we don’t import gas from Russia it does not mean that Russian Gas politics have no power over us.
The need to import ever larger amounts of energy affects our trade deficit as well. If we did not require the oil we produce for domestic demand we could easily export it which would boost our exports. At present, just the oil and gas deficit in the UK costs around £5 billion per year while production of oil and gas is some £40 billion per year. The UK’s trade deficit is around £50 billion per year or about the same as our oil and gas imports and production combined. There are several new technologies that could help us rapidly wean ourselves off of oil and gas and help to give us energy independence while at the same time boosting exports and decreasing imports.
Liquid Fluorine Thorium Reactors (LFTR)
For those of you who are unaware of this technology I suggest you watch the following documentary on you tube:
http://www.youtube.com/watch?v=GQ9Ll5EX1jc
You may also want to read the economic analysis and technical specs at:
http://energyfromthorium.com/author/robert-hargraves/
The Liquid Thorium reactor was first developed at Oak Ridge National Laboratory in the 1960s. The program was scrapped due to lack on interest in 1973. The lack of interest was caused primarily because the reactor did not produce fissile material capable of being used for Nuclear weapons. As such the DOE in America and subsequently the rest of the world built light water pressurised reactors which did produce plutonium. There are many advantages of using a Liquid Fluorine Thorium Reactor which I have listed below:
- The liquid metal core prevents meltdowns as happened at Chernobyl and Fukushima. The reactor is inherently safe and can operate in a hands-off configuration i.e. with no input the reaction will stop.
- The fact that the reactor does not operate under pressure means that there is no need for a high pressure casing which substantially reduces the cost of the building and increases the overall safety of the design.
- The reactor can be switched off and on rapidly allowing it to better respond to fluctuations in electricity production especially when combined with intermittent renewable sources such as wind and solar.
- To start the nuclear reaction a Thorium reactor requires Uranium 233 nuclear waste. This means the reactor actually eats nuclear waste.
- The reactor produces much less waste than a conventional Uranium reactor. Of the small amount of waste produced, 90% is only radioactive for 10 years while the remaining waste lasts for around 300 years. This contrasts with the plutonium produced in a Uranium reactor which requires storage for some 10,000 years.
- Many of the radioactive by-products from the reactor are incredibly useful such as Plutonium 238 for spacecraft and Bismuth-213 for cancer treatment. Currently both of these isotopes are in desperately short supply.
- The by-products of a Thorium reactor cannot be used to make Nuclear weapons removing much of the concern over proliferation.
- Removing the need for large pressurised containers means that the Thorium reactor can be made in a smaller more modular design. This would allow for rapid building in a factory further reducing cost.
- As the Thorium reactor is a breeder, it uses its fuel much more efficiently than a solid fuel uranium reactor. Thorium is incredibly abundant and right now represents a waste by-product from rare earth mineral extraction. Currently US stocks that are already mined and stored could power the USA for 400 years. While total US reserves could power the country for up to 10,000 years. The USA has nowhere near the world’s largest reserves of Thorium. There may well be enough Thorium on the planet to power the world for literally thousands of years.
Currently no country in the world has an active LFTR program although since Fukushima many have begun to look at it. With the difficulty we are experiencing in manufacturing a new fleet of uranium reactors the time may be right for the UK to pursue this technology with the same sort of vigour we devoted to the first generation of Nuclear power plants.
One of the most costly and difficult parts of an LFTR is the associated turbines and high strength tubing that produce the electricity and cools the reactor. This could be prime work for a company like Rolls Royce in the future.
If we were to devote £10 billion spread over ten years to an LFTR research program we could likely have a workable reactor design. If we made that design a modular 100 MW reactor then we could build it in a factory much the same way that we do with aircraft today. With a factory that created one of these reactors a day we could convert the entire United Kingdom electricity generating capacity to Thorium reactors in just 2.7 years. If the same factory kept producing, it could replace all coal burning capacity in the world in 38 years removing 10 billion tonnes of CO2 per year from our atmosphere.
A Thorium reactor built in a factory could under-cut the electricity cost of even the cheapest coal power plants.
Obviously, there are financial risks associated with developing any new technology and industry. However, given that an LFTR was built in the 1960s and any subsequent reports have suggested that the technical hurdles to building a power station can be overcome, I think the reward is well worth the risk.
While it’s relatively unlikely we would consider Thorium extraction in the United Kingdom (although it could be done) we could easily buy and store enough Thorium to last us for 100 years. One tonne of Thorium produces roughly one gigawatt of electricity for a year. The UK’s total electricity demand is close to 100 gigawatts. At a price of £20,000 a tonne, we could purchase enough Thorium to produce all our electricity for a century for £20 billion. We could store the 10,000 tonnes of Thorium in a container roughly about as big as a medium sized office block.
In addition to electricity, the heat given off by a Thorium reactor can be used to manufacture hydrogen. This fuel can be used to supplement areas where it is difficult to replace oil such as air transportation. In addition, this hydrogen can be used to make synthetic fertiliser giving our agriculture sector the ability to be self-sufficient from oil. Cheap and plentiful supplies of fertiliser could also allow us to farm very marginal areas of the third world increasing world food supplies.
Electric Vehicles
Obviously changing over our electricity supply is only part of the battle. Much of the oil we import is used for transportation. New plug-in hybrid vehicles could present us with a solution to this problem.
Plug-in Hybrids use a conventional petrol engine for long journeys and an electric battery charged from the mains for shorter journeys. The major advantage of this technology is that much of the electricity produced at night by renewables, nuclear and coal plants is wasted. The vast majority of electric car charging will take place at night so the energy is essentially free to the economy.
Since the average journey is well within even the 15 mile limit of the cheapest plug-in hybrids, we could substantially reduce our need to use petroleum.
In order to do this, the government would first need to invest in public recharging facilities especially for people living in urban areas.
Secondly the government could introduce a new road tax which would kick in after five years. The tax would be levied on all new road vehicles that do not have say a 15 mile all electric range. Over time, the tax would be increased until eventually almost all new vehicles bought in the UK have electric only capability. Eventually as batteries improve and the recharging infrastructure becomes more widespread we may see all electric vehicles becoming the norm.
Obviously, you could argue that we are swapping our dependency on oil for a dependency of lithium. However, we can buy and store all the lithium we need. Use of recycling could allow us to maintain our Lithium stocks almost indefinitely.
In addition to electric vehicles the government could increase its railway electrification program allowing almost all land based transportation in the UK to be based on electricity.
If the government was to start this program immediately it may very well help to stimulate our economy in the near term. The extra borrowing necessary to pay for such a program would likely be offset by the future cost of energy imports not to mention the increased tax revenue from more growth.
Exploiting Foreign Resources
We should remember than Britain does not simply begin at John O’Groats and finish at Land’s End. It stretches across the world through our network of foreign territories and our millions of overseas citizens. Total Defence seeks to leverage this overseas network for the good of the country.
Overseas Territories
The UK has the fifth largest EEZ in the world. However, much of this EEZ is not part of the United Kingdom but contained in the waters around territories such as the Falkland Islands and St Helena.
If we were to consider a union of these territories (at least the ones who want to) with the United Kingdom, then these resources would become our resources. I have no doubt that the non-tax haven British territories such as St Helena and the Falkland Islands would vote to join the United Kingdom.
It’s not as crazy as it sounds; the French use a similar set up with places like French Guiana in South America which is actually a part of France rather than a territory.
We are already beginning to find substantial oil and gas deposits in the water around the Falklands. We may well find substantial mineral and oil deposits around Ascensions and St Helena.
If we took the same impetuous to exploiting these resources today as we took to developing the North Sea in the 1960s and 1970s, then we could build a major new industry that could produce a substantial number of jobs and pay a lot of tax revenue to the treasury.
Subsea mining is a technology that is only in its infancy so we are likely to need substantial government backing to get it under way. However, with the UK’s deep sea expertise in oil and gas exploration, not to mention the fact that most of the largest mining companies in the world are based in the UK, this is well within our capabilities.
Citizen Tax
The United Kingdom has more citizens abroad than any other country. There are some 5.5 million British citizens living outside the United Kingdom. Currently, unlike America where citizens have to pay tax no matter where they are based, these British citizens (me being one of them) pay little if any tax to the UK exchequer. In order to help pay for defence and foreign policy I would like to see the United Kingdom introduce a Citizens Tax. This tax would be levied at a 5% rate, small enough so that most people will pay it, but large enough to make a difference.
We are likely to find that the vast majority of British Citizens who have emigrated to Australia and Canada simply hand back their passports. However, there is little cost to us of this. If we assume that half of these people don’t hand back their passport, and we assume that 2 million of them earn roughly the same as the UK average about £24,000 per year, then we could raise an extra £2.4 billion per year in tax revenue (more than the Royal Navy’s current budget).
As many of these people are well paid expats in finance and the oil industry, the sums may be substantially more. It is a relatively simple tax to collect as well. If you don’t file annual returns you won’t get your passport renewed.
We may also want to consider offering British passports to wealthy third world individuals. Many high earners in developing countries find it difficult to travel due to their passport. In today’s world it’s almost impossible to gain citizenship anywhere without being resident for five or more years. Many wealthy individuals, especially in countries such as China or Russia, find it prudent to have at least permanent residence if not citizenship in another country in case they either fall foul of their own government or find the country turned on its head by revolution. A citizenship tax at 5% of income is probably small enough for these individuals to consider. It could also turn many of the world’s most powerful and influential people into British citizens while at the same time raising more money for the exchequer.
With taxation, would obviously come representation. France currently has Members of Parliament representing not just French overseas territories like French Guiana but also large groups of French expats. France even has an MP for London.
We could appoint British MPs for countries that have substantial British expat populations such as Singapore, Australia or France as well as giving islands such as St Helena and the Falklands their own MP.
African Partnership
The United Kingdom will soon have the largest aid budget in the world. Due to our complete lack of direction on foreign policy much of this money is pissed up the wall in Southern Asia. What is left is spread thinly around Africa trying to reach the millennium goals. The benefit of this program to the British people is at best hard to derive. At worst, we could say there is zero benefit to the people of the United Kingdom.
This budget, which will soon be around £12 billion per year, could be used in a far more productive way, better for the people of the developing world and better for the most important people: the British tax payer.
My proposal is to get every scrap of this budget that we can and focus it on two regions in Africa. To start with we would invite both Kenya and Sierra Leone to join our African Partnership. We would then devote our aid budget to building these partner countries’ infrastructure. We would start in West Africa by building a large port in Freetown and in East Africa by expanding the port of Mombasa.
We would then work our way into the interior of the country brining roads, railways, electricity and telecommunications. Once we were finished with these two countries we would then expand into others.
From Kenya we may consider Uganda, South Sudan, Ethiopia and Tanzania. If the political landscape changes we could also consider Zimbabwe. From Sierra Leone we may consider Liberia and Guinea. We could also look at Cameroon and Ghana as separate projects.
In addition, we would support education especially the teaching of English, access to clean water and basic sanitation as well as basic health care such as inoculations and family planning. All of our efforts would be geared towards generating rapid economic growth.
In return, these countries would agree to remove tariffs against British companies and allow British companies to operate freely inside their territory. British companies would also be allowed to own land with no local participation. British Banking licences would also entitle a bank to operate in any of these countries with no local licence.
We would focus the infrastructure primarily on the natural resource sector with mining and agriculture top of this list. We would also have to insist on basic environment and anti-corruption legislation as well as on-going democratic elections in the country.
If we take away our compulsory obligations on the DFID to the UN and the like, we might be able to pump £8 billion a year into this program. Just to give you an example, if we could match the road building cost of China of around $1.3 million per mile we could build 9846 miles of road per year. That’s enough to go from Freetown to Mombasa three times each year.
Building this African Partnership would allow us to greatly improve the lives of the people of Sub-Saharan Africa. It would give Britain and UK PLC prime spot in the opening of perhaps one of the most important un-tapped economic regions of the future. The extra profits these companies derived would be funnelled back into the UK creating more jobs and paying more tax.
It may be the case that the extra tax revenue raised and jobs created does not cover the £8 billion per year. However, we would get a damn site more return on investment than we get from the current set up and I suspect we would help significantly more people. By putting basic environmental controls in place we could develop Africa in a more sustainable way than we have seen in Asia and Latin America for the good of the local people and the world environment.
By focusing the infrastructure on primary resources such as minerals and food stuffs we will gain better security of supplies in the future should we ever find the world lacking in such essentials.
By removing tariffs on British goods we can start to build a captive market for high-end British manufactured products. For example, many developing countries charge import tariffs of as high as 100% on luxury cars. If people have to pay this tariff on BMW or Mercedes you can bet they will buy Jaguar or Bentley instead.
This example may work equally well for foreign companies who produce in the United Kingdom such as Ford and Nissan. Either way it would help us get back to a manufacturing export economy and improve our trade deficit.
The African Partnership would be a free trade area. We would control the membership. This means that say 20 years down the line when Kenya is no longer receiving large parts of the aid budget, it will still have reason to stay in as its industries will be enriched by the new frontier we are building in places like Uganda or Zimbabwe.
No doubt one day in the distant future we would be squeezed out. However, that may well take more than 50 years to happen. As with Hong Kong and South East Asia today the prime position of British companies would likely continue for many years after our departure.
If we are forced at some point in the future to leave the European Union then this African Partnership would help the UK better deal with any economic ramifications of departure.
Military Strategy and Alliances
Combining much of our foreign and economic policy on this strategy would give us a clear direction to follow in our military strategy rather than the vague notions we have at present.
Africa
Obviously if we are going to invest £ 8billion per year of tax payer’s money into Africa then we need to safeguard our investment. Firstly, we would require at least some naval forces based in both Mombasa and Freetown. These naval units would primarily be tasked with anti-piracy roles as piracy has a detrimental effect on shipping and hence economic prosperity.
To foster the best security situation, we would work very closely with both the members of the African Partnership and other surrounding African nations.
We would need to build up the Army’s strength on the ground particularly its role in training of indigenous forces. We already have a training facility in Kenya but we would also need one in Sierra Leone.
One of the major economic drags on the region is civil war. Working closely with the African Union we could try and end or at least contain many of these conflicts. I am not suggesting large scale deployments of British Army units except in extreme situations however training, logistics, C4 and financial assistance could all go a long way to improving the AU’s ability to police its own back yard.
The Army’s key role would be to clear a path ahead of our infrastructure projects ensuring that a peaceful secure situation is present to allow conditions for rapid economic growth to take place.
To ward off any serious threats and improve our ability to deploy rapidly to the region, we may also wish to consider leases for RAF bases located in Sierra Leone and Kenya. There would be no need to station aircraft in these bases and to keep costs down we may consider using indigenous people to guard them.
South Atlantic
Investing substantial amounts of money into the exploration and exploitation of resources in the South Atlantic will require us to provide more in the way of military presence in the region. It will also be vital to gain support from Brazil. As Brazil moves its resource hunt further into the Atlantic it will face increasing security challenges of its own. Developing a joint security framework may help us solidify an alliance that would see Brazil recognise our rights in areas such as the Falklands. To further sweeten the deal we may look to make an all-out diplomatic effort on Brazil’s behalf for at least a permanent seat on the Security Council. In addition, we could consider basing rights for Brazilian Maritime Patrol Aircraft on Ascension.
Argentina is likely to be unhappy about our moves for union with the Falkland Islands. However, it is difficult to see how Argentina could become more belligerent than it is now on the matter. It may be that over time a more reasonable administration comes in to Buenos Aries and we can cut a deal on extended EEZs. However, if it’s not possible then we should simply say f**kem and get on with drilling. If this means putting a larger force down south then so be it. If there really are 60 billion barrels of oil down there then it’s worth it. We should also consider offering drilling rights to Brazilian and US oil companies to increase international support for our claim.
Obviously with such large and valuable resource extraction taking place we would need a larger military presence in the region. Fortunately, we already have much of the infrastructure in place at Ascension and Mount Pleasant. We may have to consider permanent naval facilities in the Falklands and possible RAF basing at the new airfield in St Helena. We would also probably require an increase in MPAs and surface vessels with an SSN based full time in the region as well. It would also seem prudent to increase the Army strength on the FI up to a battalion with additional heavy equipment and possibly attack helicopters as well.
Further South
The UK has a claim to a large part of the Antarctic Peninsula. At present current agreements prohibit commercial extraction of resources until the middle of the 21st Century. Our claim is disputed by Argentina and Chile and at present not recognised by the USA.
I am not suggesting we begin exploration of resources in Antarctica however we should keep an eye on the situation. We should gear our diplomatic efforts over the coming decades to receiving recognition from both the USA and China for our claim. We should also make every effort to come to agreement with at least Chile if not Argentina. At some point exploration and extraction will happen in Antarctica and we don’t want to give it a way for lack of forethought.
To improve our claim we may wish to permanently base people on South Georgia and the South Sandwich Islands and we should also consider patrolling the waters of the Antarctic Peninsula to deter illegal fishing which is happening today.
Europe
With the current Euro crisis one thing is becoming clear, a United States of Europe (USE) is not only necessary to fix the Euro crisis but also desirable to many of the European Political classes. With the current Euro crisis and the weak public support for the EU in the United Kingdom, it is likely to be only a matter of time until we have to leave.
It may be that we stay in the EU while others form the USE, and the EU becomes more of a trading agreement like EFTA. However this will leave us increasingly isolated. Total Defence would improve our ability to operate independently of Europe both economically and politically.
Rest of the World
By adopting Total Defence we would be far less dependent on the rest of the world than we are today. This would allow us to take a more relaxed position in our relations. We could also act far more independently than we do today. We would still be part of NATO (although NATO would have to recognise our southern territories), and we would still contribute to international operations but we would perhaps be less likely to be the first to action as we are now.
All of our diplomatic efforts would be aimed towards total defence possibly trading British support on issues to gain recognition of claims in Antarctica or get Brazil on the Security Council. Everything else would become a secondary consideration. Between our independent energy strategy, trade surplus and our control of natural resources both from the South Atlantic and the African Partnership we could become self-reliant.
Summary
Total Defence sets an economic target of self-sufficiency in basic resources and generating a trade surplus. It gives our Foreign policy a clear goal to help achieve this and allows our military strategy to be properly planned to support our foreign policy. The success of our foreign and military policy improves our economy and allows us to reach our targets of self-sufficiency and trade surplus.
I have outlined some relatively radical strategies here. However, there is nothing here than could not be done relatively easily and within current budgets. All we need is the foresight and imagination to make it a reality.
Although I love the idea of better self-sufficiency (I normally promote exactly this ideology) I’d like to point out the easy solution to your main goal…
“This strategy must have one simple goal, to enrich the lives and enhance the safety of the British people while at the same time enhancing the lives of the people in the rest of the world”
Join Europe completely.
Simon says “Join Europe completely.”
LMFAO as the kids say….
@ Martin
BZ for effort. Still wading through it.
I only read the economics part in full, and found it to be a collection of errors.
“The first thing we need to tackle is our trade deficit i.e. the amount of money we borrow from the rest of the world.”
Technically not the same, but that’s a tiny issue.
“The UK has normally run at a trade deficit since the end of the 19th century.”
There was a substantial surplus in the early 80′s and the normal for most of the period was to have really small deviations from balanced trade. The deficit only appeared for read during the 80′s and again under Blair.
http://www.tradingeconomics.com/united-kingdom/balance-of-trade
“The fact that we have yet to go bankrupt proves in part that much of this deficit is caused by the invisible exports of our financial system.”
Balance of trade is often considered as the sum of goods AND services imports and exports. If the financial system does export anything invisible to you, it’s because you didn’t look at the services balance. That, of course, would elevate the first tiny issue to a major error.
“However, becoming a surplus nation insulates us from economic controls others may choose to try to use on us. [...]”
Lots of mythology here.
Creditors have no power over debtors other than that they might withhold lending the money again when it’s about time to pay an old debt. That in turn is not so much of a lever either, for doing so might mean the old debt won’t be paid back, ever, because of a bankruptcy.
“As our debt to GDP level continues to worsen, the control others have over us increases.”
Did you even bother to look up the share of domestic creditors?
The government does not necessarily absorb all of the trade balance deficit through debt.
“The number one priority at present has to be getting the economy back to growth. If that means more short term borrowing and infrastructure projects then that’s exactly what we should do.
The UK was in a trade surplus the last time the government experienced a fiscal surplus which just goes to illustrate how critical government borrowing is to the trade deficit.”
A quick word search did not yield “savings” or “capital investment” keywords.
The way to go towards a balanced UK trade is to go back to an industrialised economy. Services trade is much smaller than goods trade for all large countries. You cannot inflate services to plug a major trade balance deficit (services are an already oversized part of the economy anyway).
A reduction of imports without substitution by domestic production means a loss of standard of life – not the way to go.
The way to go is to increase domestic manufacturing added value. That requires additional manufacturing capacity. That requires private capital investment and some public capital investment. Investment requires money, which can either be foreign credit (but we wanted to get rid of the deficit, right) or from domestic savings. Domestic savings = dependent on the savings rate. Savings rate = depending on interest rate, government (dis)incentives and culture.
So if you want to tackle the trade balance without huge negative side-effects, you need to swallow the pill of increasing the savings rate AND creating good conditions for capital investment for manufacturing capacity.
“…removing the structural fiscal deficit; increasing exports; and decreasing imports. These three items are the holy grail of modern economic policy…”
Hardly. That one would be the mystery of how to harness the diverging and separating forces of capitalism towards sustained prosperity for all.
The structural deficit is usually only about politics lacking backbone, while exports and imports can easily be manipulated through the currency exchange rates if you don’t have many other ambitions at the same time.
I lost interest in the article after this unconvincing economic part.
So should we ask Iran to scrap its plutonium-based nuclear project and replace it with one based on thorium?
Certainly a very interesting article. The idea of building thorium reactors and generating the energy we need to create a hydrogen economy is compelling. It is hard to know whether this is 10 years out or a generation away.
Economics, if I knew enough to give a convincing opinion I’d be driving a far better car and have to suffer far less fools.
At our local uni’ when the came to making cuts from the politics department they chopped the economists first. Much to the amusement of the philosophers who had then recently been forced to merge with politics.
EDIT: Um they only got rid of two thirds of the economists. The school has a rather snappy name that wouldn’t have been so snappy without the E at the end. The philosophers didn’t have their P added to the school name. Faculty politics…
Benefits of liquid thorium reactors overstated according to a recent report:
http://www.guardian.co.uk/environment/2012/sep/13/thorium-alternative-nuclear-fuel-overstated
If we can sack one in five of the army, then why not sack one in five of the civil service, quangos & council workers? Not doctors, firemen, but diversity, outreach, facilitator,climate change, deputy director types. Should get the government books back into balance & free up money for decent infrastructure.
The best near term nuclear reactor is the HTGR. Arevas version was picked for the US, should they get past the anti nuclear inertia. A PWR burns 5% fuel meaning 95% waste. A HTGR burns 65% fuel so only 35% waste. HTGRs can run on a Uranium/Thorium fuel mix. HTGRs can make Hydrogen as a byproduct.
I am all for methane recovery from cattle farms,sewage works, composting schemes. Perhaps 15% of our natural gas needs.
Only about 3% of bank money available for lending goes to industry. Tell banks if they want the taxpayer guarantee, then they need to raise this to 10%.
If we are on an energy kick,
http://coaltooil.com/
HMG should make sure all new houses come with solar panels and ground heat pumps.
I don’t think fusion is too far off. Though I know electric too cheap to metre is a concept some will struggle to get their head around.
Hartley, the reactor type you refer to is using graphite for moderation. Graphite was what turned the Chernobyl disaster from regional 8as Fukushima) to global.
The burning graphite leads to much more radioactive dirt released and the fallout becomes global.
J – ref: “Benefits of liquid thorium reactors overstated according to a recent report:”
mmmm’ so the article does not appear to actually link to the report, and no where in the article does actually say LFTR’s are criticized – in fact it says the opposite:
“The report notes that thorium’s advantages would be most noticeable in reactor types other than the conventional solid fuel, “
Hi Martin
A thought provoking piece. I have a few slight issues though.
1-Liquid Fluorine Thorium Reactors (LFTR). You made me aware of these in a previous posts of yours. While I found it interesting and like the idea of the technology, no one has developed this into a successful commercial enterprise. Not to say we shouldn’t have a look into this method of energy production but there are significant challenges to overcome, none of which you mentioned.
2-Electric Vehicles are still more expensive that petrol ones and so effectively your asking for a government backed industry, i.e the state having to prop it up and therefore significantly reducing the monetary quality of citizens lives.
3- Citizen tax, how do we know if people are paying 5% of their income? Any method of deducing this would be expensive and far from fool proof. I also doubt that foreign citizens will be willing to give up 5% of their income even if they are not living here. It may in fact scare people off, and we want to attract rich,inventive foreigners as much as possible.
Though i enjoyed reading it all the same. I was wondering do you still write your own blog?
mick
@ S O
“investment requires money, which can either be foreign credit (but we wanted to get rid of the deficit, right)”
Foreign investment actually helps the balance of trade. Foreign investment comes into the country and therefore is a surplus. The only reason the UK hasn’t got a larger trade deficit is the fact we have so much foreign investment.
“Foreign investment actually helps the balance of trade. Foreign investment comes into the country and therefore is a surplus. The only reason the UK hasn’t got a larger trade deficit is the fact we have so much foreign investment.”
Sorry, that is utterly in conflict with economic science conventions about what those words mean.
Capital export is the twin of goods/services export, same with balances thereof.
Net foreign investment in a country means that this country is having a (total) balance of trade deficit. There are some exceptions concerning allocation, but in the sum net foreign investment = symptom of trade balance deficit.
Or let’s make it easier; without money.
A factory in Birmingham is being built with parts produced in Germany. Look at what this construction does to the balance of trade.
Yet another way; A German sells a machine to a British customer. The customer pays with GBP 1 million. Now the German goes to Britain and invests. He happens to invest the exact quantity of pounds he owns: 1 million. Conveniently, he buys its own exported machine back.
Result:
UK balance of trade: minus GBP 1 million
AND
foreign investment in UK: GBP 1 million
Twins!
Capital export and goods export are two accounting moves for what would be the same one thing if there was no money.
Trade accounting practice is a bit more complicated, but this is about the basic mechanism and these basics are good enough for this purpose.
Not sure as trade deficits are really that much of an issue. I think too much attention (and money) is being devoted to the notion that we have to rebalance trade.
Anyone get the feeling “Total Defence” went from “Total” to almost purely “Economic”?
The “Total Defence” policy I’m more familiar with has 5 components, a lot interlinked and in very broad brushstroke terms still rather valid even after 30 years.
Military: Pretty much explains itself, though the influences on Social and Economic Defences are extremely profound. Without military security, investments are at risk to foreign pillaging, which also generates reluctance to invest in the country in the first place. Social implications of a lack of military security can be seen in the hate generated when Muslim radical’s bombs go off, killing people and generating a backlash of hatred against the whole community in general, causing social strife. Ironically, diplomacy is classed under military defence. Clauzwitz would be laughing.
Civil: Anticipating crisis and preparing for them. Not only large scale natural disasters but also small scale civil ones like fire, or even muggings or sudden heart attacks with things like citizen’s watches, CPR lessons, fire safety lessons etc.
Economic: Sure, you can castigate the government for overspending, but on a personnel level, have you been saving? Or retraining skills to keep relevant in the modern market? Remember, no one forced the Americans to take sub-prime mortgages, not the US government, not the CIA, not the Mafia. The people themselves. Governments also do play a part in the Macroeconomic structure, but a people’s culture of overspending can cripple an economy just as easily as incompetent government.
Social: With the recent riots, guess I don’t have to really belabour this point, other than to also point out that, as an example, people who see themselves as Britons first and Muslims second are less likely to start bombing the UK. Not to mention the more you know about the other religions living alongside you, the less likely you are to accidentally insult them. With the corresponding riots, etc…
Psycological: Actually, this is where the UK has an edge, having a long history of success through even military adversity with iconic victories. This steels the people to carry on through difficult times instead of just giving up. Cuts down on people immigrating out during difficult periods too.
I’d be interested if anyone thinks that there is another facet of defence that can be added to the 5 rather brushstroke ones.
As for the citizen’s tax… I’d rather citizenship in a country be a joy, not a chore. It’s always easier to raise taxes than to find other sources of funding, but in return, I’d say poor people. Another option might be to have government investment into successful companies. Government investment bodies are fairly common nowadays and would take some of the tax burden off the taxpayers with an alternate source of government income, as well as smooth out some of the “balance of trade” problems. If you own part of the foreign company making money off you, you repatriate some of the “imbalance” back into your economy, though it will NOT be 100%, but every little bit adds up.
Hi Guys,
Thanks to TD for publishing this article and thanks to everyone who has commented. Sorry If it gets a little bogged down in economics but I think the UK desperately needs a coherent economic strategy that integrates with foreign and military policy.
I have tied to return every ones comments
@ Simon –
“Join Europe completely.”
How’s that working out for the people in the Eurozone. I don’t see there economic well being or security being enhanced any time soon.
@ SO – The trade deficit is always balanced by the capital account i.e. if we buy things from abroad through the trade deficit we borrow more money in the capital account. If we balance the trade deficit we balance the books so to speak. It’s obviously a simple way to look at it but I did not want to write an economic essay on the BOP. I think you can get the point.
If you look at this link you will see the UK normally runs at a trade deficit
http://www.tradingeconomics.com/united-kingdom/balance-of-trade
“Creditors have no power over debtors other than that they might withhold lending the money again when it’s about time to pay an old debt. That in turn is not so much of a lever either, for doing so might mean the old debt won’t be paid back, ever, because of a bankruptcy.”
“Against a country like the UK which dominates the world financial sector debt is an immensely powerful weapon. We simply could not ever afford to default as other have in the past. “ It’s a weapon that has been used against us in the past both in the 1950’s and the 1970’s by the USA and it’s one that is likely to be used against us again if we do not properly insulate ourselves.
“A reduction of imports without substitution by domestic production means a loss of standard of life – not the way to go.
The way to go is to increase domestic manufacturing added value. That requires additional manufacturing capacity.”
I would love the UK to do this but its immensely difficult for government policy to have an impact here. It’s much easier to look at controlling other factors like imports that we can have substantial control over.
So if you want to tackle the trade balance without huge negative side-effects, you need to swallow the pill of increasing the savings rate AND creating good conditions for capital investment for manufacturing capacity.
Increasing the savings rates as with German only serves to reduce consumer demand and ultimately import’s. The world is awash with capital and access to capital is not an issue for quality manufacturing.
Putting a squeeze on consumer spending and increasing manufacturing as with Germany or Japan actually makes us more vulnerable to global economic shifts.
“I lost interest in the article after this unconvincing economic part.”
That’s ok I did not right it for zee Germans
@ Mick 346
1- There are no doubt challenges to overcome to get a working LFTR design operating. However everything I have read states that these challenges can be overcome with current technology. Much of the reactor was built in the 1960’s and understanding of chemical processes and metals to deal with high heat environments have come on leaps and bounds. It’s a massively easier task than trying to crack sustained fusion, economically remove and store carbon from fossil fuels or find an economical way to store renewable energy.
2- EV vehicles are more expensive to buy and cheaper to run. Often consumer psychology distorts a market through a fundamental flow to grasp discount rates. I.e. a bird in the hand is better than two in the bush. Governments take corrective actions in markets all the time. Any cost added to purchase price of petrol vehicles could be offset by a reduction in fuel duty balancing out the two types of vehicles on a cost footing.
3- In terms of British expats is a simple pay 5% or no new passport. People may cheat on it (most won’t) but as this is additional revenue it does not really matter. For foreigners they will still be able to come to the UK and stay as non doms with no British passport if they like. If they want a British passport (like Al Fayed) then give them one. If they live in the UK they will pay full tax. If they choose to live abroad they pay 5%. I don’t see how this would scare anyone off.
I gave up on my blog not long after SDSR 2010. There did not seem much point anymore. I get a lot more debate and comments from writing for TD which I think helps me to better formulate any ideas I have.
@ SO
It’s getting a little dull and economic in the comments. I think you are all arguing the same things. There is a balance of payments. The UK’s trade deficit is partly offset by flows into the current account via investment in the UK and flows into the Capital Account primarily from borrowing abroad. If we remove the trade deficit then we remove the capital account surplus. As a nation we have less debt in foreign hands.
@ Chris B
“Not sure as trade deficits are really that much of an issue. I think too much attention (and money) is being devoted to the notion that we have to rebalance trade.”
I many ways I agree with you. There is nothing wrong with British manufacturing. However as wee begin to import more (specifically energy) this will become a much bigger issue in the future. Pre North Sea the UK had many balance of payments issues and post North Sea we are likely to have similar problems. Nations like Japan and Germany have dealt with this for a long time primarily through encouraging trade surpluses.
@ Observer
Apologies for the large amount of economics. However I do feel it’s a vital part of UK defence. In the modern world on Nuclear Weapons and a global economy we are far more likely to be attacked economically than by other means. How many aircraft carriers and armoured divisions did we have in 1956? It did not matter one bit when the US put the economic thumb screws.
There is no point is securing oil resources with the Army or guarding sea lands with the navy if you don’t have any money to buy that oil or any over sea’s goods.
@ J and Jed
Great find there J. I don’t read the Guardian so I had not seen it. I will take some time tonight to actually read the report itself. As Jed points out the Guardian article seems to come from the premise that Thorium is bad but other than some of the more minor benefits like (maybe someone could build a bomb from it) it does not seem to say why.
@ JH – There interesting what we might call 4th generation reactor design’s out there. Makes you wonder why we seem to have ended up with the worst design for power generation.
If Chernobyl had not put everyone off Nuclear research then I think we would have many better options for CO2 free power generation that we have today. I am all for solar and wind mills but the prospect of such intermittent energy supplying all our needs is a distant dream.
@martin
They needed the reactors then to produce nukes as well. I also have the sneaky suspicion that the designers then were too in love with their idea of a self-maintaining reactor that uses it’s own power to cool itself, and forgot what would happen if the cooling cycle got cut due to power interuption.
The 4th gen reactor I really had my eye upon was the pebble bed one, in part due to the fact that despite population density, energy usage was too low for a full up high energy reactor, and that the pebble bed had the best safety as well as was scaleable to low range energy production. Waste production.. not so good. Tradeoffs, tradeoffs. On the bright side, our government is already looking into nuclear reactors in preperation for future energy crisis, so at least they are forward looking. Now for the difficult part. Getting the public to swallow it.
Addendum:
Actually martin, that thumbscrews part was a bit of a miscommunication between the US and the UK. At that time, the USSR was pushing into Hungary and couldn’t be seen to have double standards, so they had to posture.
I’ll look up on some of my notes, but I remember the American Sec of State? asking “Why didn’t you invade”, to which the reply was “if you had but even winked at us, we would have gone ahead.” Paraphrased, I’ll look for the reference. It’s …somewhere.
SO
You are mixing apples with lemons.
A 1972 Morris Marina & a 2012 Volvo both run on petrol, but I know which one I would rather be in , in a crash.
Google the Nuclear Engineering article, 15 Feb, 2012.
The US Next Generation Nuclear Plant Industry Alliance chose the Areva Gen IV HTGR as being the best design for future American reactors. They liked the pebble bed design as well, but did not think it would scale up well.
Japan built a test HTGR a few years ago. They call it a HTTR.
Britain built the dragon HTGR experimental reactor , but our senior officials/politicians did not understand it & mothballed it.
@ JH and Observer – I like the safety aspect of the pebble bed as well. However the molten salt reactor has an inbuilt safety mechanism in the form of the liquid metal core which expands releasing heat and preventing melt down.
My main reason for liking Thorium is its great abundance. If we are going to switch to all Nuclear for the worlds energy needs then peak Uranium is going to be every much a reality as peak uranium. since the industrial revolution we have been moving for one energy crisis to another. In the past we have managed to find more resources or use different ones such as oil and natural gas. However logic dictates that this won’t last for ever. Imagine if we could hand out children and grand children a cheap energy source that would last for thousands of years. That would be the greatest gift of all. Fusion and renewable’s hold promise for this but in the near term and possibly in the longer term they are expensive and come with there own drawbacks.
reading through the national nuclear laboratory report it seems to be of the opinion that Thorium fuel cycle is worth investigating but that we should do this as part of an international effort.
Kind of sums up HMGs attitude to anything today. I wish our civil service and leaders would grow some balls. Imagine if we had decided to develop radar or jets engines initially as as part of an international effort.
The concept of trail blazing in order to gain industrial benefits is just beyond these people.
Well martin, the reason they probably want a combined effort is probably on the same basis as a lot of decisions made recently. $$$. Or lack of it.
On a more interesting note, the predicted slowdown of Chinese and Indian exports is here/around the corner.
If you think the economic crisis is bad…
It just got worse.
Good luck.
I still blame the US.
@ Observer
“On the bright side, our government is already looking into nuclear reactors in preperation for future energy crisis, so at least they are forward looking. Now for the difficult part. Getting the public to swallow it.”
I think the public will swallow it. The bigger challenge will be breaking through the green movement that is so heavily invested in the renewable’s solution and has way too much influence in government as well as the media.
If we see other countries moving to 4th gen Nuclear I am sure we will eventually follow suit but we will have lost all the industrial benefits.
lol martin, you remind me of my cousin.
He once commented “the public will accept it, especially the first time they receive a $500 dollar electricity bill.”
Didn’t the Japanese build a fail safe reactor that fitted into a container?
In general it is worth reminding ourselves that all our ‘Shiny toys and brave boys’ need paying for. If we do not get our economy right then we will end up with 3 part timers armed with pointy sticks standing at Dover and waiving defiance across the channel.
However if we cut everything benefits, health etc then we will end up with riots and civil destruction, and the state will fall apart anyway!
As for Thorium reactors, v sceptical of any technical panacea we tried some of those in the 60′s concord etc…
http://nextbigfuture.com/2011/10/flibe-energy-liquid-flouride-thorium.html?m=1
@ IXION
Where do you stand on EU contributions? I see figures ranging from £15billion to £150billion; some of it hard cash and some of it hidden costs (whatever they are..)
X
I am Euro atheist, I tend not to believe anything anyone says about it pro or anti.
Some of the pro’s have their heads in in the clouds, and zero grasp of economic reality. At the moment Europe is a ‘wishful thinking club’ full of dreamers.
Some of the anti’s are frankly carpet chewing nutters! I got one a bit drunk once and together we experienced the parallel universe inside his head in which the last hundred years somehow had not happened, we are still THE world power workshop of the world etc, etc. Even when sober some of the anti’s ‘what will happen when we are free of the shackles of Europe’ theories are at best wishful thinking.
There are substantial benefits of membership and substantial problems caused by it.
Economically, complicated does not cover it! Anyone who says they KNOW what would happen if we left, good or ill is bullshitting.
At least one economist I know said his best guess is that overall the benefits of leaving would roughly be cancelled out by the losses; and that whilst there would be great change- eg a reborn fishing industry 200 mile limits and all that, but there would be losses: – All those car manufacturers that export to Europe form us might not be so happy, and plants might start closing.
But if you want to talk about scrapping the foreign aid budget….
@ Swimming Trunks – That’s a really great link on the small LFTR being designed for the US military. Maybe the troops will get phazer’s after all
seriously though its great to see some one with pockets as deep as the DOD getting involved.
Martin,
“Join Europe completely”
…based on the idea that a large, heavy, and useless boulder is more stable than a small, light, entirely useful house brick.
I think I’ve been brainwashed whilst asleep. I seem to think that a large state (e.g. USA, China and Russia) creates stability. I’m going through a takeover here at work so need to start thinking that there’s absolutely no benefit in small agile companies or nations.
Simon
“I seem to think that a large state (e.g. USA, China and Russia) creates stability”
All three have huge social, industrial, ecocnomic, military and other problems, I mean… huge. Not to a point of danger, lol, but I would not call it stable in a sense.
Obviously the veneer we all see is that they’re fine…
I’m not one for joining EU ‘completely’ but there’s sense in Europe forming an alliance. Just not an Economy one, atm anyways.
Very interesting article, will read it properly again after next shift.
I think Lord Owen suggested the UK have a referendum on Europe with 3 options; fully in including the Euro & federal structure, leave, then my favourite of being still in but semi detached.
@ S O
“Yet another way; A German sells a machine to a British customer. The customer pays with GBP 1 million. Now the German goes to Britain and invests. He happens to invest the exact quantity of pounds he owns: 1 million. Conveniently, he buys its own exported machine back.”
The example you start with is an import by Britain which is a minus from the balance of payments. Assuming he buys the product back at the same price then Britain is exporting a good. Therefore the BOP is equal or balanced. There is no deficit at all. A better example of foreign investment is: Japanese firm spends £10m of its profits to set up a warehouse in the UK. That is inflow of money from another country into the UK. Therefore this is a net gain of money for the UK economy.
Ah, thorium… the magic bullet of energy production. Electricity too cheap to meter, no more radioactive waste, an end to nuclear weapons proliferation, and not a single unsightly wind turbine in sight.
I can imagine Martin typing away, while a Disney-esque array of wide-eyed woodland creatures looks on attentively; all is well at the gingerbread reactor, where merry dwarfs of lusty voice sing heartily as they go about their work…
Only the USA and Eritrea tax according to citizenship rather than residency. Year on year, increasing numbers of wealthy Americans renounce their citizenship to avoid the IRS; some of them may end up living and investing in the UK.
Fully taxing non-resident Britons would just break links with wealth creators; there simply is not enough benefit to having a British passport if you begin to hit them in their pockets. Or if a 5 percent rate, people would just not bother paying as it would be too expensive for HMRC to chase them through other jurisdictions.
“Assuming he buys the product back at the same price then Britain is exporting a good.”
No, it isn’t. The purchase happens in the UK. It would only be an export if the product was moved back to Germany.
Those trade statistics are being created with customs data.
“Japanese firm spends £10m of its profits to set up a warehouse in the UK. That is inflow of money from another country into the UK. Therefore this is a net gain of money for the UK economy.”
The Japanese firm would have gotten GBP how? Through export of goods to the UK, which the UK paid for with GBP.
So they moved goods to the UK, got GBP bills for that, had no use for GBP bills in Japan, moved GBP bills to UK, bought something with the GBP bills.
So in the end, capital export is AGAIN equalled by goods/services exports.
Look, I studied economics for years. You’re trying to debate me on stuff that I learnt in the third week of these studies. There’s not a snowball’s chance in hell to win an argument against the basics of international trade accounting. This stuff was settled on generations ago by economists. We’re discussing conventions here, but they cannot be disproved for they were proved to be mathematically coherent.
The problem with Europe is how to do business with it, without letting it dictate minute rules back.
For example, the desire to buy and sell Hazelnuts with our European partners, but without having to comply with a seven page document laying out the specifics on how a hazelnut should appear;
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2002:187:0014:0020:EN:PDF
@ S O,
Not that I want to interject into your debate with Mick but for an “economist” you’re being surprisingly short sighted, re; “The Japanese firm would have gotten GBP how? Through export of goods to the UK, which the UK paid for with GBP.” — Or a simple currency exchange.
@ Brian – Trust me as someone who works in the offshore finance industry it is dam near impossible for anyone to get a new passport unless you emigrate to somewhere like Australia and become resident. My thoughts on the 5% citizen tax where that it’s a new income flow that HMRC has never received before. It’s a small enough amount that most will pay it. If you don’t pay it then you won’t get your passport renewed (many expat’s have to renew every two or three years so a big sanction) The vast majority of expats and people in general are law abiding and will pay it. 5% is not enough of an issue for most people to run off and change citizen ship.
“I can imagine Martin typing away, while a Disney-esque array of wide-eyed woodland creatures looks on attentively; all is well at the gingerbread reactor, where merry dwarfs of lusty voice sing heartily as they go about their work…”
I love the imagery and if you count my beagle as a woodland creature then it’s highly accurate. In all seriousness though where are the draw backs in Thorium. I realise its proponents over state benefits just as the proponents of other fuels do. As yet through my own personal research I have been unable to find anything majorly wrong with Thorium and it seems to be a far superior fuel source to anything we have today.
The big problem with trying to assess thorium from the outside is that all the voices have their own agenda. Arguments get overstated or understated all the time. China or India will probably be the first to find out whether thorium is a goer.
Some of the principles you touch on are, in general, good ideas. Aid spent on more infrastructure projects, and more densely targeted to make a bigger impact on a country’s economy. Or assisting the AU with materiel support – help Africa sort out its own problems. AU plans are often eagerly supported by African nations, but are regularly hamstrung by the lack of logistics, intelligence, etc. But attack helicopters to the Falklands again, no. And Mandelson’s second resignation was over the Hinduja’s passports – perhaps all you need is a Labour government before passports go on sale.
@ Brian – No doubt there is a lot of hype around Thorium the same as anything else. However given the potentaial pay off HMG spending a few billion over the next decade to investigate it seems entirely reasonable to me.
I don’t see attack helicopters in the FI as a big issue. I do see absorbing the FI into the UK as the major point. If we need to put more defence down there to deter the argies or anyone else then so be it.
“Not that I want to interject into your debate with Mick but for an “economist” you’re being surprisingly short sighted, re; “The Japanese firm would have gotten GBP how? Through export of goods to the UK, which the UK paid for with GBP.” — Or a simple currency exchange.”
Currency exchange makes sense only for two reasons – central banks manipulating currency exchange rates or for buying something. Plus tiny period-to-period spillover effects. I focused on buying goods, for it’s what trade balances are about.
Few Japanese will give Yen away that are useful to them in order to get GBP and then only deposit the GBP in their socks. AND Brits doing the same with the Yen. Such a nonsense has the relevancy of a statistical error. That’s “clownish behaviour” as you can find it in many statistics and especially polls, but it doesn’t influence the whole noticeably.
@ S O
The only thing I can think of is that “currency exchange” means something different in Germany than it does here?
If a Japanese company wants to buy a British warehouse as in Martin’s example, they can just go to their bank and have the money transfered, which in effect is an automatic currency exchange. Or they could just take out a loan with a British bank.
Why do you think they have to sell £10 million worth of goods in order to get pounds?
@ Martin – been away so only just seen your post. Very interesting read. While I agree with your broad point – the UK’s lack of a coherent strategy other than cosying up to the US – I don’t agree with all your suggestions.
UK is investing in fusion research so why not thorium; not very familiar with the technology but it sounds more “real world” than a fusion reactor.
Your proposals re Africa are interesting but I can’t help thinking – why bother, why not just keep the aid money for ourselves? Doesn’t Comic Relief and Children In Need suffice to meet our “moral obligation” to help those less fortunate than ourselves? Don’t forget our substantial contributions to UN projects as well.
Absolutely agree with the need for closer ties with Brazil – perhaps they could have Russia’s permanent seat at the UN (it belonged after all to the Soviet Union). Hopefully a friendlier Brazil will mitigate the need for us to beef up our defences down south – your Ascension Island suggestion is especially intriguing (I have suggested a similar arrangement with India over Diego Garcia). Surprised you don’t even mention the Commonwealth – surely our first port of call if EU collapses or we pull/get thrown out.
Your suggestion of a citizen tax is interesting and I think you’ve pitched it at the right level at 5% – high enough to raise substantial funds while low enough not to encourage widespread abuse/avoidance. I wouldn’t waste time or expense in enforcing it; as you say, anything we get from it is a bonus.