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The EU’s energy problems are about to get a lot worse

European Commission President Ursula von der Leyen on Europe's plan to become carbon-neutral. Credit: TED

June 23, 2023 - 1:00pm

The EU, it is now obvious to see, is not only a project contributing to peace but in equal measure one which depends on peace. As long as the world was comparatively stable, European decline was a rather comfortable affair. It did not seem to matter that economic power had shifted away from the old continent to China and the US. Nor was Brussels perturbed by the fact that the EU economy, having been larger than its competitor in 2008, now constitutes just 50% of the US economy. Even if Britain were to rejoin tomorrow, Washington’s economy would still be larger by a third. 

Similarly, energy dependency on Russia or broader economic dependencies on Chinese markets were seen less as risk factors, more as successful elements of a joint European foreign policy. Now it turns out that this stability was nothing more than an illusion, and the return to reality is more difficult than many realise. Take, for example, decoupling from China. The move would be “unthinkable for almost all of German industry”, according to Mercedes-Benz CEO Ola KĂ€llenius, a sentiment shared by Belen Garijo, chief executive of the science company Merck. 

Also doubtful is how easy the decoupling from Russian energy will be in the long run. The EU is an economic giant with feet of clay as far as energy is concerned. The share of global oil production is less than 0.4%, 2.3% for natural gas, and only 3.8% for coal. Optimists might say that these fossil fuels will soon be replaced by renewables anyway, but unfortunately electric vehicles, solar panels, and wind turbines are more resource-intensive than current technologies. The necessary minerals and rare earths are just as scarce in Europe as coal, oil and gas, so whatever benefits renewables might bring, geopolitical independence will not be one. 

The EU has woken up to the problem, and is now demanding more autonomy in energy, food, water and raw materials. Europeans, however, are also finding out that it will be an almost impossible task to simultaneously pursue autonomy in these areas while promoting its green agenda — which calls for less energy production, less farming, and less mining. Indeed, this week the European Climate Neutrality Observatory warned that the EU is currently on course to miss its climate neutrality target in 2050. Most countries still enact strict bans on fracking and, just a few days ago, the Dutch government closed down Groningen’s natural gas field, the largest in the EU. In addition, Brussels — under pressure from Germany — continues to drag its feet over embracing nuclear power, which could bring some relief from gas dependency for electricity production. 

It is also not clear how forcing French and Irish farmers to reduce their livestock or going to war with Dutch farmers over environmental goals will increase European food security. The same applies to the ambitious “Nature Restoration Law”, which was criticised for its potentially negative impact on European agriculture by some members of the European Parliament. 

Sometimes it feels as if the EU is suffering from a collective case of cognitive dissonance, because otherwise it is hard to explain how Brussels plans to “restore nature” and call for more mining without seeing the contradiction. There is simply no way to achieve both goals simultaneously. At some point the EU will have to make a decision, because it cannot muddle through forever.

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David McKee
David McKee
1 year ago

“…the EU economy, having been larger than its competitor in 2008, now constitutes just 50% of the US economy.”
Worse than that: when Britain joined the EEC (as it was then), Europe accounted for about one third of the global economy. The EU that Britain has left behind is just one eighth of the world’s economy. Europe’s glory days are long behind it.

Stephanie Surface
Stephanie Surface
1 year ago
Reply to  David McKee

Europe will be just one giant Tourist Attraction, a museum of past glories, leaving manufacturing to other continents.

polidori redux
polidori redux
1 year ago

Well. one part of me thinks that if you can make a living that way, then fine. Unfortunately the other part of me thinks that you can’t.

Steve Murray
Steve Murray
1 year ago
Reply to  polidori redux

Have a chat between yourselves, and let us know what you come up with.

polidori redux
polidori redux
1 year ago
Reply to  Steve Murray

Any suggestions?

Steve Murray
Steve Murray
1 year ago
Reply to  polidori redux

Yes, use different voices.

polidori redux
polidori redux
1 year ago
Reply to  Steve Murray

Biting!

polidori redux
polidori redux
1 year ago
Reply to  Steve Murray

Biting!

Steve Murray
Steve Murray
1 year ago
Reply to  polidori redux

Yes, use different voices.

polidori redux
polidori redux
1 year ago
Reply to  Steve Murray

Any suggestions?

Steve Murray
Steve Murray
1 year ago
Reply to  polidori redux

Have a chat between yourselves, and let us know what you come up with.

Jim Veenbaas
Jim Veenbaas
1 year ago

Europe will become nothing more than a huge museum. Here folks, this is what advanced civilization used to look like.

Last edited 1 year ago by Jim Veenbaas
Simon Denis
Simon Denis
1 year ago
Reply to  Jim Veenbaas

If only! A museum might at least be peaceful. In fact it is rapidly becoming a re-settled, polyglot slum, in which the artefacts housed in museums are at ever greater risk of defacement and destruction.

Simon Denis
Simon Denis
1 year ago
Reply to  Jim Veenbaas

If only! A museum might at least be peaceful. In fact it is rapidly becoming a re-settled, polyglot slum, in which the artefacts housed in museums are at ever greater risk of defacement and destruction.

Emil Castelli
Emil Castelli
1 year ago

Haha..

If it is to be that it will be like the

‘demolition of Nimrud, an Assyrian city from the 13th century BC’.

National trust will pretty much ISIS their properties…

My guess is all left will be Tate Modern with the urinal mounted on the wall and Tracey Emin’s ‘Unmade Bed’ as all the National Gallery will be declared ‘Racist to the Core’ and the artwork thrown into the river….

haha, self harming loons….

polidori redux
polidori redux
1 year ago

Well. one part of me thinks that if you can make a living that way, then fine. Unfortunately the other part of me thinks that you can’t.

Jim Veenbaas
Jim Veenbaas
1 year ago

Europe will become nothing more than a huge museum. Here folks, this is what advanced civilization used to look like.

Last edited 1 year ago by Jim Veenbaas
Emil Castelli
Emil Castelli
1 year ago

Haha..

If it is to be that it will be like the

‘demolition of Nimrud, an Assyrian city from the 13th century BC’.

National trust will pretty much ISIS their properties…

My guess is all left will be Tate Modern with the urinal mounted on the wall and Tracey Emin’s ‘Unmade Bed’ as all the National Gallery will be declared ‘Racist to the Core’ and the artwork thrown into the river….

haha, self harming loons….

Andrew Fisher
Andrew Fisher
1 year ago
Reply to  David McKee

The global economy comparison is not so relevant. It was completely inevitable short of their pursuing disastrous economic policies forever, that China, and then many other countries, with much larger populations and areas, would catch up with Europe.

John Riordan
John Riordan
1 year ago
Reply to  David McKee

That statistic is shocking, but has to be judged against wider trends: the West as a whole is shrinking as a proportion of global GDP and this is something that we should all welcome, as the whole world finally joins free market capitalism and starts enjoying the lives they deserve as a consequence of it.

But it is nonetheless true that the USA and other parts of the West are doing far better at keeping pace with global economic growth while the EU is not. (Whether the UK joins the USA-style fast track or sticks to EU-style decline is difficult to predict right now: the only thins we can say for certain is that Britain CAN join the fast track if it wants because Brexit has delivered the freedom to do so. Our political class however is very obviously not up to that more challenging job, so the future isn’t certain).

As for the EU itself, it predominantly the cause of the economic decline and not, as some will doubtless claim, the solution to the problem. It seems unbelievable at this stage that there is anyone left in the European political class who deludes themselves that they hold a global leadership role in things like climate change, or that the EU is a regulatory superpower. The wake up call that is the Ukraine War has woken up everyone except the very people who really needed the wake-up call. It’s ridiculous, but there it is.

Stephanie Surface
Stephanie Surface
1 year ago
Reply to  David McKee

Europe will be just one giant Tourist Attraction, a museum of past glories, leaving manufacturing to other continents.

Andrew Fisher
Andrew Fisher
1 year ago
Reply to  David McKee

The global economy comparison is not so relevant. It was completely inevitable short of their pursuing disastrous economic policies forever, that China, and then many other countries, with much larger populations and areas, would catch up with Europe.

John Riordan
John Riordan
1 year ago
Reply to  David McKee

That statistic is shocking, but has to be judged against wider trends: the West as a whole is shrinking as a proportion of global GDP and this is something that we should all welcome, as the whole world finally joins free market capitalism and starts enjoying the lives they deserve as a consequence of it.

But it is nonetheless true that the USA and other parts of the West are doing far better at keeping pace with global economic growth while the EU is not. (Whether the UK joins the USA-style fast track or sticks to EU-style decline is difficult to predict right now: the only thins we can say for certain is that Britain CAN join the fast track if it wants because Brexit has delivered the freedom to do so. Our political class however is very obviously not up to that more challenging job, so the future isn’t certain).

As for the EU itself, it predominantly the cause of the economic decline and not, as some will doubtless claim, the solution to the problem. It seems unbelievable at this stage that there is anyone left in the European political class who deludes themselves that they hold a global leadership role in things like climate change, or that the EU is a regulatory superpower. The wake up call that is the Ukraine War has woken up everyone except the very people who really needed the wake-up call. It’s ridiculous, but there it is.

David McKee
David McKee
1 year ago

“…the EU economy, having been larger than its competitor in 2008, now constitutes just 50% of the US economy.”
Worse than that: when Britain joined the EEC (as it was then), Europe accounted for about one third of the global economy. The EU that Britain has left behind is just one eighth of the world’s economy. Europe’s glory days are long behind it.

Hugh Bryant
Hugh Bryant
1 year ago

In business, Europeans are risk averse to an extraordinary degree. I think this is because businesses are so minutely regulated that the cost of experimentation is inordinately high. For example, you build a new plant in order to launch a new product. After a couple of years it’s clear the launch has not succeeded. You then discover that the cost of closing the plant will be greater than the cost of opening it in the first place.
US businesses face many fewer constraints of this type.

Walter Marvell
Walter Marvell
1 year ago
Reply to  Hugh Bryant

Correct!!! It is all because of the totally different legal systems! Anglo Saxon Common law works on precedent – not Napoleonic codes – and has fewer pre existing constraints to restrain dynamism innovation and entrepreneurship. We were once unfettered by the suffocating regulatory New Order of Europe and we prospered. By contrast those nerdy scribes in Brussels are addicted to the codification/regulation of all forms of life – from bananas and army helmets to sanitary towels and the welfare of newts and bats. This grotesque heavy handed system leads directly to ..wait for it..their infamous’precautionary principle’ as it is inherently precautionary and risk averse! Ask Dyson! Or JCB! This explains the reason why the EU flounders and the US has soared ahead. The UK, saddled with a weird ugly unworkable mix of the two for 40 years, must now exorcise this demon; we must expel the EU’s precautionary legal regulsyory Blobby death star from the orbit of our planet – and free the minds of our wretched wfh Zombie Elite & Blob, all of whom are patently still mentally handicapped, incapacitated and under its toxic sway (lockdown anyone?).

Andrew Fisher
Andrew Fisher
1 year ago
Reply to  Walter Marvell

The term “Anglo Saxon” isn’t particularly useful here. The UK continues to be just as highly regulated as the EU, and even with our gold plating of all its directives and never bending the rules, as do other nations, worse. UK productivity is abysmal and has been for decades, so the previous relative lack of regulation isn’t the only thing that can be said on the issue of relative economic performance.

Germany (though not many other EU countries) still manages to outperform the UK, not least because it has always focused on quality and the workers actually work when they are there!

Billy Bob
Billy Bob
1 year ago
Reply to  Andrew Fisher

Productivity when talking at a national scale has almost nothing to do with the work ethic of the average worker, if it did all those supposedly harder working Eastern Europeans who moved to Britain in the last two decades would have dragged up the UKs productivity.
Productivity is increased by businesses investing in automation, new tools, technology and working practices. However due to a constant supply of cheap labour and credit many haven’t bothered to do so, instead simply hiring more staff and using company profits to enrich the shareholders.
If wages were higher (and the immigration taps turned off) then companies would be forced to invest in their business in order to get more output from each worker as simply hiring extra staff would be ruinously expensive

Billy Bob
Billy Bob
1 year ago
Reply to  Andrew Fisher

Productivity when talking at a national scale has almost nothing to do with the work ethic of the average worker, if it did all those supposedly harder working Eastern Europeans who moved to Britain in the last two decades would have dragged up the UKs productivity.
Productivity is increased by businesses investing in automation, new tools, technology and working practices. However due to a constant supply of cheap labour and credit many haven’t bothered to do so, instead simply hiring more staff and using company profits to enrich the shareholders.
If wages were higher (and the immigration taps turned off) then companies would be forced to invest in their business in order to get more output from each worker as simply hiring extra staff would be ruinously expensive

Andrew Fisher
Andrew Fisher
1 year ago
Reply to  Walter Marvell

The term “Anglo Saxon” isn’t particularly useful here. The UK continues to be just as highly regulated as the EU, and even with our gold plating of all its directives and never bending the rules, as do other nations, worse. UK productivity is abysmal and has been for decades, so the previous relative lack of regulation isn’t the only thing that can be said on the issue of relative economic performance.

Germany (though not many other EU countries) still manages to outperform the UK, not least because it has always focused on quality and the workers actually work when they are there!

Walter Marvell
Walter Marvell
1 year ago
Reply to  Hugh Bryant

Correct!!! It is all because of the totally different legal systems! Anglo Saxon Common law works on precedent – not Napoleonic codes – and has fewer pre existing constraints to restrain dynamism innovation and entrepreneurship. We were once unfettered by the suffocating regulatory New Order of Europe and we prospered. By contrast those nerdy scribes in Brussels are addicted to the codification/regulation of all forms of life – from bananas and army helmets to sanitary towels and the welfare of newts and bats. This grotesque heavy handed system leads directly to ..wait for it..their infamous’precautionary principle’ as it is inherently precautionary and risk averse! Ask Dyson! Or JCB! This explains the reason why the EU flounders and the US has soared ahead. The UK, saddled with a weird ugly unworkable mix of the two for 40 years, must now exorcise this demon; we must expel the EU’s precautionary legal regulsyory Blobby death star from the orbit of our planet – and free the minds of our wretched wfh Zombie Elite & Blob, all of whom are patently still mentally handicapped, incapacitated and under its toxic sway (lockdown anyone?).

Hugh Bryant
Hugh Bryant
1 year ago

In business, Europeans are risk averse to an extraordinary degree. I think this is because businesses are so minutely regulated that the cost of experimentation is inordinately high. For example, you build a new plant in order to launch a new product. After a couple of years it’s clear the launch has not succeeded. You then discover that the cost of closing the plant will be greater than the cost of opening it in the first place.
US businesses face many fewer constraints of this type.

Simon Neale
Simon Neale
1 year ago

Now is surely the time to allow many millions of African and Middle Eastern people into Europe. They are mostly engineers, of course, so I’m sure some of them will have the solution to these problems of physics and economics which have for so long bamboozled native Europeans.

Simon Neale
Simon Neale
1 year ago

Now is surely the time to allow many millions of African and Middle Eastern people into Europe. They are mostly engineers, of course, so I’m sure some of them will have the solution to these problems of physics and economics which have for so long bamboozled native Europeans.

Jim Veenbaas
Jim Veenbaas
1 year ago

The question IMO is how does this magical thinking take over the institutions? Net zero might make sense if the EU was fully committed to nuclear, but we know where that’s at. Even if you think renewables can work, which they can’t, where are you putting all those solar panels and wind turbines? They take up a massive amount of space. How do these obviously bad ideas dominate the political discourse? There has to be some sociological reason for it. It’s truly mystifying.

Last edited 1 year ago by Jim Veenbaas
Stephen Walsh
Stephen Walsh
1 year ago
Reply to  Jim Veenbaas

Agreeing with these things may make no sense for society as a whole, but a great deal of sense for the career conscious individual, particularly where market signals have been distorted by government intervention, and cancel culture has made expressing dissent dangerous.

Last edited 1 year ago by Stephen Walsh
Simon Denis
Simon Denis
1 year ago
Reply to  Jim Veenbaas

Magical thinking takes over when people have spent so long flinching from certain aspects of the truth that they begin to question truth in principle. The only alternative to reasoning warily upon experience (evidence of an honest, or truthful mind) is credulity, and the current European establishment has wilfully sunk itself in the dogmas of vile Marxist fantasy. Why? That must be the question, since the fruits of this fantasy are so toxic and so bitter.
Answer, because like many a cult in the past it makes them feel “virtuous”. The intoxications of self-ascribed saintliness are addictive. They enable the sufferer to impose upon himself (and others – never forget that) any number of disgusting and gratuitous privations and feel the delight of “triumph” amidst it all. Certain mediaeval “saints” – so-called, since they were little more than the mentally disturbed misleaders of an ignorant peasantry – rolled in cut glass or survived at the edge of death on crusts and brine – smelly, self-righteous and revolting.
And it is not only peasants whose cowardice supports such rubbish – the decadence of Rome supported it, too. All this was implicitly recognised in Luther’s great rebellion and carried to a logical and liberating conclusion in the Enlightenment; a movement which, some would say even now, allows the real message of Christianity to be heard at last.
But today, yet again, western humanity is slipping and sliding into the quicksand of gnosticism, mysticism and occult “knowledge” – and it started with sentimentality, as always.

John Riordan
John Riordan
1 year ago
Reply to  Simon Denis

Excellent polemic.

John Riordan
John Riordan
1 year ago
Reply to  Simon Denis

Excellent polemic.

Stephen Walsh
Stephen Walsh
1 year ago
Reply to  Jim Veenbaas

Agreeing with these things may make no sense for society as a whole, but a great deal of sense for the career conscious individual, particularly where market signals have been distorted by government intervention, and cancel culture has made expressing dissent dangerous.

Last edited 1 year ago by Stephen Walsh
Simon Denis
Simon Denis
1 year ago
Reply to  Jim Veenbaas

Magical thinking takes over when people have spent so long flinching from certain aspects of the truth that they begin to question truth in principle. The only alternative to reasoning warily upon experience (evidence of an honest, or truthful mind) is credulity, and the current European establishment has wilfully sunk itself in the dogmas of vile Marxist fantasy. Why? That must be the question, since the fruits of this fantasy are so toxic and so bitter.
Answer, because like many a cult in the past it makes them feel “virtuous”. The intoxications of self-ascribed saintliness are addictive. They enable the sufferer to impose upon himself (and others – never forget that) any number of disgusting and gratuitous privations and feel the delight of “triumph” amidst it all. Certain mediaeval “saints” – so-called, since they were little more than the mentally disturbed misleaders of an ignorant peasantry – rolled in cut glass or survived at the edge of death on crusts and brine – smelly, self-righteous and revolting.
And it is not only peasants whose cowardice supports such rubbish – the decadence of Rome supported it, too. All this was implicitly recognised in Luther’s great rebellion and carried to a logical and liberating conclusion in the Enlightenment; a movement which, some would say even now, allows the real message of Christianity to be heard at last.
But today, yet again, western humanity is slipping and sliding into the quicksand of gnosticism, mysticism and occult “knowledge” – and it started with sentimentality, as always.

Jim Veenbaas
Jim Veenbaas
1 year ago

The question IMO is how does this magical thinking take over the institutions? Net zero might make sense if the EU was fully committed to nuclear, but we know where that’s at. Even if you think renewables can work, which they can’t, where are you putting all those solar panels and wind turbines? They take up a massive amount of space. How do these obviously bad ideas dominate the political discourse? There has to be some sociological reason for it. It’s truly mystifying.

Last edited 1 year ago by Jim Veenbaas
Peter B
Peter B
1 year ago

This is almost right:
“The EU, it is now obvious to see, is not only a project contributing to peace but in equal measure one which depends on peace”.
But I feel this might be more accurate:
“The EU, it is now obvious to see, is not only a project not contributing to peace but one which depends on peace provided and guaranteed by others”.
One might almost call this the “foundational lie” of the EU – the pretence that it is somehow a creator and guarantor of peace in Europe. When it is actually the beneficiary of peace guaranteed and underwritten by NATO – and principally the US.
We know now beyond any doubt that the EU both fails to effectively deal with military and political crises (the collapse of Yugoslavia, Ukraine) and also to invest in defence (individual countries failing to fund their own defence).

Peter B
Peter B
1 year ago

This is almost right:
“The EU, it is now obvious to see, is not only a project contributing to peace but in equal measure one which depends on peace”.
But I feel this might be more accurate:
“The EU, it is now obvious to see, is not only a project not contributing to peace but one which depends on peace provided and guaranteed by others”.
One might almost call this the “foundational lie” of the EU – the pretence that it is somehow a creator and guarantor of peace in Europe. When it is actually the beneficiary of peace guaranteed and underwritten by NATO – and principally the US.
We know now beyond any doubt that the EU both fails to effectively deal with military and political crises (the collapse of Yugoslavia, Ukraine) and also to invest in defence (individual countries failing to fund their own defence).

Will K
Will K
1 year ago

Europe is on its own, economically and militarily. The US looks out for its own economic interests, no one else’s. Europe has long assumed that, being part of NATO, it is militarily protected, eg by the US nuclear capability. But the USA will of course not accept it’s own destruction to protect any part of Europe. All the USA will do for Europe is send weapons, to pile on the death and destruction in Europe.

Last edited 1 year ago by Will K
Emil Castelli
Emil Castelli
1 year ago
Reply to  Will K

So you are saying Europe needs to join the BRICS?

I get where you are coming from, If Biden wins a second term my guess is he will invade Germany, or something equally insane. Something to keep War going on……Maybe it is India’s time to get in a war with USA – my guess is it will depend on how much they slipped Hunter during the family dinner Modi attended….

Peter B
Peter B
1 year ago
Reply to  Will K

More puerile anti-American rubbish.
Perhaps you should visit the the US military cemetries across Europe from WWI and WWII. And consider where we might be without their help during those wars.

Peter B
Peter B
1 year ago
Reply to  Peter B

Perhaps the cowards who downvoted this would be brave enough to attach their names.

Peter B
Peter B
1 year ago
Reply to  Peter B

Perhaps the cowards who downvoted this would be brave enough to attach their names.

John Riordan
John Riordan
1 year ago
Reply to  Will K

“The US looks out for its own economic interests, no one else’s.”

A little naive. All nations must and do pursue their own geopolitical interests at all times. There’s no friendship and no altruism, and that’s exactly as it should be in a world where leaders are responsible for the condition of their own nation’s people.

The USA is not different to any other nation in that it pursues national self-interest but at the same time has strategic interests that coincide with those of other nations, hence it has alliances. Ironically in the context of your claim, if there is one major exception to the rule that national self-interest comes before diplomatic charity, it is that the costs of NATO are borne mostly by the American taxpayer but the benefit of NATO lands almost entirely upon Europe.

Last edited 1 year ago by John Riordan
Emil Castelli
Emil Castelli
1 year ago
Reply to  Will K

So you are saying Europe needs to join the BRICS?

I get where you are coming from, If Biden wins a second term my guess is he will invade Germany, or something equally insane. Something to keep War going on……Maybe it is India’s time to get in a war with USA – my guess is it will depend on how much they slipped Hunter during the family dinner Modi attended….

Peter B
Peter B
1 year ago
Reply to  Will K

More puerile anti-American rubbish.
Perhaps you should visit the the US military cemetries across Europe from WWI and WWII. And consider where we might be without their help during those wars.

John Riordan
John Riordan
1 year ago
Reply to  Will K

“The US looks out for its own economic interests, no one else’s.”

A little naive. All nations must and do pursue their own geopolitical interests at all times. There’s no friendship and no altruism, and that’s exactly as it should be in a world where leaders are responsible for the condition of their own nation’s people.

The USA is not different to any other nation in that it pursues national self-interest but at the same time has strategic interests that coincide with those of other nations, hence it has alliances. Ironically in the context of your claim, if there is one major exception to the rule that national self-interest comes before diplomatic charity, it is that the costs of NATO are borne mostly by the American taxpayer but the benefit of NATO lands almost entirely upon Europe.

Last edited 1 year ago by John Riordan
Will K
Will K
1 year ago

Europe is on its own, economically and militarily. The US looks out for its own economic interests, no one else’s. Europe has long assumed that, being part of NATO, it is militarily protected, eg by the US nuclear capability. But the USA will of course not accept it’s own destruction to protect any part of Europe. All the USA will do for Europe is send weapons, to pile on the death and destruction in Europe.

Last edited 1 year ago by Will K
John Riordan
John Riordan
1 year ago

Excellent article in general. There is this though, and it could really be another article in its own right:

“Take, for example, decoupling from China. The move would be “unthinkable for almost all of German industry”, according to Mercedes-Benz CEO Ola KĂ€llenius, a sentiment shared by Belen Garijo, chief executive of the science company Merck. ”

There can be no decoupling from China in the manner casaully implied here. The West’s economies have benefitted colossally by the rise of China’s cheap manufacturing over the past 30 years, the principle effect of which has been the primary Brexit promise but writ large for the whole world: cheap imports. Cheap Chinese imports – not just buying cheap stuff directly as a consumer, but the colossal price savings western companies benefit from in terms of commodities and components inputs. (Most western manufacturers simply could not sell their products at all if they were to use western-only supply chains for all their inputs – they would be priced totally out of their markets).

So this airy discussion of decoupling from China as if it’s something our policymakers can just decide without noticeable effects on the voter, taxpayer and consumer is just nonsense. It cannot be done without hyperinflation and probably the worst fall in living standards ever recorded. Nobody is willing to pay the price of it, and it won’t happen.

Last edited 1 year ago by John Riordan
John Riordan
John Riordan
1 year ago

Excellent article in general. There is this though, and it could really be another article in its own right:

“Take, for example, decoupling from China. The move would be “unthinkable for almost all of German industry”, according to Mercedes-Benz CEO Ola KĂ€llenius, a sentiment shared by Belen Garijo, chief executive of the science company Merck. ”

There can be no decoupling from China in the manner casaully implied here. The West’s economies have benefitted colossally by the rise of China’s cheap manufacturing over the past 30 years, the principle effect of which has been the primary Brexit promise but writ large for the whole world: cheap imports. Cheap Chinese imports – not just buying cheap stuff directly as a consumer, but the colossal price savings western companies benefit from in terms of commodities and components inputs. (Most western manufacturers simply could not sell their products at all if they were to use western-only supply chains for all their inputs – they would be priced totally out of their markets).

So this airy discussion of decoupling from China as if it’s something our policymakers can just decide without noticeable effects on the voter, taxpayer and consumer is just nonsense. It cannot be done without hyperinflation and probably the worst fall in living standards ever recorded. Nobody is willing to pay the price of it, and it won’t happen.

Last edited 1 year ago by John Riordan