Progressive Autarky
What Caroline Lucas and the New Economics Foundation have in common with Donald Trump
Donald Trump’s tariffs have tanked the value of American businesses by almost $3 trillion. Economists predict the unprecedented hike in import taxes could spark a recession. Yesterday markets in the United States experienced their worst single day since the Covid crash.
Not even America’s reviled Smoot-Hawley tariffs of the Great Depression era raised barriers to trade so high or so fast. And those tariffs were so bad that they made it into the opening scene of Ferris Bueller’s Day Off - as part of a poignant, if dry, lesson on economic mistakes. If only Donald Trump watched more movies.
While almost everyone in Britain suddenly seems to understand that taxing imports will be terrible for the American economy, it seems that at least one corner has not thought to expand that logic here at home. Instead, greenwashed Trumpian thought has never been more in vogue.
Which brings me to the New Economics Foundation, a think tank founded out of the environmentalist (and weirdly anti-G7) movement to rethink our approach to economics. Rethinking the traditional model of growth, the organisation was founded to focus on diversity and equality.
And they have been massively influential. Their work opposing free trade deals, shale gas extraction, and airport expansion has been massively influential in keeping British growth low over the best part of the past two decades.
Forget the pro-growth think tanks on the right, it’s left wing think tanks like the NEF (which received almost a million pounds in lottery funding last year) that have dominated policy discourse, helping kill off nice things like new transport infrastructure and cheap, abundant energy.
And at the last election, the organisation’s CEO stepped down to become… you guessed it… a Labour MP. She was quickly made an energy minister under Ed Miliband.
While this government has done some good work on planning, it should be more than mildly concerning that the Energy Security department is perhaps the biggest bastion of anti-growth sentiment across Whitehall. It’s hard to think of many other departments in which the incubation of this sort of thinking would be worse.
Well now the explicitly anti-growth NEF has turned its attention to Luton Airport expansion. The government has finally given the go-ahead for a new terminal and taxiways (though no second runway) at the airport, in what is expected to not only increase Luton’s annual passenger capacity from 18 million to 32 million… but also make the experience of travelling through London’s worst airport mildly less hellish.
This, according to the NEF, would be bad.
Why? Because currently more Brits travel abroad for tourism than the numbers of foreigners who choose to visit Britain. This ‘tourism deficit’ is apparently reason to make it harder for us to travel the world.
Former Green Party leader Caroline Lucas chimed in, writing on Trump advisor Elon Musk’s X website:
“Almost 90% of flights from Luton are taken for leisure - in other words British tourists taking their money out of the country to spend abroad. Expanding Luton is not good for UK growth & certainly not good for nature & the environment. Why doesn’t Labour understand that?”
This is Trump trade deficit logic. Lucas and the NEF believe that if more people choose to holiday abroad than holiday in the UK, that’s somehow bad for growth.
When looking at single country trade deficits, Trump does two things. Firstly he only concerns himself with the flow of goods rather than services, as if it is only physically manufactured things that cost money. Secondly he forgets that it is fundamentally insane to think you are being ripped off by a country if you happen to buy more in physical goods from that country than you sell to it.
I have a 100% trade deficit with Tesco. I pay them infinitely more than they have ever paid me. This doesn’t mean I’m in terrible debt, or should resort to growing my own food, because happily I have a 100% trade surplus with my employer. They pay me infinitely more than I pay them.
The NEF and Caroline Lucas do not seem to understand that facilitating greater travel is likely to provide economic benefits they can neither imagine nor plan. The idea that people currently choosing to holiday in the UK would travel abroad instead if only for cheaper flights doesn’t stand up to logic given the cost of holidaying in the UK compared to budget airline deals.
Demand to fly to London has more doubled in the last three decades. Do we now expect that to stand still? And Luton sits nuzzled at the centre of the genuinely exciting Oxford-Cambridge Arc - one of Britain’s biggest prospects for growth in the decades to come.
An expanded Luton would undoubtedly open up more space for business travel as well as tourism, all while alleviating pressure from Heathrow - helping to maintain the UK’s vital hub status for round world travel under increasing pressure from the Netherlands, France, and Poland.
But no, a trade deficit in tourism is reason enough to throw that all away.
As the economist Julian Jessop asked Lucas, “Why not go the whole hog? Ban people from importing any goods from abroad, as well as services (like holidays in Europe), and force them to spend all their money in the UK instead?”.
Some countries have tried economic self sufficiency before. Everywhere from Mussolini’s Italy to Hirohito’s Japan pursued a policy of autarky. The problem for these states was that they needed more goods, services, and resources than they could provide themselves. This often led to rather extreme consequence of territorial expansion, as autarkic leaders took to invading other countries once they started to stutter economically.
The lessons of trade restrictions are strewn through history. From the isolation derived destitution of North Korea, to the Smoot-Hawley tariffs prolonging the Great Depression. From the Corn Laws exacerbating the Irish Potato Famine, to Japan’s invasion of Manchuria.
There’s a reason why countries sanction their foes with tariffs and trade embargoes. To weaken and impoverish. The NEF, Donald Trump, and Caroline Lucas seem intent on sanctioning themselves.