Pocket guide to beating the Trap

Sir James Goldsmith has written a powerful polemic against Europe. But not an unchallengeable one

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Only the brave take on Sir James Goldsmith in argument. He is the Basil Rathbone of discourse, formidably informed, and devilish wristy even when wrong. Yet it is vital that a few clear heads stand up to him because he has become a champion for re actionary instincts across Europe. His book The Trap was a hit in France 18 months ago, when the French were balking at the prospect of the Uruguay Round of the Gatt world trade talks. Now the English translation is much cited by Britons unhappy with boo mlessgrowth, fed up with market economics, and viscerally opposed to "Europe".

The appearance of a right-wing tycoon blasting Western cultural and economic imperialism is wonderful for those who have long rejected it, and for their new recruits among the unsettled middle classes. So if you doubt the Goldsmith thesis, and find yourself at some Stop-the-World dinner party that might incongruously include Michael Portillo, Bill Cash, Tony Benn, greens, neo-fogeys and animal rights activists, all busily toasting the great man and his philosophy, you must be able to leap like Errol Flynn on to the table and demand satisfaction.

Here, blow by blow, are Sir James's rapier thrusts, and how to parry them.

The West has imposed upon the world an obsession with economic growth, but GNP is not the true measure of the success of societies.

Whip out the Pocket World in Figures to show that the United Nations' human development index, which ranks the world's peoples for a blend of education, literacy, health and wealth, correlates crudely but clearly with GDP per head. So does lack of infantmortality, length of life, percentage of populations in the workforce, not to mention ownership of fridges, telephones and the like. The undeniable drift is that GNP is a necessary, though not sufficient, ingredient of a nation's happiness. It takes a complicated mind to think otherwise.

Global free trade, enshrined in the Gatt, is misguided. The law of comparative advantage condemns countries to specialisation, and it now exposes the rich world to a "completely new type of competition" from cheap labour armed with productive technology.This will eliminate the West's workforces and transfer all its production abroad.

Sir James has got the principle of comparative advantage fatally wrong. Trade does not add to prosperity only when countries A and B each have some good that they can make more cheaply than the other. It requires merely that the ratio of the costs of thegoods within the countries is not the same in country A as in B.

Think of it this way: Sir James should stick to tycoonery and leave the writing to me. This is not because I write better than he, but because the gap between us as tycoons is vastly greater than the gap as writers. I have no absolute advantage over Sir James, in any department, but I cling to a comparative advantage in writing, and thus can fruitfully trade blows with him. The specialisation and exchange that such comparative advantage stimulates have been part of economic life since the Stone Age. Whyshould something so normal within -nations suddenly be regarded as suspect when it happens between them?

Sir James doesn't seem to grasp that all the West's production cannot be lost to sinisterly cheap workers abroad because those workers must, ultimately, accept something from us for the goods they send us. In short, the market opportunity those workers offer is as great as the industrial challenge they pose.

Might they not reduce us, in the process of such exchange, to their pathetic rates of pay? Look at the economic history of Britain since the industrial revolution. We continuously handed British technology to more backward nations. We abandoned industry after industry. Yet we stopped advancing in our standard of living. We have not gone down to join the Hong Kongers; the Hong Kongers have come up to join us.

A European super-state cannot be created by undemocratic fiat. The European Union should allow as much independence and diversity to its members as possible. Only the single market, defence, diplomacy, and the environment should be run from Brussels.

Excellent aim, eye-opening prescription. Does this champion of the nation-state really advance defence as something to be run by a European Security Council in Brussels? Defence lies at the very core of sovereignty. On the other hand, does Sir James grasp how much joint law is needed to create a single market in a modern economy? The single market is an admirable, deeply political ambition. But you have to ask for it with your eyes open. Mrs Thatcher didn't, and that ultimately cost her her job.

National health and education should be run in as decentralised and diverse a fashion as possible, with the state helping to provide the needy with the insurance policies and vouchers that will be used to shop for them.

He's right. It is vital to get away from the Budget-driven obsession that the share of our GNP spent on these two great life-enhancers be held down.

Intensive farming will drive millions of people off the land into festering cities. It breeds diseases and uses macabre genetic engineering. Farm subsidies ought to be adjusted accordingly. Meanwhile, mankind could use a lot less energy; and government dishonesty has foisted nuclear power on us.

A radioactive cobalt glow has come into Sir James's eyes. It is probably wise to humour him on these points. Yes, the Common Agricultural Policy subsidises the European mass production of inferior crops whose export hurts poor farmers the world over. Yes, the attempt to privatise Britain's nuclear power stations unmasked their rose-tinted accounting treatment. Dare one note that in both cases the free market might have made wiser choices from the start?

There are more miserable people in the world today than ever before. Our planet faces unprecedented man-made threats. The problem dates back to the Enlightenment, which elevated reason into an end in itself, and converted tools that were meant to serve society (science, technology, production) into demigods.

There are also more contented people in the world today than ever before. Economic prosperity curbs population growth, and, after a difficult transition, it actually improves the ability of nations to look after their environment.

Yet such ripostes are futile, for at the heart of this duel lies the question whether reason or unreason can best sort out the problems that reason has created. Alexander Pope, writing at the start of the Enlightenment, would have smiled at this one. Remember his Essay on Man: "He hangs between, in doubt to act or rest, in doubt to deem himself a God or Beast, in doubt his mind or body to prefer, born but to die, and reasoning but to err." Should we go for the positive or the negative in Pope's conundrum? We should have our complacency pricked by Sir James, but not our faith in reason punctured by him.

The writer is editorial director of the Economist Intelligence Unit.

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