Deficits, the global measurement system and global trade

In this article, Ronnie Cohen looks at the deficits of some major economies and asks if  apparent reluctance to use the global measurement system is a symptom of a wider problem – adapting to a changed world.

While reading the 2016 Edition of the Pocket World in Figures booklet, I noticed a striking statistic about the top five countries with the largest deficits in 2013:

  1. United States: -$400 253 million
  2. United Kingdom: -$114 210 million
  3. Brazil: -$81 108 million
  4. Turkey: -$64 658 million
  5. Canada: -$54 665 million

Three of the top five countries with the largest deficits are the ones that still have an embedded dual measurement system, namely Canada, the United States and the United Kingdom. The same three countries appear in the top five deficits for the previous year. The 2015 Edition of the Pocket World in Figures booklet lists the following top five countries in terms of the largest deficits in 2012:

  1. United States: -$440 423 million
  2. United Kingdom: -$94 270 million
  3. India: -$91 471 million
  4. Australia: -$64 341 million
  5. Canada: -$62 256 million

The three countries all have allowed their plans for the metric changeover to stall and each has a national association  pushing for completion. I thought that this was more than a mere co-incidence. For this reason, I have raised this issue here and invite readers to comment on it.

I looked at their trade figures in the Country Profiles section of the same booklet. The 2016 Edition of Pocket World in Figures shows the following trade figures for the metrication laggards:

Canada United Kingdom United States
Visible Exports FOB 465.4 479.7 1593
Visible Imports FOB -472.4 -655.9 -2295
Trade Balance -7.0 -176.1 -702
Net Transfers -1.8 -42.5 -124
Current Account Balance -54.7 -120.2 -400
– as % of GDP -3.0 -4.5 -2.4

I quote visible trade rather than invisible trade because trade in physical products that are shipped across borders are far more likely to involve measurement units than services, and also involve a  lot more of them. All three metrication laggards have fared badly in visible trade in recent years. The UK and US have had big trade deficits for years. While there are many factors that affect the trade position of countries, the inability of the laggards to complete their metric transition probably reflects the bigger problem of their failure to adapt to a changing world in other areas. Hence the decline of some manufacturing industries in these countries (e.g. US car industry, British steel and textiles industries).

The Canadian Metric Association (CMA) says, “Currently the vast majority of countries in the world officially use the SI system. British Commonwealth countries such as Canada and Britain still face substantial resistance from industries such as agriculture, construction, real estate, forestry and grocery.” The SI system, known officially as the International System of Units, is the modern metric system. They go on to say, “As any resident of, or visitor to, Canada can tell, life in Canada is a mixture of metric and non-metric measurement, mainly because of the vast influence of the United States across the border. Since CMA never totally disbanded, there is an effort under way to once again work towards completing Canadian metrication.”.

The US Metric Association (USMA) briefly describes the measurement mess in these three countries on its FAQ page as part of its answer to the question, “How do you decide whether a country is metric or non-metric?”. USMA replies with the following observation:

“…while the U.S. is non-metric in some areas, such as road signs, speedometers, and weather reports, it’s metric in many other areas, such as food quantity and nutrition labels, and car and machinery manufacturing, and athletes run 100-meter races.

Conversely, Canada is generally considered to be metric, and its road signs indeed are, yet it uses yards in its football games and typically uses feet and inches and pounds when describing a person’s height and weight. Similarly, it’s usually stated that the UK is a metric country, but its road signs are not metric just like the U.S.”

The UK Metric Association says on its ‘The mess we’re in’ web page, “On the one hand, the international metric system (SI) is the official, legal system for most purposes in the UK. Yet, at the same time, much of British everyday life remains untouched by the metric system and continues to use imperial units.”.

Is this part of a deeper malaise, a failure to adapt to the modern world? In which other areas have the metrication laggards failed to adapt? How much have they lost out to foreign competitors in trade, commerce and manufacturing from their failure to complete the transition to the metric system? What impact will the dire trade position in Canada, UK and US have on future metrication efforts? How much has this contributed to the looming tariff war between the biggest laggard and the rest of the world?

Whilst it may not be possible to prove a link between a country’s trade deficit and its failure to fully adopt the global measurement system, this might provide readers food for thought. Metric Views would be interested to hear what you have to say.

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2 Responses to Deficits, the global measurement system and global trade

  1. Bodrules says:

    Whilst it is an interesting conjecture, I feel that any part played is minor to sy the least, given that industry has more or less 100% converted in the UK re export sales and maybe slightly less on the domestic market.

    Far bigger players in this have been some of the following, at least in the UK, imo;

    - Chronic under investment in workforce skills
    - Chronic under investment in capital goods and new ways of working
    - Poor customer service
    - Poor language skills (English being the lingua franca is both a blessing an a curse)
    - Generally speaking, poor management, especially their attitude to the work force which sets up a classic "Us vs. Them" situation where any change from the top is viewed as nothing more than another attempt to screw the employees over and is thus resisted.
    - Poor levels of R&D
    - The City and the finance system in general, being incredibly short term in outlook
    - The idiotic totally open markets, whilst other countries have shielded their markets and domestic champions,

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  2. Daniel Jackson says:

    The major reason the US has the highest deficits has a lot to do with ponzi scheme the US set up after the collapse of the Breton Woods agreements in the early '70s. In order for the US to have control of the world's economy, the dollar had to be the major reserve currency. To achieve this, the US had to print up teradollars and export them all over the world. Such a move would normally create hyper-inflation, but the US managed to create a demand for the dollar that the world accepted it and it retained its value.

    First, oil a commodity every one needs had to be priced in dollars and this created a demand for dollars. Second, the world needed sell their goods to each other in dollars to pay for the oil they needed in dollars, this also created a demand. Third, the US had to basically export most of its manufacturing to the other nations so they could sell their products back to the US in exchange or dollars.

    So what happens to all of the dollars these other countries have earned? Are they stored in a vault in the holders country? No, they are "reinvested" in US institutions which in turn lend them out to US consumers. The result is low interest loans to Americans who normally wouldn't be able to purchase much on their low wage service jobs, so that they can now afford through borrowing nice homes, new cars, credit cards without having to provide collateral, etc.

    This all adds up to a huge deficit but as long as the world is willing to accept dollars and continue to store them in US institutions the trend will continue and the debt will continue to rise.

    The UK even though the pound has never had a big piece of the reserve pie has focused its economy on the city of London financial services. The main reason the UK could never join the euro is the pound had to be priced high to assure foreign investments in the city of London's institutions. The euro needs to be much weaker in order to assure strong exports. A strong euro to benefit London would ruin the eurozone and a weak euro to benefit the eurozone would ruin the city of London.

    Donald Trump is either unaware of this strategy of the US Federal Reserve Bank or is aware and doesn't care, but his actions are going against the policy both left and right adhered to over the decades. His actions will in effect end the reserve status of the dollar. Brexit as well is going to cut Britain off from the Europe and the city of London will suffer as a result.

    Both the US & UK with the loss of their world-wide financial markets will both go bankrupt. They may find themselves in complete isolation and struggling to survive.

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