Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday, 24 March 2017

The Brexiteers know the war is far from over

It is easy to view the letter from 72 MPs criticising the BBC for being biased against Brexit as just another example of the government putting pressure on the news organisation. But if that is all it was, it is odd to have another conservative MP, Nicky Morgan, describe the letter as chilling.

I would argue that this letter as another example of the fear I talked about in this post. Fear by Brexiteers that their little English coup may still unravel. Their reasons for fearing this are real enough. The original Leave vote was based on lies and on obscuring the truth. These lies are perpetuated by those who now feel obliged to advance the Leave cause. I talked in my last post about how Tim Harford had recently noted that tobacco firms had managed to delay by decades the response to the first studies in the early 1950s that smoking was harmful. What chance, then, did economists have before the referendum? But the lies told and truths dismissed in the referendum are going to start to unravel as soon as negotiations begin.

One of the main initial topics of those negotiations will be how much the UK will have to pay the EU. Many of those who voted Leave expected it to be the other way around. For this reason, the UK would like everything to be discussed together, so that this bad news can be hidden. But this is not the way the EU likes to do things, and the negotiations are going to be done the way the EU dictates. Remember they hold all the cards, because it is the UK who suffers most with no deal.

This bad news could be avoided if the UK walked away, which is one reason why the option of no deal is beginning to sound attractive to the Brexiteers. But the British people do not want this. Here is a recent poll that contrasts the popularity of a EEA/Norway option with no deal.

What is described as ‘Hard Brexit’ here is really ‘No Deal Brexit’. The poll says that as many Conservative voters will be as unhappy with no deal as they would be with the EEA option. While the full horror of no deal for the UK economy will take years to manifest itself in lower GDP, the consequences in terms of firms leaving will be immediate. David Davis has not modeled the impact of no deal because he already knows the results would be terrible. [1]

If this is what people feel when confronted with the truth, the only option left to the Brexiteers is to try and hide the truth. Little things are all they ask for from the BBC. Like not mentioning Brexit when talking about rising inflation, because to do so would be ‘controversial’. To play down news of firms planning to leave the UK, because that was the news last week. To not present the view of the EU in negotiations, because this is like a battle and the BBC must be patriotic. The Brexiteers hope that with these ‘small modifications’ to broadcast news, and the pure propaganda from much of the press, they can get away with a deal that is not in the UK’s interests.

If those pursuing this agenda do not think the war is over, it would be foolish for those opposed to leaving the EU to believe it ended with the triggering of Article 50. The Brexiteers fear that if there is no deal, MPs in parliament will at last find their voice to say no. Those opposed to leaving the EU must do all they can to encourage that possibility.

[1] Among political commentators, all predictions by economists are assumed to have equal weight, so even Janan Ganesh writing in the FT can say “politicians are allowed to question [economists] record of clairvoyance”. That is not true, because economists’ predictions are not all alike, as I have explained many times. One of his favourite politicians, George Osborne, has said that Brexit is the “biggest single act of protectionism in history”. History as well as economics tells us that protectionism of this kind is invariably harmful.











11 comments:

  1. As always, the wording of the questions could affect the results.

    One wonders if the proportions answering "happy" vs. "unhappy" to the questions would have been the same if the first question had added: "continued to be subject to most EU regulations, but now having no say in drawing them up,and subject to the jurisdiction of the ECJ in any disputes affecting trade. Probably continued, but smaller than now, payments to the EU Budget."
    Conversely, the second question could have added: "no longer subject to the ECJ, and possibly a one-off payment to the EU Budget but no further contributions to it."

    Almar.

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  2. Bias against them? Quite the opposite.

    As far as I’m aware no BBC journalist has ever directly challenged any Brexiteer with the serious issue that there may well be no automatic default to WTO rules. The UK will remain a member of the WTO, but that does not necessarily mean that the tariffs and rules will automatically take effect.

    The WTO Director General warned this prior to Brexit and (I think) has since reiterated this position. Amongst other issues, we are very unlikely to have the requisite monitoring and regulatory structures (currently these are handled by the EU).


    https://www.theguardian.com/business/2016/jun/07/wto-chief-brexit-trade-talks-start-scratch-eu-referendum


    As the WTO is a body that works on consensus the UK’s position could be blocked by almost anyone – suddenly issues from the status of Gibraltar and the Falklands to the Elgin Marbles might be brought into the discussions.

    That’ll be fun.

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  3. The BBC wrongly did not name the 72 MPs nor give the text of the letter, which I found on City A.M.

    It was made up of the usual hard right of Tories, DUP, and the UKIP one, but three Labour MPs also signed, Kate Hoey MP, Kelvin Hopkins MP, and Graham Stringer MP.

    Of course it was timed to coincide with the release of the inflation figure, CPI at 2.3% up from 1.8%.

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  4. I actually think that the poll you quote and imbed is some sort of joke. Soft Brexit talks about "minimal disruption to the economy" whilst hard Brexit talks about "significantly reducing trade and harming the economy". Leading by the nose has nothing on this!

    Now to you these are not merely factual but reasonable summations but in fact they are biased in terms of the language used, in fact it's quite amusing to me that anyone could think otherwise and take that sort of poll as any guide as to what people really think.

    A more substantial point is that the questions are formed in totally economic terms whereas the arguments for and against the EU are much more widely drawn. You seem to believe consistently that because the economics case is firm - at least in theory - then that seals the matter QED but it does not; there are other issues.

    You also say the David Davis has not modelled a "no deal" case because he knows the results would be horrible. How do you know? It might also be that he believes that no one can forecast the future with any degree of confidence and there is little point in trying to do so.

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    1. «A more substantial point is that the questions are formed in totally economic terms whereas the arguments for and against the EU are much more widely drawn. You seem to believe consistently that because the economics case is firm»

      That «economics case is firm» is of course based on a set of political assumptions in particular about the distributional impact, but a standard attitude of Economists is to avoid discussing that and talk aggregates.

      With different assumptions about the distributional impact one can have different conclusion: for example if one believes that exiting the EU will make the labour market more favourable to native workers in southern England then what happens to aggregate GDP is a rather less important.

      And there is an influential interest group that advocates a quick and complete exit hoping in the opposite distributional impact: those who have well understood that T May and P Hammond have promised very publicly to the Conservative party that in case of quick and complete exit ("no deal") the government will scratch the current social and economic model and choose a Pinochet-style (or at least Texas-style) model for the english economy, completing Thatcher's long term plan described in her famous letter to Hayek.

      They have already started talking about "Free Enterprise Zones" as s first step, with no corporate or profit taxes, no customs duties, no immigration restrictions, no labour laws, high wage and sales taxes, staffed by indentured asian and african guest workers, generating large and easy labor arbitrage profits for investors; to start perhaps in Sunderland, and eventually the whole of England to become one, like in the 1850s. A relevant quote:

      www.ibtimes.co.uk/buyout-boss-says-brexit-will-be-good-his-business-will-mean-30-cut-uk-wages-1602631
      «One of the biggest names in European private equity said that Brexit will be good for his business, but will mean a 30% wage reduction for UK workers. ... He added that EU immigration will be replaced with workers from the Indian subcontinent and Africa, willing to accept "substantially" lower pay.»

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  5. I am Irish and I am very very happy that Brexit is happening. The world was drifting toward a One World Government - you have no understanding at what is at stake.

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    1. And you have no idea what you're talking about.

      Delete
  6. I have a question. Once we have invoked Article 50 this week, can we un-invoke it? Or do we have to re-apply for EU membership?

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    1. «Once we have invoked Article 50 this week, can we un-invoke it?»

      Lord Kerr, who drafted TEU article 50, has said in the Lords:

      hansard.parliament.uk/lords/2017-02-21/debates/5061080A-55F6-4500-91D4-10EC50BBC33C/EuropeanUnion(NotificationOfWithdrawal)Bill#contribution-33DEBE0F-40E9-4D1F-A458-E10D2A3300B3
      «An Article 50 notification is not irrevocable. The President of the European Council and a gallery of EU legal luminaries have confirmed — of course, the noble Lord, Lord Lester of Herne Hill, is among their number — that a member state may, in accordance with its constitutional requirements, withdraw its notification within the two-year period or its extension.»

      The TEU article 50 says itself that after the 2 year notice the withdrawing state must reapply for membership.

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  7. What precisely do Hard Brexiteers want? I really don't understand it.

    If David Davis is too scared to model Hard Brexit impacts, which it appears he is - then what in the name of fuck does he think he will get out of this?

    It appears logic has abandoned the British Isles.

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  8. I am wondering what is happening in the world, in recent posts our blogger first gritting his teeth realizes that the politics of J Corbyn are not that defeatist and lunatic after all, and in this post he also realizes that the chances of nullifying the referendum are nugatory and the real argument is EFTA/EEA versus something stupid.

    As to that, perhaps because of "deformation professionelle" the arguments in this post are all about the economist impact. But hardcore EU exiters care more about something else, and I have found by reading "Leave" blogs and articles a nice way to summarize it: they perceive being in the EU as a national humiliation, as a quisling subordination to mere membership of an organization of equals. First a quote from Norman Tebbit that gives just a hint of the tone used by many "Leavers":

    www.telegraph.co.uk/news/2016/05/16/its-time-for-britain-to-get-off-its-knees--freedom-awaits-us-out/
    «It's time for Britain to get off its knees – freedom awaits us outside the EU ... Freedom beckons. Will a generation of politicians who have never fought for it betray the many thousands who died for it?»

    The innuendo about the EU being a deceitful german plot to enfeeble and subjugate England is easy to detect. Someone with that opinion will of course want an end to subjugation that is as quick and complete as possible, not something like EFTA/EEA.

    More moderate "Leavers" seem to think that a great power like England ruling a vast empire should not give that up to be "just a member" of a small regional club like the EU. Another quote:

    www.theneweuropean.co.uk/top-stories/the_problem_with_the_english_england_doesn_t_want_to_be_just_another_member_of_a_team_1_4851882
    «The problem with the English: England doesn’t want to be just another member of a team .... The destruction by the USA of the British empire, after its finest hour in 1940, was a traumatic blow to the psyche of two English generations, from which they have never recovered, largely because they have never recognised it. ... Over three centuries the needs of empire shaped England’s systems of government, national and local, its Church, its schools and universities, the traditions of its armed and police forces, its youth movements, its sports, its BBC, its literature, and its cuisine.
    The end of empire meant the end of all this. And because England has been unable to acknowledge that loss, it has also been unable to acknowledge the end of English exceptionalism, the end of the characterlessness the English had enjoyed as rulers of the world – with no need of distinct features to mark them off from their equals since they had no equals, embodying, as they did, the decency, reasonableness and good sense by which they assumed the rest of the world privately measured its lesser achievements and to which they assumed it aspired.»

    Here again those who believe that EU membership is preventing England from realizing its manifest destiny to be a great power ruling a vast empire an exit from the EU that is as quick and complete as possible is the best outcome.

    For both types of "national humiliation" advocates of a quick and complete exit the economics don't matter as much as «get off our knees» and and stopping being «just another member of a team», and any economic problems can be solved with lower wages and lower taxes, the universal neoliberal policy for "competiveness".

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