Brexit is fantastic project

Leavers often say they do not understand why Remainers cannot just accept that we are leaving. There are many good reasons, but the one that I keep coming back to is this. Brexit is fantastical. There is nothing about the case for Brexit that is based in reality. This is why everything Brexiters say is either nonsense or untrue.

Take, for example, the leaked government estimates of how much poorer we will be on average as a result of Brexit. There is no surprise here for economists, because the estimates are in line with the wide range of large negative long term impacts made by various groups or organisations before the referendum, including the UK Treasury. But these new official estimates are made by the department for exiting the EU, and if any massaging went on in producing them it will surely have been to promote Brexit. These new estimates include, for example, the impact of yet to be discussed trade deals with the US and others. The fact that they still come out with numbers that are not very different from those produced before the referendum is, in effect, an official acknowledgment that these earlier estimates were reality based, and not the Project Fear of Brexit spin.

So what do we get in response from the government? Just different varieties of nonsense. They say the bespoke deal the UK is hoping to get is not included. As Jonathan Portes notes, this bespoke deal is somewhere between Norway (2% GDP loss) and Canada (5% GDP loss). You have to be totally innumerate not to realise that this would mean a GDP loss between 2% and 5%.

And there is the good old ‘all forecasts are wrong’ line. I am tired of inventing new ways to distinguish between conditional and unconditional forecasts, but I guess I will have to continue to do so as long as some political journalists fail to understand the point, and economic journalists fail to make the point. Here is an example for Brexiters. Mr. Fox thinks making trade deals with pretty well anyone he can is good for the economy. That is a forecast. It is a forecast using many of the same elements as those behind the latest official estimates of the cost of Brexit. The reason that deals with all and sundry cannot replace being in the EU is down to gravity, which as Chris notes is one of the most successful and robust ideas in economics.

And then there is the even more tiresome “according to economic forecasters the economy was going to collapse” type of argument. I got wise to this kind of thing with austerity. A few allowed themselves to over-egg the impact of the government cuts and that allowed others to declare 2013 growth as a vindication of austerity, just as I predicted they would. In reality austerity caused years of stagnation and the slowest economic recovery in living memory. The reality of Brexit is that we have already lost about 1% of output, as the rest of the world including the EU leaves the UK behind.

Source: Jonathan Portes in the New Statesman here

So the economic arguments of the Brexiters are nonsense: describing them as fantasy gives fantasy a bad name. But why don’t Remainers like me accept that this is really a culture thing, and that Leave voters are willing to pay for their independence from the EU. One reason is that there is clear evidence that most Leave voters believed they would at least be no worse off after Brexit, which is of course why Brexiters continue to try and rubbish estimates of how bad the hit will be. I’m pretty sure those arguing that this is only about culture are not worrying each week about how to make ends meet.

But the ‘taking back control’ idea is itself a fantasy. Trade deals today, and the Single Market in particular, are about harmonisation and cooperation. Why is this such a terrible loss of independence when the cooperation is with the EU, but no problem when it is with the US? There is a real debate to be had about the extent to which globalisation erodes national democracy. But this is not the debate the Brexiters are having. Their dislike is with the EU in particular. I have yet to hear a single voter complain about the specific directives that come from Brussels: indeed the UK government often pretend ownership because they tend to be popular. The idea that Leave voters are objecting to a “remote Brussels bureaucracy” imposing standards to keep our beaches and air clean and to prevent workers being forced to work long hours is a myth. Voters would like to take back control, but not from Brussels or the EU.

There is even a large fantasy element when it comes to immigration. Yes, there are a few Leavers who would pay a large amount to avoid hearing a foreign language spoken in their town, but they do not represent most Leave voters. Instead there is the belief, carefully cultivated by the Conservative party, that immigration has reduced real wages and our access to public services. Large numbers voted Leave because they thought less EU immigrants would mitigate the NHS crisis. Now those EU immigrants who also happened to be doctors or nurses are leaving, and the NHS cannot fill vacancies. And, of course, those lower growth numbers mean less money to spend on the NHS: the Brexit dividend is negative.

To see how much of a fantasy it all was, why not take an article by Andrew Marr, who as the presenter as the BBC’s flagship Sunday current affairs programme should know what he is talking about, written just over a year ago. He writes

“some things are already becoming clearer. We will be out of the single market and will be out of a customs union – because if we weren’t, we wouldn’t be able to negotiate our own trade agreements around the world. Theresa May would hardly have created a new Department for International Trade if she intended it to have no purpose.”

All this, of course, was based around the fantasy of invisible customs posts on the Irish border. The UK committed to staying in the Customs Union when it signed the first stage agreement, but yet still clings to the fantasy that it has not. And then

“The logical conclusion is that we will see sector-by-sector agreements to allow in X thousand electricians, or Y thousand careworkers, with industry bodies given coupons by the government and allowed to issue the work visas they require.”

which fails on the simple logic that the EU could never allow such a thing. And then

“Some of the measures the left would like to take to support and protect the steel industry, or engineering, or to enhance our growing advantage in robotics, are made impossible not by British Conservatives, but by EU regulations on competitiveness and state funding. Make no mistake: an awful lot is back in play. Rail renationalisation, for one …”

Again, a fantasy, this time from the left. He then goes on to list lots of exciting things we can do, most of which we can do more easily inside the EU.

For all those who will tell me that the British people knew what they were doing (or rather the 52% who voted Leave), I ask did they really know more than Mr. Marr writing six months later? I suspect you could still find far greater flights of fancy among Leave voters. This is not because people are stupid, but because they soak up the propaganda in their newspapers, propaganda which the BBC is too timid to contradict. 

In the end, the economics is key to how the Brexit fantasy will end. No sane government or parliament will allow an outcome that makes people on average 8% worse off. That is why we have to make a deal with the EU, and the only deal the EU will allow is one that prevents a hard Irish border. That means staying in the Customs Union and much, possibly all, of the Single Market. Brexit will end with the UK becoming what Rees-Mogg describes as a vassal state. It will not be the fantasy people voted for, nor the fantasy the Brexiters had in mind. 

When reality bites, almost no one who voted Leave will be happy with the result. So should Remainers stay quiet and just wait for this disappointment to sink in, just for the sake of a particularly partial concept of democracy? To allow peoples lives to be impoverished and their opportunities to be diminished because of a referendum based on lies? There are democratic ways out of this fantasy turned nightmare, and we should take them.

Postscript (1/02/18)

Rees-Mogg suggested today to minister Steve Baker that the forecasts produced by government economists made Brexit look costly because civil servants had deliberately designed them to do just that, and Baker made no attempt to defend his civil servants. While this attack on the integrity of the civil service has gone unremarked by No.10, when minister Philip Lee said that the Brexit process needed to take account of "evidence not dogma", he was reprimanded. It is almost as if the government had decided that it needed to show that Brexit was indeed a fantasy project in which evidence, alongside 'saboteur' MPs, 'enemies of the people' judges, 'in the pay of the EU' economists and now 'conspiratorial' civil servants, are not welcome.