Winner of the New Statesman SPERI Prize in Political Economy 2016


Showing posts with label deal. Show all posts
Showing posts with label deal. Show all posts

Friday, 18 October 2019

Is this good for Johnson, whether he wins or loses?


I have no idea whether Johnson will get his deal through on Saturday. As the broadcast media is obsessed by headcounts I will leave it to them. What I will say is that the idea that MPs will be taking a decision that has a profound influence on everyone in this country (in which will do such serious economic and political damage to the UK) on the basis of only two days of scrutiny with no assessment of its impact is just absurd, and typifies everything that is wrong about Brexit.

Who knows why Johnson changed strategy during or before his meeting with Varadkar. Maybe it was fears about security in Northern Ireland after No Deal created a border. Maybe he always had the idea in mind of going back to the EU’s original plan to keep Northern Ireland in the Customs Union and Single Market. It seemed to be the obvious thing for Johnson to try, as I suggested in August. Maybe the suggestion came from Varadkar. But whatever it was, there is a huge irony in where we are now.

What Johnson has agreed to is basically the first deal the EU proposed. It is a deal that May said no UK Prime Minister could accept, and the deal condemned by Johnson a year ago. The backstop has now become the deal. No wonder Varadkar looked so pleased after his meeting with Johnson, and no wonder European leaders look so pleased when the deal was finally agreed. Of course the EU could agree to something they had already proposed.

Why has the ERG apparently agreed to this, when they said they could not possibly support it first time round? Unfortunately (or perhaps not) I cannot put myself in ERG shoes and answer that question. What does annoy me is when the BBC’s political editor praises Johnson for having got the EU to drop the backstop, when in reality he has forgotten all ideas of alternative arrangements and made the original backstop the deal. Indeed the BBC in lavishing praise on Johnson, and failing to point out his earlier rejection of almost the same proposal, is doing its bit to get the deal over the line on Saturday.

If Johnson fails on Saturday to get parliament to vote for his deal, he has got himself a very strong Brexit line to take into any General Election. Winning a General Election has always been Johnson’s prime goal. Before that walk among the trees with Leo Varadkar, Johnson’s election strategy had been to formally argue that he could get a deal (to keep Tory MPs on board), but hope a sufficient number of Farage inclined Leavers took this to mean he would leave with no deal.

Johnson's new deal is also a better election strategy. Few English voters care about Northern Ireland, regrettable though that is, and so they will feel no qualms about giving Johnson enough MPs to drop his DUP alliance. For Leavers, the idea of voting to get Brexit over the line will seem irresistible. Of course if Johnson does win and gets his deal through parliament Brexit will continue in the form of negotiating an FTA, but we will be out of the EU.

The risk that Johnson always had in actually finalising but not passing a deal is that Farage would convince enough voters his deal was not true Brexit and that they should therefore vote for him. However I suspect that will be very hard for Farage with this deal. What part of the deal can Farage use to convince Leavers it is not a real Brexit? As I noted above, talking about the EU annexing Northern Ireland is unlikely to impress most voters.

Does it make sense to hold a People’s Vote (PV) on Johnson’s deal vs Remain if Parliament can find the votes for that? Here the calculation is very simple. Unlike the PVs I talked about in earlier posts, which would have almost certainly led to a Johnson boycott, it will be much harder for him to boycott a vote on his own deal. However much he says that a second vote betrays the first, running away from a vote on your own deal just looks bad. So I suspect we would get a proper PV, even if Johnson resists it in many ways beforehand.

The main reason he will eventually agree to it is that he thinks he can win. He may well be right. Remainers should not put too much faith in the small majority in polls of Leave versus Remain. It could well be 2016 all over again.

Alasdair Smith goes through some of the lines that Johnson/Cummings will take. It is classic disinformation of the type that some of us can still remember from 2016. They will claim that the deal ensures that Britain will be free of EU laws and regulations, and now free to strike trade deals of our own. In reality this is true only if the UK does not sign a trade deal with the EU. Trade deals are all about harmonisation of tariffs and regulations, and there is no way the EU is going to harmonise on anything other than their own.

Nor is abandoning a level playing field made real until it comes to negotiating a FTA with the EU. The EU will certainly insist on one if there is tariff alignment, because tariffs are the EUs weapon against a country undercutting the EU by lowering standards. The reality has always been that complete sovereignty, in the sense of having nothing to do with EU laws and regulations, is only true if the UK is prepared to avoid an EU FTA completely. Indeed that possibility remains open to Johnson with this deal. If he does not get any FTA's this deal will morph into No Deal, except that Northern Ireland is safe.  

The alternative to a PV is an election, which parliament is sure to get. If Labour forms a government after that election then it is almost certain Brexit is dead. The Tories will vote against a soft Brexit as not a ‘real’ Brexit, and Remainers will vote for Remain. So the critical variable is the probability of that election outcome. I suspect most people would put the probability of a PV win for Remain as higher than Labour winning the election, simply because in the latter the Remain vote is split by the Liberal Democrats.

If Johnson does get his deal through parliament, or wins a PV, he will enjoy at least a week of media adulation that will be unbearable for Remainers. I had wondered if there might be a sting in the tail for him. With Brexit out of the way, he will have lost his main weapon against his opponents in a General Election. He may suffer the fate of his idol Churchill, and (in leavers eyes) win the war only to lose the peace.

However I can think of countless reasons why winning on Saturday will hand Johnson the election on a plate. There is the adulation from Leavers and the media of course. Remainers will also not quickly forget, and they will be looking for someone to blame, and many will blame Corbyn. That feeling may be intensified if it turns out, as it may well do, that it was Labour MPs who were critical in getting Parliament to approve the deal on Saturady. In short, whether he wins or loses, Johnson is set pretty for the General Election.



Friday, 16 November 2018

Brexit. Of course everyone hates a compromise, but like much else its the best option, isn't it?


This is the argument put forward by May and her supporters, but rather more significantly it is also the case argued by Martin Sandbu here and other very rational and realistic people. When you have two sides implacably opposed, compromise is often the way forward. No one likes the compromise, but that is the nature of compromises. It a mature democracy where we don’t want to be at our throats all the time, compromise is inevitable.

Labour are actually arguing the same thing. They just think they can get a better compromise, and they have a good case because they will not have to constantly try and appease a large group of Brexiters. But they can only do this when in power, and so if they do not get the General Election they want then all options are open, including arguing for Remain in a second referendum. This too can make sense. If May’s compromise is worse than Remaining, and Labour cannot implement their better compromise, then it makes sense for Labour to campaign for Remain. It is a sensible case that I have yet to hear Labour leaders make, but give them time say supporters.

I want to argue something very different. Let me start with an analogy. You have been feeling unwell for some time. Someone suggests you take some snake oil that they say will make you feel much better. Another person, who happens to be a doctor, says snake oil will do you harm and your ills have other causes that cannot be fixed quickly. You really want your problems cured soon. A third, wise person tells you to compromise: try the snake oil but with half the recommended dose. A compromise seems sensible, so that is what you do. Your temperature soars to 104 and you end up in A&E.

I think this analogy is more accurate than the traditional two sides and compromise idea proposed by May, Labour and Martin Sandbu. The snake oil was sold with the big lie that we could leave the EU, gain sovereignty, reduce immigration but keep the economic benefits of being in the EU. That lie was believed by Leavers. Behind that was a second, more pervasive lie, which is that reducing EU immigration would improve access to public services and increase real take-home pay. In terms of the first lie, the deal May has done  keeps a few of the economic benefits of the EU but with a substantial loss of sovereignty. (The deal Labour wants to do keeps even more of the economic benefits but loses more sovereignty.) In terms of the economic dimension (public services, incomes) and sovereignty, a Brexit deal is either worse in one of these dimensions or both. It is difficult to know in what dimension people will be better off or feel happier.

But surely people were voting to leave the EU, and we would have at least done that. But the evidence suggests the EU was of little concern to voters until 2016. According to IPSOS Mori, only a few percent of people thought the EU was an important issue in 2010. In 2015 it only occasionally reached double figures. This strongly suggests that people voted Leave not because they wanted to leave the EU for its own sake, but for what they believed would be a consequence of leaving in some other dimension. This is the key to understanding why a compromise does not work.

Most Brexit voters will not be moderately happy with a deal that makes them worse off: they will not be happy at all. Most Brexit voters will not be moderately happy with a deal that gives the UK less say in the rules the UK has to obey than when in the EU: they will not be happy at all. A true compromise is something that gives each side something, but the incredible thing about Brexit is that what most Leavers want from Brexit is not possible, yet most politicians and much of the media refuse to tell them that.

The curse of Brexit is that anyone enacting it will be unpopular, not because most Leave voters do not get all they want but because they do not get anything they want. In fact, like the snake oil analogy, they will probably be worse off or have less say. Brexit was always a fantasy, and anyone who makes Brexit concrete will fail to deliver that fantasy. As most politicians have not had the courage to call Brexit out as the fantasy it is, voters are likely to blame the politicians who fail to produce their fantasy rather than blaming themselves.

May will keep telling lies, in the tradition of Brexit, to try and get her deal passed. She claimed outside Downing Street that she had secured our departure from Freedom of Movement. She has done no such thing. The final trade deal is still to be negotiated, and will not be known until after it is too late to change our mind. As pointed out here, the proposed Customs Union for mainland Britain is seriously incomplete. Once we have left the EU, we have no options left so we are in an even weaker position than we are now.

To say, as Philippe Legrain does here, that those arguing for Remain are playing Russian roulette with the UK economy are wrong. A majority of MPs asking for a referendum between May’s deal and staying in the EU is called democracy, and clearly if there was not a majority for such a referendum May’s deal is better than No Deal. The whole ‘taking a risk’ story is the result of deliberate choices by a Prime Minister that wants her deal passed on the basis of fear. MPs have to decide what deal is least worse for the UK, and that is clearly staying in the EU. 

In June 2016 we narrowly voted to Leave, when the Leave campaign claimed Turkey was about to join the EU and we would have more spending on public services if we left, in a campaign that used money that exceeded election rules the origins of which are still unclear. We now know that Turkey joining the EU is not on the horizon, according to the OBR there will be less money available for public services after we leave, and we will have to end up paying and obeying with no say over the rules. Our best estimates are that the UK economy is already 2.5% poorer as a result of Brexit, and on top of that the Brexit collapse in sterling has cut real wages. According to the lastest large poll two thirds of people want a say on the withdrawal agreement and there is a clear majority to Remain. Here is a similar YouGov poll. This is despite neither main political party arguing for the Remain option. It is time parliament respected the views of the people, not their hope 2 years ago when they were promised the moon but today when those promises have not been delivered.