Wednesday, 20 April 2016

'Leave' Has Just Lost its Economic Argument

Michael Gove, who is likely to be the person most responsible for setting the parameters of Britain's negotiation with the EU after a leave vote,  indicated on the BBC Today programme the UK will not stay in the common market. We would seek a free trade agreement like Albania, or Iceland.

This means the risks of #brexit have gone up. The prospects of a risk-free slip into the EEA have gone. We must therefore run the risk of the foreign investors on whom we rely to cover are triple deficit (current account, fiscal and trade) going on strike.

Where this to happen, In order to tempt them back, the Bank of England would need to raise interest rates , which slows growth. The UK may not be a default risk , but as a country with I need for constant inflows of foreign capital we may need to print more money to cover the bills . Investors will therefore need a higher return to compensate for the risk.

This is one mechanism by which leaving the EU could slow growth. There are others. The UK may become a less attractive place for foreign companies to invest. And not just because of access to the single market. For all its faults, the EU has been consistent in its application of laws surrounding state intervention in business and preventing government's interfering too much in markets. Leaving risks that benign business environment.

The risk therefore of a catastrophic cycle of interest rate hikes and currency issues has to be set against the sheer paucity of the potential benefits from leaving the EU . Just what are we hoping to achieve? Why are we risking prosperity in this way?

An honest answer would make use of Gandhi's aphorism " it is better to be governed badly by oneself, than well by other people." If it is simply about democracy, then supporters of brexit will need to be honest about the potential economic costs.

The post EU UK could become the free market prosperous business-friendly place of brexit fantasy, but it could equally become a paranoid insular protectionist hell hole of UKIPpery, or worse yet, the Labour Party could nationalise everything in sight. These are both outcomes European Union protects us from.

The problem is brexit becomes a tabula rasa on to which everyone can paint their own ideal post EU UK . Then arguing against brexit becomes an argument against everything that person holds dear. Many have spent decades seeking confirmation for a prior belief that the EU is behind all the bad things. Nothing can persuade these people that leaving the EU isn't a panacea to solve all the UK's ills. It's a peculiar Mania.

The lesson of the ERM debacle is not that the EU is evil, but that the UK should not have joined the euro, and we didn't. It doesn't follow we should leave the EU too. The EU is not the enemy. The UK is not going to join the euro. EU is not going to Force the UK into a superstate, a European army, or a single currency.

The European Union is a collection of some the freest, most prosperous and happiest democracies on Earth. The Euro project has impoverished half the continent on the altar of political vanity. But that is not the question we are asking in this referendum. We are asking specifically whether the UK should leave the European Union.

What are the benefits of leaving the EU? If they aren't economic, they seem mostly to accrue to politicians who gain greater freedom to interfere in our lives. And what do we the people gain, to offset the probability of a negative economic outcome?

Will we lose the right to live, work and travel at will from Helsinki to Lisbon and from Warsaw to Dublin? Probably not, but it's a risk. Will UK be better off economically speaking speaking? Probably not. That means people will lose jobs.

The risks are real, the benefits seem ephemeral. And very fact that we are having this referendum now means should the EU develop in a way that is an anathema to British interests, for example if  as I am told is "inevitably" going to happen,  the Euro is forced upon the UK, we can always leave another time. The very fact of this referendum undermines fatally the sovereignty argument.

Thankfully the polling seems to indicate the remain campaign is winning.



Monday, 4 April 2016

I dislike the EU intensely. I'm voting to Remain in.

I get it. You hate the EU, and Jean Claude Juncker's a twat. I get it, the desire to kick Guy Verhofstadt in the bollocks. I understand on a deep and visceral level the desire to headbut Martin Shultz and wedgie Neil bloody Kinnock and hang him on a clothes peg by his underpants until they rip. I want pour itching powder into all their underwear drawers. Jaques Delors especially. But for better or worse, in the EU or out, we have to work with these bloody people, and the tin-pot countries they come from which show precious little gratitude for the British blood poured into their soil over the centuries for the privilege they still enjoy to not speak German (or French or Spanish). Instead they must speak English...

I get the desire to send RAF Typhoons on punitive strikes against the wasteful and absurd Strasbourg Parliament building, with or without the MEPs still inside. I understand the desire to have HMS Dragon, the most modern air-defence destroyer on the sea to be deployed against Spanish fishermen. I get the desire to set fire to French sheep (mainly because you'd get in less trouble than you would setting fire to French farmers). I too deplore the wasteful CAP. Above all, I want the entire commission, parliament and bureacuracy of the EU lined up and bogwashed by the smelliest upper-sixth prefect, one after the other while they practice their English irregular verbs. All right-thinking people agree.

I'm still voting to 'Remain'.

The most likely scenario should the UK leave the EU, is that not a lot would change. There will of course be some disruption before people realise this, probably leading to a small recession. But upon UK leaving the EU, slipping into the EEA will feel like a more comfortable shirt. Long-run, we may even be better off and happier. This will likely suit our historic national desire for "the open sea" over the continent. But  UKIPpers will still be grunting about immigrants, and deplore the fact we still have to obey EU rules. But as we will no longer have any formal means to influence them all that much, they'll have to lump it. Thankfully without their MEPs (and EU money) they'll fade away.

We'll be free to trade with the world (as if we aren't already...)? Well here's the Economist suggesting it's nowhere near as easy as Brexiteers pretend to negotiate new trade agreements.  This EEA scenario holds no fear for me. But it's by no means a given, and nor does it achieve much beyond 'not being in the EU'.

If we aren't staying in the EEA, then negotiating a new arrangement with Europe will likewise be nowhere near as simple as Brexiteers will have you believe - and it will be negotiated in an atmosphere of bad blood. There will be a recession, and probably a long and deep one. We will in the short to medium term almost certainly be worse off.

However there is a broad strand of 'Leave' thought that wants the UK to be the catalyst for the collapse of the entire EU project. The problem is with Brexit, a systemic collapse is far from just being a 'KIPper's mastubatory fantasy, it could happen, and there exist outside forces, who've already got influence, that will be urging it on. This systemic collapse WILL cause a massive recession, both here and even worse, in the EU, and lead to all the geostrategic points that I've been raising in all my previous essays on the subject. Vladimir Putin would be delighted. World trade - heretofore liberalising albeit at a glacial pace would go back by 30 years.

You can't have it both ways: glory in the imminent collapse of the EU AND paint the downsides of that scenario as 'Project Fear' when it's absolutely what most brexiteers desire, when the mask slips.

You can EITHER control EU immigration OR keep all the trade benefits of the EEA, but not both. Leaving the EU can either be low-risk OR you can control EU immigration and "get our country back". Not both. 

Even the best case scenario of EEA membership, (which I suspect most Brexiteers only favour to have any chance at all of securing a 'Leave' vote at all) will leave the UK not much better off, with significant risks all on the downside, should any more damaging scenarios play out.

Leaving this bloody stupid organisation our idiot neighbours built simply isn't a good gamble. Stay in, and keep the more excitable Federast knobbers under control as best we can is in the best interests of the UK, and that of our friends and allies on the continent. Basically that means staying in, to work with the Germans to prevent the French screwing everything up. Again.

If leaving was government policy, and I knew therefore which of the options I'd be voting for, and the risks and benefits were clear in advance (and we were opting for EEA...), I'd probably go for it. But it isn't, they're not and so I won't. I'm not taking a risk with my prosperity, just to please idiot 'KIPpers. That's that. 



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