#22. The pros and cons of Brexit

BRITAIN AND THE EU
If nothing else, the televised encounters between deputy PM Nick Clegg and UKIP leader Nigel Farage underline quite how conflicted most of Britain is over membership of the European Union. The second instalment of ‘The Nick and Nigel Show’ was remarkable in terms of quite how many misconceptions could be squeezed into a single hour of viewing.

The bottom line is that neither membership of the EU nor exit from it is a panacea for some deeply-rooted problems, problems of which the British public seems sublimely ignorant. In its wide-eyed optimism, Nick Clegg’s vision of Europe seemed at times to be scripted from the lyrics of a syrupy Eurovision entry – Cliff Richard’s Power To All Our Friends comes to mind. The views of Nigel Farage, on the other hand, often seem rooted in the same sort of ‘Hovis nostalgia’ which characterises much of the Eurosceptic cause.

To his credit, Farage comes across as fundamentally decent, an affable, genuine person who relates quite sincerely to the concerns of the ordinary man. Credit must be given to Clegg, too, for having the guts to engage in debate instead of hiding behind the somewhat ludicrous dignity in which most members of the political establishment habitually seek to clothe themselves.

But the bottom line is this. Of itself, leaving the EU won’t solve Britain’s fundamental problems, and neither will remaining inside the Union.

* * * * * * *

If you wanted an illustration of the sheer fatuity of much political debate in Britain, you could hardly do better than the Farage-Clegg dingdong over European legislation. The theme, from the UKIP perspective, was that the EU makes most of Britain’s laws, so we would be a freer and more prosperous country outside the Union. The Clegg case, more or less, was the opposite.

The debate over the percentage of British laws made in Europe is the height of irrelevance. You cannot weigh quantities of laws like quantities of potatoes, because some laws (like the prohibition of murder) are vastly more important than others (like statutes on dog-fouling), so the percentage attributable to Europe is a meaningless issue.

This argument misses two further, vitally important points. First, regulations flowing from Europe are enforced nationally and, if you transgress against one, it will be a British official, not a German or a Dane, who will bring you to book. So the nuisance which these regulations create results from British officiousness, not continental zeal, and that officiousness would continue unaffected if Britain did leave.

Second, the argument that we would be freer out of the EU assumes that European legislation would not be recreated, almost immediately, by the Westminster and Whitehall legislative sausage-machine. In reality, almost the only EU law that might not be replaced domestically is the Human Rights Act and I, for one, regard with deep suspicion any politician who has a problem with the protection of human rights.

* * * * * * *

The first fundamental problem with the ‘in-or-out’ debate, though, is that neither side looks at the issue realistically. Europe is not the power for good that its proponents contend – rather, it is a bureaucratic gravy train capable of mistakes as horrendous as the single currency. On the other hand, accusing Brussels of excessive bureaucracy is a bit rich from a country which invented “red tape”, “the men from the ministry” and “in triplicate”. Moreover, leaving the EU would not waft Britain back to the 1950s. It would require Britain either to stand on its own two feet or to join another trading bloc. Neither looks a realistic proposition.

Where Farage scored over Clegg was in his identification of EU membership with the British governing elite. Britain’s commitment to a single market is highly selective – we may have free trade where it suits big business, but any citizen who tries to exercise his theoretical right to purchase petrol, alcohol or cigarettes from a continental supplier will soon realise free market logic goes only so far, and that the ordinary individual is not the intended beneficiary of the single market.

Likewise, the British elite has always sought to make the EU wider, for fear that it might otherwise become deeper. Britain has done more than any other member to ensure that countries like Romania and Bulgaria are admitted to the EU.

* * * * * * *

Britain outside the EU is difficult to contemplate (though this does not justify the outrageous proposition that the electorate should be denied the right to decide for themselves through a referendum).

If Brexit occurred, many might think that we would become closer to the United States. In reality, this is highly unlikely, not least because American esteem for Britain has dwindled. Indeed, the “special relationship” is a dead letter – if defence cuts, the mishandling of the Syria issue and the role of London as a haven for rich Russians hadn’t already soured American opinion, the recent revelation that Britain will not close London to Russian money has been the clincher. Any American president, and not just Barack Obama, would now call Paris, Berlin and even Warsaw before phoning London.

This means that, outside the EU, we would be on our own, which in turn means that our massive debts, our economic dependency on borrowing and our chronic current account imbalance would remain intact.

With or without interference from Brussels, then, our fate is in our own hands. If I have a clear preference for Nigel over Nick, it is because Farage is capable of offering a potent challenge to the governing elite, which improves the odds on change.

 

16 thoughts on “#22. The pros and cons of Brexit

  1. A measured round up Dr Tim; thanks. I agree that whilst Farage offers instinctive appeal, there are some big questions to be answered about UKIP’s overall positioning and capabilities as a coming-from-virtually-nowhere political party. I have joined UKIP and would vote for a local candidate. However, I intend to scrutinise the development of UKIP’s wider policies on all matters political as the party embeds itself in our political system – or not, as the case may be.

    The risk, of course, is that the closer UKIP gets to the Establishment, the more likely it is to transmogrify in to a mainstream party of the British political class. At which point, forget UKIP as far as I’m concerned. It will be very difficult for Farage/UKIP to hold the ‘Citizen Smith’ line for long, but if they can do so, then we might see some significant changes to how politics is ‘done’ in the UK over the next 5 – 10 years. For me, the jury’s out for now.

    We live in interesting times.

    • Thanks. I’ve largely avoided this subject up to now, but felt compelled to say something about the sheer scale of misunderstanding.

      I’m not clear if we’ll actually get a referendum – politicians usually only pose questions when they think they’re going to get the answers that they want…..

  2. Tim, On laws etc I remember that the economist many years ago did a piece which identified the fact that say one page of EU “laws” translated into 10 pages on average when put into UK use.Whereas the French and Germans used them directly and only modified them in the light of practical use.

    • Certainly makes sense. At the other end of the scale, the Italians (for example) are often said to sign up to anything coming from Brussels, it doesn’t matter as they don’t plan to enforce it anyway!

      Interestingly, whilst other countries with smoking bans just have “no smoking” signs, we have the heavy-handed and pompous “it is against the law to smoke in this building”.

  3. Thanks Dr Morgan,
    My view is that life outside the EU would be much better for Britain. I note that your article doesn’t really put it’s finger on any tangible benefit to Britain from EU membership.

    The experience of Norway seems encouraging.

    http://autonomousmind.wordpress.com/2014/04/05/the-truth-that-mats-persson-and-open-europe-dont-want-you-to-know/

    If this article is to be believed, we could have MORE influence over EU trading arrangements..without the high cost of full blown membership. Furthermore we wouldn’t have to accomodate an extra city the size of Southhampton every year to fulfil the requirement to have open borders.

    • Thanks for this. I should explain that I’m not pro-EU, and for that matter I’m an admirer of Nigel Farage.

      But my question is this – can Britain really go it alone? My view, you see, is that the UK economy is far weaker than is generally recognised. We have huge debts (at least 500% of GDP); we are borrowing-dependent; the scale our recovery since the slump is feeble (maybe 4.5% so far, derisory after a 20%+ devaluation); we’re facing a major energy challenge; our current account deficit isn’t sustainable; and we have serious political, social and institutional weaknesses.

      I take your point 100% about immigration – uncontrolled for far too long – but would Brexit change influential employer pressure for low wage immigrants?

      Comparisons with Norway don’t really work for me, as we’re quite different (for one thing, they banked their North Sea windfall whilst ours was blown).

      Head over heart, I’d rather leave the EU – I think we’d be better without the EU, and the EU would be better as well – but no-one has shown me how we’d fare on our own. (If you can, please do!)

    • PS I’m thinking about writing a blue-print for the kind of recovery that WOULD enable us to stand on our own two feet…………….

    • Thanks Dr Morgan,
      On the ‘Can we go it alone’ ? question, this seems to suggest there is some tangible economic benefit to being a full blown member of the EU club. ?
      If you know of any benefit we recieve economically that we could achieve in a looser and much less costly trading relationship (such as Norway’s) I’d be very interested to know.
      In my view a better question would be ‘Can we continue to waste so much money on EU membership? (£55 million a day). Can we continue to enforce massively expensive job destroying EU directives and contnue to offer a world NHS/Education/Housing service.

      I’m surprised that the decision to pull out of the EU isn’t more clear cut.
      In my view the EU is a socialist instrument to level the playing field – transfering money and jobs from wealthier countries to those that are more impoverished
      Another key role is to protect German economic interests by damaging competitor economies in a most ruthless way. Why is Germany allowed to burn their dirty coal when we have to close our power stations ?.
      It was Germany’s BMW that bought up Rover in the late 90’s, used Rover money and expertise to develop the succesful MINI and BMW 4×4 range…then dumped Rover when they had got what they wanted all along.

    • On the North sea oil point,.. although the windfall has been squandered by selling most of our oil at rock bottom prices the revenueif available today would really be a drop in the ocean. If we had been wise enough to leave more in the ground as a strategic resource then that could have been of real benefit.

      Employer pressure may be influential but we did manage to pick plenty of veg and run hotels etc. before the massive expansion in immigration. Its for governments to make work more attractive by changing the benefit system.
      We would do just fine ‘on our own’… i liken the situation to living with an abusive other half that bully’s and constantly demands money …lets get out now!

    • Kenneth. Thanks. First, be a bit wary of that £55 million a day figure, it’s vastly higher than the Treasury figure. But the question is a good one.

      Let me take a step back here. My start point is that our economy is in real trouble (and don’t be misled by growth figures, as growth is easy if you borrow it!). So, the question is, will our economy improve if we leave? Getting rid of a lot of EU restrictive rules seems a good idea. But my fear here is that Whitehall likes these rules, and enforces them with far more rigour than other EU countries – in other words, Whitehall likes bullying people. So, if we leave, will an unreformed Whitehall quickly reintroduce all the same restrictions, and more, on a national basis? If so, we’d be “out of the frying pan and into the fire”.

      Re. Rover etc, Europeans aren’t the only ones to have bought our assets. We’ve allowed flagship, strategic assets (such as energy companies) to be bought by foreigners – not just Europeans, but Americans, Chinese and others – in a way that other countries wouldn’t allow. The US, France and many others simply don’t allow foreigners to buy strategic assets – can you imagine if a foreign company tried to buy EDF? They’d be stopped. But this asset sell-off isn’t an EU issue, and the buyers haven’t all been European – rather, it’s about our short-termism and greed. That wouldn’t change just because we left the EU.

      Don’t get me wrong – I’m in favour of leaving. But what my article tries to say is that leaving isn’t a silver bullet, a quick-fix for our economic weak nesses. Those weaknesses were created here, and can only be fixed here.

    • Dave, I’m not at all convinced that debt-fuelled consumer spending constitutes a sustainable economy for the 21st century. Gail Tverberg (link below) is much better than me at explaining why we’re at the fag end of mankind’s era of fossil-fuelled and, therefore, debt-fuelled economic growth. We’ve been kidding ourselves, to all intents and purposes, and we’re kidding ourselves again now.

      I think that we can really only be a few years away from the edifice collapsing. It’s difficult to call exactly when, or to identify what single event or sequence of events will trigger the unravelling process. However, debt-fuelled consumerism cannot form the foundation for the long-term economic stability of our complex society as we reach the end of the Oil Age. Neither mainstream orthodox economists nor workaday journalists demonstrate any understanding at all of what is really going on here, still less do they endeavour to explain to the masses the state we’re in.

      We’re sleepwalking towards a bad place and have been doing so since around the turn of the century, and most certainly since the global-financial-crisis-that-never-was … the politico-banking elites punted the crisis in to the future (print money, grow the indebtedness), and – in my opinion – that future is close now, very close.

      ‘Limits to Growth at Our Doorstep, But Not Recognised’

      http://tinyurl.com/qf9636r

    • OK, thanks both. I’ve been thinking about writing an article explaining why the IMF growth projection isn’t the great news story that it seems (but my list of potential articles is a long one!)

      GDP is a measure of flow (income), not stock (like a balance sheet). So it does not include movements in debt. UK GDP is about £1,600bn, so growth of 2.9%, plus inflation of say 2%, increases nominal GDP by 4.9%, or £78bn.

      But the government alone will borrow at least that much. Then there’s private borrowing – think of Help to Buy here. So we’re likely to “grow” by about £80bn (nominal), whilst debt increases by at least £120bn, perhaps a lot more. Then there’s our current account deficit, effectively borrowing off overseas trade creditors, about £70bn last year.

      All in all, I think we’re likely to “buy” growth of about £80bn at a cost (in borrowing) of anywhere between £120bn and £200bn. Nice if there’s an election coming, but…. If you spent £80 more this year, but borrowed say £160 to make it possible, does that really make you better off?

      This is similar to what the banks did. Let’s sell some junk bonds, or mortgage bonds, etc.. The commission on this sale boosts our profits (and our bonuses, of course). But the junk debt goes onto the balance sheet as toxic assets which we’ll lose on eventually. So we’re buying profits at thge expense of the balance sheet.

      Sad to say, this is what the “Anglo-American economic model” consists of. Borrow to consume – the extra consumption boosts our GDP by £x, but the borrowing increases our debt by £xx.

  4. Thanks again Dr Morgan – I take your point that the take over of British Companies isn’t exclusively by Europeans and that most of our problems are self inflicted and could have been anticipated. Membership of the EU is a symptom of the disease, not the disease itself in my view.

    But I do believe and our membership of the EU is linked by a desire by the ruling classes to destroy a gentle, prosperous England – split us up, run down our industries, demoralise the working classes etc.

    I subscribe to the view of George Orwell that a great many English ‘intellectuals’ hate their own country. His writing is as relevant today than at any other time.

    I’m sure you and other readers will be familiar with this quote but it’s worth repeating :-

    “England is perhaps the only great country whose intellectuals 
are ashamed of their own nationality. In left-wing circles it is always 
felt that there is something slightly disgraceful in being an Englishman 
and that it is a duty to snigger at every English institution, from horse 
racing to suet puddings. It is a strange fact, but it is unquestionably 
true that almost any English intellectual would feel more ashamed of 
standing to attention during ‘God save the King’ than of stealing from a 
poor box. All through the critical years many left-wingers were chipping 
away at English morale, trying to spread an outlook that was sometimes 
squashily pacifist, sometimes violently pro-Russian, but always 
anti-British.”

    It’s the underlying anti-British attitude of the Europhile Nicholas Clegg types that must be addressed – to those of his mind the EU must feel like a gift from heaven.

  5. Kenneth.:

    “Anti-British” raises the issue of patriotism, and that is a tricky one. Whilst patriotism is commendable, it can put individuals in a difficult position. How was the royalist Frenchman supposed to act under Napoleon, or the decent German under Hitler? I often wonder what I would have done after the Civil War, when Parliament executed the lawful king and imposed horrible puritanism. Or under Henry VII, whose unprincipled, brutal rule would undoubtedly have been labelled a fascist if such a word had existed in 1485.

    I accept the point about intellectuals sometimes being ashamed of being British, but the British have long distrusted intellectuals, preferring practicality, so I suppose this cuts both ways. Maybe it dates back to the Industrial Revolution in England, which was hands-on, not theoretical, and this may have created mutual distrust between “intellectuals” and “practical men”. Also, we Brits have long been suspicious about theoretical approaches to government, treating both Rousseau and Marx/Lenin with justifiable doubt.

    I think we can be proud of being both British and European. You only have to think of the ancient Greek civilisation, the renaissance and the enlightenment to be proud of being European, or of our inventors, our pioneers and our Navy to be proud of being British. Then there’s G.K. Chesterton, profoundly proud of being English, but not fond (to put it mildly) of the Scots or the Welsh.

    We have a problem with our dominating elite, as Ferdinand Mount’s recent book explains very well. Would leaving the EU strengthen individual liberties and democracy, or could it weaken them? I wish I knew the answer to that!

    • Thanks Dr Morgan,

      In my view patriotism has been discredited by the left to the point that it might be considered a tricky issue by the likes of the BBC. I would hope that a great many Conservative minded patriotic people In Germany would have had the resolve to fight against Hitlers national socialism . Arguably the patriotic Conservative German should have resisited the nazis but may well have been put to deah for his pains!.
      The leftists would ofcourse like to forget the nazis party’s roots in socialism prefering to label those on the right facists etc. to divert attention away from their own great failings.

      I don’t see patriotsm being about supported a ‘leader’ just because he/she is in a position of power – patriotism is about doing what you believe is right for your country.
      In the case of the EU the patriotic position is to head for the EU exit.
      Must say the label ‘ European’ rather chills the blood. The Greeks can rightly be proud of their ancestry just as we in Britain can be proud of ours – but we are fundamentally Greeks and British..Europe is/was strong because we are diverse peoples not a melting pot of conforming ‘Europeans’.

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