This is my final blog post on the referendum.
I have found the entire debate profoundly depressing. The media coverage has simply intensified that feeling. Both sides have produced dud numbers and fatuous arguments; very few journalists seem capable of rigorous interview and many columnists, most of all Toynbee, seem to inhabit a world that I do not recognise. I approach Thursday with one overwhelming thought, and that is that politics in the UK is broken and that must change. Now.
I think that the current political failure exists in great depth throughout the system. It starts with the classification of left and right which would be better expressed as a split between authoritarian or libertarian. The structuring of political parties does not help, the creation of professional politicians, and indeed political dynasties (Kinnock, Benn, Churchill), has lowered quality. The largely LibDem creation of the MP as a social worker adds further confusion. Add in sound bite politics and the application of mass marketing techniques to stimulate emotional responses to what is supposed to be an intellectual process and the current mess is explicable. I shall return to it in subsequent posts.
The fundamental point about Thursday’s vote is that it is a choice between two possible futures – both of which are uncertain to an immeasurable degree. Once all the economic forth is discarded (any forecast that comes without a measure of how likely it is while claiming accuracies of 1% or less is clearly drivel – or intended to deceive) the question becomes one of how you prefer to be governed. If it is by directly elected politicians who regularly submit themselves and their policies to a plebiscite, then you prefer out. If you think it better to rely on an appointed elite to set policy, then vote in.
A huge amount has been made of access to the single market, most of which has been bilge. I have done my own research on this (you can too – Google is your friend and World Bank is pretty impartial and comprehensible). In 2014 the UK GDP was about £2,000 billion. Of that about 28% was exports, of which about 44% went to EU. The value of our exports to EU was thus about £246 Bn. The trade weighted average import tariff of our largest EU partners is 1.5%. Thus the import tariffs that would have been paid on these exports is about £3.7 billion (I’m rounding figures up and sensibly). Out net contribution (i.e. after rebates, CAP payments and one off grants) to the EU in 2014 was £7.1 billion, so we are actually paying almost £2 in cash for every £1 of tariff that we save. That makes no sense to anyone other than a politician.
Moreover, there is no such thing (for an exporter) as a single market. A product that sells is France is unlikely to sell in Germany without some modification– for a start the instruction manual will need to be in a different language. Moreover, the marketing and advertising will be completely different. Our largest single export partner is the United States, followed by Germany, Netherlands Switzerland and France. Exports to US are twice the size of exports to France.
In terms of growth (i.e. which export markets are likely to be larger in future) the Eurozone is stagnating at about 0.3%. The future lies in Asia, where growth rates are 5% plus. The EU is, increasingly, a backwater. Worse than that, the (self-inflicted) problems of the Euro mean that the EU’s future is far from certain. At least some of the commercial establishment wants to stay in. Why? Because EU regulation is a barrier to entry, and thus protects the current incumbents. That does not make it the right decision for the UK (nor actually the right long term decision for the current incumbents, but then famously the City doesn’t do long term). Why would any country, let alone the 5th largest economy in the world and the world’s financial centre want to pay to retain access to a market that has near zero growth and a currency time bomb?
We come now to migration. The simple, unadorned fact is that the UK has failed to get a grip of migration for years. Moreover, the debate has long been poisoned by halfwit politicians and commentators who can’t discern between nationalism and racism, let alone accept that the former is as essential to understanding what is going on as the latter is abhorrent. However, even if we did get a grip, we would not be able to regulate the flow from the EU, which is about half (although many suspect that this is an underestimate) or 160,000 per year. That is because the EU requires the free movement of labour. Restricting movement in any way requires us to leave.
So, is migration a good or a bad thing? Well, it depends. If a job needs filling and it can’t be filled by UK resident, using a migrant enables growth. Which is a good thing, but how good depends on what that migrant does with his or her pay. A UK national will spend and invest most of their pay inside the UK. That pay therefore gets recycled as further growth for the recipients of that spend. Economists call this the multiplier effect and it is a fundamental part of growth and it has exponential tendencies (the extra income for the food seller comes out as profit, which then gets reinvested etc). However, if that migrant choses to live packed into a room, spend as little as possible and send the rest of his money to his home country then the multiplier effect is much reduced. The overall effect is still good, but not as good as using a UK resident. If you then consider the additional burdens on infrastructure (housing, transport, water, education, health) some costs will accrue. Again, if the worker is spending some or all of his or her wealth in the UK it probably covers it. As money is repatriated then the tax take (through 20% VAT on sales) diminishes and the net gain becomes harder to measure.
Is uncontrolled migration a problem at the moment? It depends where you live and how much you earn. In some areas it certainly is. Is future migration potentially a problem? Well, the UK has a very high standard of living compared to those countries that have recently joined or are about to join the EU. That would imply that their people will come here seeking work. Now, Cameron’s reforms (note that these are actually future reforms because they do not yet exist in EU law and there is no guarantee that they will). And note that those reforms rather rely on the Border Service trying to find and deport unemployed EU migrants after they have been in UK for 6 months. It is a recipe for yet more failure. If you wish to control who lives in the UK then you need to vote out.
And don’t listen to the drivel that voting our means that we’ll be short of labour. Controlled immigration is not zero immigration. It works in US, Australia and in fact most of the rest of the world. Note also, as I showed above, that leaving the single market would actually save the UK money. So if the choice is between controlled immigration and single market membership, out is the way to go.
So that’s democracy, economic management and immigration. That really only leaves security and ex-pats. The latter is simple. No EU member state has said that it will take any action against any UK nationals resident in their country. Reason? Well firstly it would make no sense and secondly EU law would make it very, very difficult. It is a non-issue.
Moving on to security. Firstly, let’s just remember that the reason for peace in Europe (well, northern Europe at least) is NATO and nuclear weapons. And thinking about it, it took NATO (not the EU) to bring peace to the former Yugoslavia. To argue that our membership of the EU is important to NATO or our security is drivel. We were NATO members long before we joined the EEC and NATO was formed long before the fore-runners of the EEC. Moreover, the current EU military capability is risible. Any future one (and there is one) will be equally risible as it will not include the US. Some old Generals wrote a letter saying EU membership was important. At least one of the claimed signatories had not agreed it and another has recently changed his mind. There is simply no way in which the military security of the UK is in any way dependent upon the EU.
What about terrorism. As anyone who knows anything about the subject will tell you the key weapon in fighting terrorism is intelligence. The best intelligence in the world (they will also tell you) comes from the Five Eyes group (UK, US, Canada, Australia, NZ). They do not share it. There is, of course, other information from other countries. The UK may well share information with France or Spain. Maybe Germany. But probably not Bulgaria or Romania. So any EU intelligence organisation is not getting the best stuff that the UK has. One of the problems of the free movement of people is that we have no mechanism to stop EU nationals whom we know are involved in terrorism if the information comes from non EU sources (which is likely). Some argue that if we leave EU we won’t get access to EU data. As I have shown, the EU data is not top quality and we have better stuff anyway. Moreover, as EU is likely to want stuff from us I do not believe that leaving EU will preclude intelligence sharing.
My final point is this. The debate has shown that the current political system in this country routinely knowingly publishes inaccurate data, seeks to inflame emotions rather than win arguments and stifles dissent rather than encouraging better. Given the current level of polls it is surely symptomatic of a failed system that all parties (bar one) have adopted a policy likely to be rejected by at least 45% of the electorate. How can they be so out of touch? How can the “professional” political reporting establishment have missed this so badly? How can a government publish such drivel as the leaflet, a Chancellor threaten vengeance taxes simply for voting out or a Prime Minister forecast war? It’s not good enough.
I expected better than this farce. I want, no, I demand improvement; you should too. The only to get change is to exercise the sensible option. Vote for improvement. Vote to remove some of the buffoons in Westminster and all of the ones in Brussels. Vote because you love democracy and freedom.
Vote for whatever reason you like, but vote OUT.