Tuesday, 18 September 2018

Brexit delusions repackaged for the USA are no more likely to succeed

An alliance of American and British free market think tanks yesterday launched their flagship template for a free trade agreement between the US and the UK. It styles itself as a "free trader's" ideal. From the get-go it erects a straw man.
Real free traders may consider the notion of an ideal free trade agreement oxymoronic. After all, real free traders are most concerned about eliminating domestic barriers to trade, whereas trade agreement negotiators consider those same barriers to be assets. Free traders seek the removal of domestic barriers, regardless of whether other governments promise to do the same; we understand that the primary benefits of trade are the imports we obtain, not the exports we give up. 
This is quite typical of the think tank breed. Everyone who works in the discipline of producing free trade agreements is not a "real free trader" by their definition - and conventional wisdom must be casually swept aside to make room for their inspired radicalism. Here we see the belief that "real free traders" do all they can to unilaterally remove barriers as a matter of course and this of itself is a universal good with automatic results.

The process of trade, however, is very much the process of coordinating commitments to reducing barriers to trade. These barriers can be of varying nature where domestic governance systems may cause bureaucratic costs and delays where the only way to eliminate that barrier is either to eliminate the governance system entirely (which assumes these systems do not exist for a reason) or to work with trade partners to enhance the compatibility of systems, preferably working to common standards be they data conventions or product standards or even just the standardisation of forms and processes.

Naturally this means if there are radical systemic changes to be made to trade governance systems, it usually falls upon the junior partner to align with that of the larger party. In this instance the USA has the leverage as the regulatory superpower. It won't lift a finger if it doesn't have to - especially if it does not see us as an equal - which it doesn't. This is the regulatory gravity effect. Trade 101.

Like all "real free traders" any stab at a trade policy means bending the definition of free trade to meet their own dogma. Here is where we see some of the Minfordesque unilateralism creeping in.
Free trade is a condition characterized by the absence of trade barriers. Establishing the most important conditions for free trade - the elimination of domestic barriers - requires no formal agreements between or among governments. It is misguided to believe that the economic freedom of people living in one sovereign nation should depend on the consent of a foreign government. But the benefits that accrue to producers, workers, consumers, and taxpayers when their own government eliminates or reduces its own trade barriers - regardless of whether a foreign government agrees to do the same for its citizens are ample and well-documented.
The assumption here is that two nations each taking their own domestic measures can eliminate trade barriers without reference to what each other is doing. This is a conceptual fallacy we have seen before from one of the reports authors.

As it happens, for the last twenty years the entire edifice of non-tariff related activity in the realm of intergovernmental trade talks has been around the establishment of common standards because that above all reduces barriers and, in fact, differentials in regulatory approaches are the chief barrier to further trade liberalisation between the EU and the US.

It is interesting, through, that the report sets up the straw man concept of unilateral removal of trade barriers. It sets the stage nicely for the recurrent "mutual recognition" hobby horse that appears no less than twenty nine times in the report - which tells us that the lead contributor on regulatory affairs is one Shanker "snake oil" Singham of the Institute for Economic Affairs.

Mutual recognition appears to be an obsession of the Tory "fwee twade" set because it presents itself as the magic bullet for frictionless trade while retaining regulatory sovereignty. It is embedded in the script.

There is, of course, a reason why the EU finds it difficult to forge a comprehensive trade agreement with the US. The regulatory cultures are fundamentally different, which reflects in the way regulation is written and enforced. Mutual recognition simply would not work and the Americans would regard it as a huge back door into their regulatory system, with profound sovereignty implications.

Basically, it means surrendering the right to set domestic product standards. The US would have to accept whatever the UK decided was appropriate and the chances of Congress agreeing that are precisely nil. If they they won't do it for the EU then they won't do it for us either.

More to the point the US is doing exactly what the EU does in its own backyard. It uses trade agreements to export its own standards and make its own regulatory demands - much like we see in the TPP agreement. There is no reason to expect it will make an exception for the UK.

Here we see a particular Tory delusion that imagines there is a special relationship with the USA. There are occasionally warm diplomatic words toward the UK, particularly from the ambassadorial branch since we tag along with US military adventures, but when it comes to trade, America has always operated an America First policy and Donald Trump will be no different even in respect of the UK.

The report has a similar approach to the Tory approach to Brexit in that complex problems can be eliminated at the stroke of a pen by clever rhetorical devices. They sound superficially plausible and even credible to the uninitiated but I suspect I am not the only trade geek reading this report and rolling their eyes.

It would take considerably more of my time to dismantle the entire report which is scarcely worth it since the publication of these reports are usually only for the greater glory of their authors, launched to a fanfare of media coverage on a slow news day with accompanying favourable poll and then a day later it is completely forgotten. We will, though, see a regular repetition of themes filtering into the debate over time, one of which will be a redefining of the concept of a free trade deal. It's easier to shift the goalposts when you re-programme the language. Take a look...
At the outset, it should be made clear that free trade and FTAs are not the same thing. Free trade is about the freedom of people to transact as they wish, when they wish, with whom they wish, and without politicians and bureaucrats as gatekeepers. Free trade is about removing impediments that benefit some at the expense of others so that each of us individually has the fullest battery of choices to decide how best to use our own resources. FTAs are really more about managed trade, which often includes labyrinthine rules intended to distribute particular benefits to specific interests. In some respects, FTAs give free trade a bad name. However, despite their flaws, FTAs have helped reduce domestic impediments to trade, expand our economic freedoms, and lock in positive reforms. Over the years, FTAs have delivered freer trade.
They are, of course, right in that free trade agreements are not free trade and were it not for the ill defined language of the WTO we would still be calling them by their proper name... Preferential Trade Agreements. Far from being free trade, they very much are managed trade - and for good reason. Here we get an insight into the mindset of "real free traders".

They say "Free trade is about the freedom of people to transact as they wish, when they wish, with whom they wish, and without politicians and bureaucrats as gatekeepers". That is the end point. That is where we want to get to - but here we have to ask how we get there? And that is why we have "politicians and bureaucrats" - not as gatekeepers, but as facilitators who, through coordinated activity, can eliminate the many non-tariff impediments to trade. Describing them as bureaucrats implies they are parasitic rather than central to the process.

But then trade and commerce is not devoid of politics. What drives trade, as much as anything, is the desire to create a level playing field. A typical example being a global drive on labour standards in international waters to ensure that our own fishing vessels are not undercut by foreign operators using filipinos on slave wages.

Typically labour provisions without surveillance systems are very often of little observable value and generally only a figleaf, but in some sectors like fishing, such standards are enforceable and there is the political will to do so. These are the sorts of complications that turn "free trade" into managed trade.

In addition to this we add layer upon layer of complexity as we try to monitor, define and tax trade in services while protecting intellectual property rights on goods and digital content. The free trader imperative for simplifying trade is wishful thinking. Modern trade beyond the shipment of tins of tuna is inherently long-winded, complicated and time-consuming. There is no simplifying it much though we may wish we could. 

Moreover, as "real free traders" fixate on cutting tariffs and deregulation, very often the focus is on improving the profitability of already maximised value chains by eliminating fraud, counterfeiting and food adulteration by improving regulation. The core element of any transaction is trust and complex FTAs go a long way to establishing systems that buyers can place their trust in. That is the inherent value of regulatory systems. Eliminating those such overheads can do more than a substantial cut in tariffs, many of which are already negligible.

Where things get interesting though, is that for every value chains distortion a preferential agreement eliminates, it can always create more. Modern trade agreements have measures against preference erosion which can mean an FTA is actually entrenching inefficient value chains. This is why FTAs are often described as termites in the trading system, undermining multilateral efforts. In fact, it is hard to support the authors claim that they seek to be radical when they are still thinking along the lines of comprehensive bilateral FTAs.

Here we need to look at the successes in recent years in achieving incremental progress on a multilateral basis. Global regulations from the IMO and UNECE have created platforms we can build on which can over time eliminate the regulatory differentials between large blocs and countries ensuring that we are not forced to choose which regulatory superpower we have to bend to. The more granular such systems are the more likely they are to succeed, but even individually can add billions to global trade. The holy grail would be a global medicines approval system.

What this report is, though, is a series of well worn and timid free trader canards marinated in free market dogma seeking to bend reality to obsolete ideology - particularly "free trade" with none of the external obligations that go with modern trade. I would expect nothing else from this particular nexus of think tanks since they are all interchangeable in ideas and personnel.

As it happens, I sincerely doubt we are ever likely to see a comprehensive FTA even though the political will may be there. It has to be ratified on both sides right about the time when fondness for the hard right fantasies of the IEA et al are rapidly going out of fashion. Such a deal is never going to be a substitute for the single market nor will a deal based on "mutual recognition" delusions ever come to fruition. First and foremost it will depend on the regulatory commitments made to the EU and it would be impossible to scope such a deal until we know what the EU relationship looks like.

Provided the UK does not make a monumental mess of the Brexit process there is every reason to believe it will remain a fairly wealthy country, but if it chooses FTAs over multilateralism we must get used to being only a mid ranking power and not a priority for many of the larger economies. Being that the case we are better off waiting for the EU to conclude a deal with the USA and find ways to plug into that. We must look at trade tools available to us beyond FTAs taking as read that our room for manoeuvre on regulations and tariffs will be slender should we wish to maintain our current trade volumes with the EU.

That is not to say the UK is without assets and opportunities, only that we have to develop our regulatory diplomacy abilities making use of international mixed alliances in standards forums and international organisations. Instead of a regulatory race to the bottom we should seek to raise standards for all and use an integrated trade and aid policy. We are not without allies and we can lead sectoral alliances which can rival the EU dominance. We cannot, though, bet the farm on an erratic and self-interested player like the USA and it would certainly be unwise to put our faith in the ideas of scripture driven think tanks who refuse to see the complications in the world as we find it.

Monday, 17 September 2018

Waiting for reality

I have never been described as a quiet person. Being a somewhat large Yorkshireman, it is difficult not to be noticed. I am also one who has plenty to say most of the time. Not so at the moment. I am beset by a quietness of the mind and one does not speak simply for the sake of speaking. All I can really write about is how little there is to say.

Last month I managed to clock up forty three blog posts which is unusually high even for someone as prolific as me. This month, though, I seem to be mute. There are groans and creaks in the Brexit world but nothing I would consider a reportable shift in dynamics. We are counting down to conference season where the politics is tribal and tedious and all we are likely to see is politicians broadcasting their stances to the party faithful. Dull as dishwater.

The only thing especially outstanding this last week is the frantic tone of the remain brigade who have launched yet another new campaign attracting another hundred thousand pounds through crowdfunding. It is yet more tone deaf elitism from Gina Miller, launching a full scale NHS love-in. It would struggle to be more tiresome.

It actually tells us quite a lot about the Westminster bubble. Whenever they feel the need to connect with the plebs they make noises about threats to the NHS as though that were our sole preoccupation. It was annoying when Vote Leave did it and now now Remain doing it is comical. It tells us that they still think the referendum was won by a big red bus.

One could be a little more animated were this in any way a credible threat to Brexit but I have long felt that we have crossed the event horizon, we are leaving and it has taken on a life of its own. Attempts to influence events have proven futile so now we just watch and wait to see what comes out of the oven and in the meantime chart the non-stop debasement of our media.

If there is one advantage to having a spell of inner silence it is that one has a heightened zen like awareness of what is actually important - and the way I feel at the moment, very little is. Twitter is an interminable feed of cliche and trivia and entering pointless spats with remainers is not a productive use of time.

It is reported this morning that EU officials have been busy redrafting the Northern Ireland backstop, but this is likely to be be fudging the matter just to help Theresa May sign any withdrawal agreement. May could likely chalk it up as a big win as she folds in the final hour. That's how they play it. It is, though, nothing to get terribly animated over.

The only way to derive any sort of entertainment value is by entering the Tory alternate universe where Chequers is an actual thing and one picks a side in a battle royale between two equally impractical and unworkable ventures. Addressing the issues is the very last thing the main parties wants to do - which is just as well since the lack any and all capability. The big question, the one I am waiting for, is what happens when politics returns to planet earth and Brussels says no... again. Will it sink in or do the Tories carry on in denial until it's too late?

Thursday, 13 September 2018

Losing the thread

Every now and then then I lose the thread of Brexit because there's so much noise it's difficult to work out if there have been any developments and then when something finally does happen it takes you by surprise because usually what the people who write the news think is news is not actually news and the only real news is that there have been no developments.

The main development today seems to be that there will be no new negotiating mandate given to Barnier by the EU27 but that is only really news people who expected they might, which in the main was media speculation born of their own ignorance. Since I never expected it to happen it wasn't something to watch. 

Meanwhile for all that we have heard much noise from the ERG and Dominic Raab, one gets a sense that we are simply treading water - winding down the clock to that final hour where the decisions must be made. The rest is little more than propaganda noise to hold the fort. The drip of no deal warnings has become a torrent - while Brexit activists continue to grunt "project fear" despite businesses starting to vote with their feet.

In the background we continue to see Tory MPs running with the "Chuck Chequers" meme, referring back to Lancaster House - either pretending a Canada FTA is on offer and there for the taking, or simply not understanding why an FTA is wholly inadequate to our needs. The public debate on Twitter is in the paddling pool and the remainers are really only talking to themselves pushing for a referendum that simply isn't going to happen.

In all this, one simply doesn't bother looking at newspapers for information. The only reason to look at them is to get an idea of how the media is misinforming the debate. It doesn't help either that insomuch as I am catatonic with Brexit boredom, the rest of the nation is as well. I notice my Facebook feed is discussing just about everything but Brexit. Right about the time when we can't afford to have people tuning out.

This is as much to do with an overall sense of bewilderment because the even the most basic technical nuances of trade don't filter through to reach Mr and Mrs Average. Last weekend I had dinner with friends (yes I have some) over in Reading. Joining us were a couple of ordinary senior citizens, both of whom voted remain, but not especially political, remarked that they thought the EU seemed to reject anything the UK presents.

This, I expect, is probably the common perception and though the Tories may be lying to our faces about EU intransigence, it is a highly believable narrative and one that is not easily dispelled without explaining the finer details - which is beyond the understanding of Mr and Mrs average. Being that it is impossible for most people to know what is and isn't true out of all the warnings people are left to take their best guess.

Here it is easy to see how the ERG is losing ground. If even half of the warnings are true, and most of them are, then there can be little appetite in the country for no deal. As the clock ticks down we will see a new urgency. Whether it has any bearing on the outcome is anybody's guess. This government has been deaf from the beginning and there is no sign of change.

Wednesday, 12 September 2018

Modelling the future

Every now and then I need a few days off from blogging to do something else entirely. This week I decided to drag out a stack of hobby kits I've been meaning to build for the better part of a decade. That was a mistake. Being an obsessive, my living room is now almost entirely devoted to the production of model tanks and aeroplanes which I think is the reason I gave it up to begin with. Like Brexit, anything I do becomes all consuming to the exclusion of everything else.

I had hoped that with a few days away from it all I would gain some perspective or have something original to say. Blogging Brexit is seriously hard work when all has been said and we are just waiting for some kind of coherence from those in charge of it. There's only so many times you can churn over yet more of the same dismal nonsense from the ERG and there wasn't any point deconstructing the Economists for Free Trade because they haven't come up with anything at all new.

It would seem this week, however, the ERG is on the wane with signals they are going to shelve any plans to de-throne Theresa May. Their cupboard is bare policy wise and since Mrs May is lumbered with all the difficult choices it serves them better to let her carry on until Brexit day and let her carry the can for whatever abortion of a deal we get. Assuming we get one that is.

Right now the odds are back to fifty-fifty on that. The EU must realise they are not yet ready for a no-deal Brexit, so with Mrs May in the clear they might throw her a lifeline and offer only a vague political statement in place of a trade framework. That gets us as far as a withdrawal agreement if nothing else.

Beyond that, absolutely anything could happen as it dawns on the powers that be that many of the "no deal" problems are not solved by a withdrawal agreement nor are they addressed by way of a basic FTA. Whoever is in charge by then will have to grapple with that question where finally we might get a sensible debate about the EEA. Tone from Brussels may also change with a withdrawal agreement in the bag.

There is also the danger that tone from Brussels will harden after exit day since by the time the transition is over, most of the problems will be entirely our problem and not at all theirs. Again, thanks to the complete absence of a plan, we can only speculate.

Here, I suggest those involved take a little time out to build a model of their own. It teaches you how to think and plan. As I have discovered this week, you have to understand what it is you are building, study all the components individually, break the job up into task and ensure you have all the materials you need before you start work. You also have to be mindful that though you have all of the necessary components, even with the best of intentions it is not going to look anything like it does on the box.

With Brexit, they have no idea what they are building, don't know what the pieces are for, they're attempting to do it all at once and they think it's going to look better than it does on the box. They've been sniffing the paint thinner and inhaling the glue fumes.

The secret to a good model is preparation and technique. It really doesn't matter how hamfisted you are just so long as you stick to the plan. Like the Joker from Batman says... Nobody panics when things go according to plan even when the plan is horrifying. There also comes a point when you have to admit that what you're doing isn't working and it's time to reach for the paint stripper.

Sooner or later Mrs May will hold her Chequers plan up to the light and see that no amount of touching up or varnishing is going to make it any less of an abortion.

Thursday, 6 September 2018

IPPR: the report that nobody's talking about

The Institute for Public Policy Research think tank has published a report on economic justice. Proposals from the IPPR formed much of Labour’s agenda under Tony Blair and Gordon Brown when it took office in 1997 and has continued to influence Labour policy. In recent times even Theresa May has stolen their clothes.

As is the way with these things, because IPPR is in London and it being silly season (now all year round) the report has received full spectrum media coverage. Much of it is devoted to telling us how important they are, attracting patronage from such luminaries as the general secretary of the Trades Union Congress, Frances O’Grady; Legal & General fund manager Helena Morrissey; the head of the City of London Corporation, Catherine McGuinness; Dominic Barton, McKinsey’s Global managing partner; and Mustafa Suleyman, co-founder of artificial intelligence firm DeepMind.

For it to get noticed by anyone in the bubble it has to be leaden with prestige. The media will not cover it otherwise. If you have prestige you can publish virtually any old toss and high society will lavish it with praise. 

The report itself is an amalgamation of centrist talking points on anything from a national investment bank, increased public investment, a social dividend (whatever that means), expansion of collective bargaining, worker representation on company boards etc. Milibandian in its blandness.

The report immediately nosedives on page thirteen where it tells us "We have not taken a position on Brexit; our analysis shows that the UK’s economic problems are of long standing". I'm not at all sure how you can set about an economic master plan without Brexit being a central theme. Everything investment wise will hinge on the Brexit outcome and our future trading relationships.

Very often in the Brexit debate you will find remainers observing that we could be doing so much were we not tied up with Brexit and if you asked them what that would look like, they would produce a report much like this in the belief that Brexit is primarily a consequence of economic injustice. Far from being radical what we are actually looking at is business as usual thinking from roughly the same people who brought us to this point to begin with. 

Some of the proposed reforms include:
  • An immediate increase in the minimum wage to the real Living Wage of £10.20 in London and £8.75 outside the the capital.
  • A requirement that workers on zero-hours contracts be paid 20% above the higher real Living Wage rate.
  • An industrial strategy to boost the UK’s exports, backed by a new national investment bank that would raise £15bn a year to push public investment to the G7 average of 3.5% of GDP.
  • Major changes to how UK companies are governed, such as: enshrining a broader purpose in directors’ duties; the inclusion of workers on company boards; a rise in the headline rate of corporation tax and a minimum rate of corporation tax to tackle tax avoidance by multinationals.
  • Taxing work and wealth on the same basis, with a single income tax for all types of income (meaning the abolition of capital gains tax and dividend tax), and the replacement of inheritance tax with a lifetime gift tax, levied on recipients rather than estates, which would raise £9bn a year.
This is pretty pedestrian stuff along with all the tedious nods to renewable energy and smart grids. This is all generic manifesto fodder that pads out the prospectuses for all of the major parties, and activists will dutifully adopt such talking points as an when is required of them. Original it is not. 

And that is the real poverty in the UK. It is a poverty of ideas. What we see here is the uninspiring managerialism of the establishment that wouldn't know radicalism if it bit them in the face. That as much as anything is the reason many voted for Brexit. Straight off the bat most of these ideas are swept out of the realm of possibility by Brexit, not least because, if it goes the way we think it's going, we'll be broke. 

As for things like workers on company boards, this measure was met with confusion and puzzlement when announced by Theresa May. Nobody knew what the policy was designed to address or what it even solves. As to tinkering with minimum wage, again Brexit puts a huge question mark over that, but there are more serious issues with it. If London requires a high rate then that is directly related to the cost of housing and transport, in which case we are tackling a symptom, not a cause. 

In tackling housing costs we need to look at the artificial floor price created by housing benefit, and we also need to look at demand, which may stabilise depending on our future immigration policy. More to the point, though, we need to look at de-londonising the economy and encourage more home working. This can be done with tax incentives and if you can get people working from home even one day a week then that is a 20% reduction in infrastructure costs. 

The report mentions a number of measures to deal with low pay and zero hours contracts but again these are reactive measures that fail to address how we got here to begin with. Several years worth of regulatory incursions have gradually strangled labour market fluidity where we could very well do with substantial liberalisation of the labour market. Making it easier to hire and fire is good for workers. I would quite happily dump the EU Agency Workers Directive.

The report then latches on to the notion of a "green industrial strategy" which ultimately means choosing expensive intermittants for the sake of creating jobs while sending our bills skyrocketing and increasing energy costs for business. This is then met with daft suggestions for an energy cap which Corbyn and May alike have alluded to. This is the prevailing mindset in the Westminster establishment. Their policy proposals are nearly always reactive measures to deal with problems they caused. Investment banks etc proposed by government are not going to solve anything. All it does is entrench the quangocracy we already have, creating boondoggles for tier one consultancies. 

What is actually needed is a total reboot of political thinking because the mindset we see here is the command and control mentality that has been with us all of my adult life - and one that has totally destroyed local democracy and bureacratised government to the point where most of what it spends is on self-administration. It is the mindset that believes we can legislate our way to prosperity, where spending on vanity projects is "investment". This is the fundamental problem and the likes of IPPR cannot solve the problem because they pretty much are the problem. 

This is, in part, why I voted for Brexit, precisely because it will demolish the ambitions of spreadsheet sociopaths and it will force government to do less and reduce its capabilities. The resultant fallout will mean more people have to do things with their own resources - releasing a lot of zombie capital in the process. Only something disruptive like Brexit can possibly reset the mode of thinking in the bubble as they are forced to adapt to a wholly new dimension in government. 

Being that the UK will be repatriating a whole tranche of law and domesticating it, they will find that a number of systems can no longer carry on as before and will have to do the same with fewer resources or not at all. Here is where government will have to find ways to engage the private sector and civil society, which may very well reboot the voluntary ethos that New Labour destroyed.

If we wanted the sort of top down policy making of IPPR we could just as well have stayed in the EU in that this is what the commission does and would have gotten round to all this stuff eventually anyway. What we are not going to get from the IPPR or the Westminster bubble in general is any kind of new thinking because they have ultimately forgotten how to think and there is no mileage in doing so. 

Publishing these reports is their bread and butter. Every once in a while they need to raise their profile to get the donations rolling in so all you need is a glossy PDF packed with all the favoured talking points of all the usual suspects, plastered with all the affiliated logos and you have your day in the media spotlight. Since you don't need to produce anything original or groundbreaking, why would you even go to the expense and hassle?

More to the point, with a report running over three hundred pages, nobody is going to have the time to read it, let alone absorb it in time to publish thorough analysis, therefore whatever passes for analysis will be the result of a quick skim of the executive summary and those praising the report will do so by triangulating against whichever prestigious name has put their credentials to it - ie, whichever establishment drone wrote the foreword.

In fairness, it's not just the IPPR. It's the whole edifice of think tankery. This is the business model throughout, perpetuated by a coprophagiac media for whom these reports fill air time and column inches. IPPR will be slapping themselves on the back this weekend for a job well done and by Monday nobody at all will be talking about it. One or two recommendations will find their way into political discourse but nothing original and certainly nothing realisable. 

This is the Westminster bubble culture that has taken root over many years, where its PPE denizens will trade factoids and nostrums, none of which solve any problems I actually have, and nothing I would go out of my way to vote for. Being that the parties are empty shells with no research capacity of their own and no consultative policy mechanisms, come election time they will sift through the work of IPPR to provide a veneer of social concern. It's all disposable, interchangeable, recyclable churn fodder mainly to keep wonks in political nonjobs. 

The consequence of this is an out of touch politics, unable to inspire the voters or win their confidence, leading to exactly the sort of anti-establishment protest vote that brings us where we are today. If we really want a new Britain then we need new politics broken out of the Westminster circle jerk. That can only come from real local democracy and inverting the power pyramid.

The IPPR alludes to this, but it centres on creating new bodies such as a "new National Economic Council. Based on the principles of partnership and consultation, we argue that the Council should be the key mechanism to secure greater coordination between central government and the devolved nations and regions, and between government and business, trade unions and civil society. Partnership of this kind has sometimes been scorned in this country. We believe it to be essential if we are to transform our economy on the scale required".

Again this is quangocracy. Their mindset throughout is based on creating structures and hierarchies and systems of micromanagement and interventionism. It is beyond them to envisage a society without them as our political masters. Bringing about a fair society involves state intrusion on every level, creating economic justice nonjobs and interfering with commerce. This is Blarisim 2.0. 

Meanwhile, back in the real world, what I could really use is a cut to VAT on the things I buy, a cut to petrol tax so I can do more, deregulated labour markets so I have choice in who I work for, a cut to income tax so I can go on holiday, and a lot fewer quangos with a lot fewer CEOs on salaries exceeding that of the PM. 

Beyond that, we need reform of just about every branch of the state, but that's going to require a lot of tough and unpopular decision making that the likes of IPPR (and all the major political parties) won't touch with a barge pole. Since they won't, we have forced the issue by voting to leave the EU. The IPPR doesn't have any answers to speak of and we'll be waiting til the end of time for anything radical from the Westminster bubble. Radical thinking is far beyond their ability. 

Norway then Canada cannot work

The "Norway option" is often described as an off the shelf solution. It is only off the shelf insofar as it already exists but it is only the framework of a solution and one will will need to be configured for the UK's unique needs.

The EEA agreement can be tailored to meet our needs. It is an adaptive framework with country specific protocols and the UK will need several to cover fisheries, agriculture customs cooperation and most likely a distinct protocol for Northern Ireland. All of this will take almost as long to negotiate and implement as an FTA.

Consequently, the notion that we can use the EEA as a short term interim measure, as suggested by Nick Boles MP, is one not in touch with reality. He proposes that we pick up the EEA as a short term transition while we negotiate a Canada style FTA.

This would effectively double the workload where we spend considerable technical and diplomatic resource in configuring the EEA only to have to start the process all over again. We would ask, for starters, what the actual point is? A tailored EEA solution would be entirely adequate for our needs and one that addresses most of the technical dilemmas thrown up by Brexit. It would safeguard our EU trade in ways that an FTA wouldn't.

Put simply, if we leave the EEA we are treated as a third country and subject to full third country controls which even an unprecedented FTA cannot address. There is no economic utility in doing so. Were we to embark on such a process it would be with a view to full divergence in the hopes of serving larger markets elsewhere which is highly improbable.

Diverging on standards would create considerable customs problems for our EU trade, which of itself is troubling, but it is also fruitless since a number of countries already have harmonisation commitments with the EU centring on global standards - which are increasingly forming the backbone of EU regulation.

If the aim is a looser relationship than the EEA then it makes more sense to work with other Efta member to improve the EEA agreement over time and make better use of the system of veto. Moreover the UK would be welcomed as a fully committed member. In this it is difficult to see why EEA states would welcome the disruption to the EEA system for the sole benefit of the UK if we intend to leave it.

Superficially, "Norway then Canada" seems like a sensible approach but it ignores the level of work involved and assumes the EEA is immediately operable as though it were a software patch. It isn't. There is no possible way we can leave the EU without at least transitional provisions for fishing and agriculture and if we wish to retain participation in integrated markets, any new protocol would have to be permanent.

Though the UK has global ambitions the reality of trade points to the fact that we must continue to participate fully in European markets and Efta is the obvious vehicle for doing so. Should we take the EEA avenue then we must do so as a fully engaged member rather than using it as a cop out. It is difficult to see why the EU would entertain a transient use of it or deviate from the existing exit schedule if the end point is a Canada FTA. It will not seek to prolong Brexit or add another layer of complexity that would require coordination with EEA states.

We would urge Nick Boles and "Better Brexit" to rethink their proposal. It is impractical, unworkable and naive. The EEA is only going to work as a long term venture and should we commit to it there is every chance we can shape it into something better with the cooperation of the EU, perhaps even expanding it to Switzerland, thus consolidating the EU's neighbourhood relationships. Brexit is then a win-win for Europe and nobody feels used by it.

Longer term, as the UK establishes its own external trade relations it may be possible to phase out aspects of the single market where appropriate thus contributing to the overall wealth of Europe. The EU says that we cannot cherrypick from the single market, but there are ways to configure it from within and the UK is more likely to get what it wants by coordinating divergence with the EU rather than opening up retaliatory spats.

The short of it is that Britain needs a deep and comprehensive partnership that goes well beyond the scope of an FTA and the most intelligent means of doing so is to join a multilateral system such as the EEA. We can then go further as the EEA is not subject to the same WTO MFN clauses we find in FTAs. It then provides a framework for continuous and managed exit rather that attempting it all in one go. It has been our view from the beginning that Brexit is a process, not an event - and that much has not changed.

Tuesday, 4 September 2018

Brexit is Britain's path to redemption

Both the Tory Brexit ultras and the EU is that they both believe in maximum trade liberalisation. The only real difference is that the EU works gradually through negotiation whereas the Tories believe there are unilateral shortcuts. The EU knows how the system works when Tories do not have the first clue. What they both have in common is that they haven't really thought about whether it is a good thing and whether the people want it.

We are told time and again that freedom of movement has no detectable impact on wages. I am sure that is true if you look at the averages but any honest multivariate analysis will show that it does have a disproportionate effect on the bottom two deciles. What makes it more difficult to detect is that it tends to mainly affect informal labour or those sectors where it is easier to hide financial transactions. Not least the building trades. 

We are actually being sold a lie in that the one thing all economists agree on is that an increase in supply tends to lead to a collapse in price. Why labour is exempt from this universal rule they do not say. Because it isn't. This is a form of market liberalisation along with liberalisation in trade in goods and services. Voters have expressed doubts about liberal immigration but we should also examine the wider effects of liberalisation of goods. 

We are told that trade liberalisation is a universal good and the statistics will always show that. By keeping losses firmly in separate, unrelated categories, they can convince themselves that they are adding value. You never see them deducing the cost of negative externalities of trade and free movement. If you have a single market in goods, services and people then you also have a single market in crime - and one which asymmetrically affects the UK.

Then there are the undetectable societal impacts. Presently UK retail is collapsing. It's partly mine and your fault. We buy things on Amazon out of convenience and usually because we can save a few quid. But retail is also dying because of unsustainable competition. I shall elaborate.  

I hate Christmas. It means I have to go into town and find something to buy for my family who, like me, don't actually want anything and have everything they could immediately need. This is made all the harder by way of the shops not actually selling anything I would part with money for.

It's not that there isn't a wide selection of goods on sale. It's just that the quality of goods in recent years has collapsed. This is a trend we have seen since the mid nineties as we have opened up our markets to cheap Chinese tat which locally produced quality cannot compete with. 

We therefore have a greater choice but the things we buy have less intrinsic value and are not likely to last. We are actually at a point where it is cheaper to buy a new printer than to replace the ink cartridge. Environmentally that is unsound, but it is also massively wasteful. And that waste is structural. For years we have sent container loads of e-waste abroad to meet our recycling quotas but this usually ends up in Chinese landfill. It's been a key part of the economics for China. 

This also extends to food. Recent "no deal Brexit" warnings have included warnings about the threat to British sandwiches. This is an £8bn industry which is worth a magnitude more than fishing and and employs tens of thousands of people. Again this is a relatively recent phenomenon and one which probably only happens because of a low wage economy. But it also has secondary effects.   

It was recently reported that Millennial couples priced off the London housing ladder could save enough for a deposit in five years by giving up six “luxuries” ranging from phone upgrades to sandwiches and overseas mini-breaks.

Strutt & Parker's original analysis applies to a couple saving for a house over a period of five years, so the figures are a lot more reasonable than they appear, even if it still seems a bit steep for a weekly spend. Their analysis focuses on the potential savings that could be made by a couple cutting back on: coffee, gym membership, takeaways, lottery spending, and not going out once a week.

Naturally this triggers howls of incredulity as hard pressed young things compare their meagre habits to those presented but there is certainly some truth to it. Even in this time of so-called austerity our buying habits have trended ever more toward convenience. Over the last decade we have seen an explosion in supermarket brand express shops opening wherever there is a vacant lot. A quick look at the refrigeration units tell us that it's geared for luxury and convenience foods. It's a peculiarly British thing to see fresh made sandwiches in petrol stations and corner shops.

Britain has become a convenience economy. We can have just about anything we want just so long as we are prepared to lower our expectations on quality. This actually makes something of a mockery of the much vaunted single market controls in that they do not seem to prevent imports of substandard garbage. Amazon backdoors the system. 

The cost of this is a society that has no concept of frugality and one that can sate any whim to the full, which could very easily explain the total collapse in personal savings and the ever growing pensions black hole that we expect the state to plug. The consequence of having a shallow and selfish consumer society is is an equally shallow and selfish politics - and one which sees the state as a financial backstop to its own excessive behaviours. 

What I also see in this is a society that does not create or produce when it can simply buy. We very often innovate in order to produce cheaper alternatives but that doesn't happen when everything is already at rock bottom price. We cannot compete domestically when we're buying from Indian producers who pay 28p an hour. 

This liberalisation has also changed the concept of value. We now take seasonal foods for granted all year round. I am just old enough to remember when new potatoes were a treat. Such things are now mundane and no longer special - to the point where very little is special these days. 

Britain has been at the forefront of liberal economics in Europe and we have liberalised just about everything including immigration and the ruling class has imposed its warped value system on the regions. It has not made us a happier country nor especially has it made us wealthier. Those who caught the housing market at the right time are doing ok but economic exclusion is growing for those who did not. 

Now that we are here we find that Eastern European states are looking very carefully at the malaise we have made for ourselves. Jaroslaw Kaczynski, leader of the ruling Law and Justice party in Poland said on Sunday "Poland belongs in the European Union but should be careful not to be “infected by social diseases” that dominate the bloc, ruling Law and Justice (PiS) party leader"

Speaking at a party convention he defended his party’s democratic record and accused critics of serving “powerful interests and making deals with the mighty of the world”, in an apparent jab at the close ties between the liberal opposition in Poland and Brussels.

“I had said we would face an uphill battle and that stones would be thrown” Kaczynski said.“We are being attacked internally and from the outside in ways that discount the reality and aim to demean Poland. It’s easy to serve the interests of the most powerful. If you want to serve the society, the nation, it’s much more difficult.”

While underlining the need for Poland to remain inside the bloc, his party says the EU is forcing member states to conform to standards that contravene Poland’s traditional family values. Kaczynski said EU membership was “the shortest way for Poland to achieve parity when it comes to living standards” with its western allies. “But that doesn’t mean we should repeat the mistakes of the West and become infected with social diseases that dominate there,” he added.

Now you can make of that what you will, but as I observed recently, much of Europe only sees the EU as an economic device but does not want the political and social union. Kaczynski may be explicit that Poland needs to stay in the bloc, but it is increasingly apparent that living according to your own values as defined by your own politics is incompatible with EU membership. 

Poland has not yet undergone the sort of rapid social liberalisation the UK has but there are plenty of signs that it doesn't actually want to and I can't say I blame them either. Much of the social liberalisation in the UK is something that was done to us by a virtue signalling metropolitan political class who are bizarrely becoming more authoritarian in the defence of that liberalism. That is why Brexit is as much a culture war as anything else.

This is why I struggle to understand why social conservatives apparently back Jacob Rees-Mogg and his radical "fwee twade" agenda. It's precisely the opposite of what Britain actually wants and needs. I can see the appeal of his social conservatism and is support base is crying out for moral leadership to counteract the creeping "liberal" authoritarianism of the incumbent left. Britain is not the liberal oasis our ruling class imagines it to be.

Remainers have characterised Brexit as a a form of insular nostalgia for days gone by. To a point it is. There is a strong feeling that Britain has lost its moral centre adrift in a perpetual state of moral relativism while our culture and identity is eroded by a political class who will not uphold even the most basics standards. 

Trade liberalisation has had a profound effect on the UK economy but also on our society where we have become an anything goes society where there are no boundaries and the concept of social obligation bound up in citizenship is viewed as antiquated and obsolete. This makes a cohesive society all but impossible, not least with a transient population and insecure employment. 

If anything Brexit is an attempt to row back from globalisation so as to reassert some boundaries and to restore some sense of obligation to one another. The globalist ideal is based on the idea that our nations are just places and that our home is open to the world for others to come and live as they please. What they fail to comprehend is that this is not reciprocated and we never asked for it to be either. 

Right now our politics is collapsing because there is a social revolution underway and our politics as we have known it no longer reflects the divisions in the country. Arguably Brexit is symptom of that, but the EU is one of the more insidious causes of this malaise which has detached our politics from policy and replaced democracy with technocracy. We are, therefore, at the mercy of spreadsheet sociopaths who chase marginal increments in GDP over and above all else and use that as a the sole measure of whether government is performing. 

In recent years due to virtually uncontrolled immigration governments have been able to prop up anaemic growth and just about keep the basics working, but if we are honest with ourselves we know that our entitlement culture is unsustainable and some might very well conclude that if the price of the NHS is predatory Pakistani rape gangs and a perpetual stabbing epidemic and acid attacks then liberal immigration isn't worth it. 

As it happens perceptions are warped by social media as we are fed a daily diet of things we would otherwise not know about. This perhaps explains the rise of the "populist" right which perhaps also explains the establishment's fondness for censorship. Censorship, though, is not the answer. Someone I follow on Twitter remake this week that if liberals will not stand up for our values then it is inevitable we will employ fascists to do it. 

This, of course, is not strictly accurate. The new right have been described as fascists which they aren't. They are in fact the product of liberal success. If you want a society where women and homosexuals are safe to walk the streets and we want to maintain free speech then you can't be importing Islamist primates from the back hills of Pakistan. If we want to maintain liberalism then we must defend it. Being that the moral relativism of the left is no longer capable of doing so, it is not surprising they will be thrown out of office. 

We are told we are facing a crisis of liberalism but it's more a case of if things are to stay the same then everything must change and we must change the way we think about government. Good governance depends on a number of factors and economic growth is far from the most important. There is some recognition of this but the measures to tackle the crisis in social mobility and inequality of opportunity simply do not work. All we are doing is reinforcing failure. 

If we want reform then we have to be ruthless. We have to dismantle the structural welfare serfdom, we have to ask the hard questions about NHS provision, we have to do what it takes to restore labour market fluidity. We have to think long and hard about who and what we open our markets to. We have to rebuild the voluntary ethos and deregulate social provision. We need to rebuild local democracy. We need to take back what is ours. We need a government with the self-confidence to take radical measures and start governing instead of maintaining client bases.

In every area of life the state has sought to insert itself to the point of making people hopelessly dependent on it rather than each other. Even the upper middle class dump granny on the council as soon as she becomes inconvenient - and naturally the state pays. We are culturally conditioned to depend on the state to the point where workers in Britain put less of their wages into savings than counterparts in nearly every other country in Europe. One third of Brits are fiscally illiterate. It makes us feckless, frivolous and selfish.

As we have drifted ever toward managerialism government has lost its moral mission. This is why we have zombie politics drifting from one crisis to another, trying its best not to upset the status quo and firehosing cash at every problem to no avail. It simply doesn't occur to our rulers that there is another way because it means trusting in the public and letting them take back control. This they will not do.

The referendum showed us how the establishment holds us in contempt and it showed us what lengths they will go to in ensuring we don't have a say. That has been the hallmark of our entire relationship with the EU. Like much else in politics, they will try absolutely everything except the one thing that could actually work... democracy. That is why we must leave the EU. We cannot resolve our politics until we do and there is no hope of reform unless we do. 

Sunday, 2 September 2018

It's a little late for what-ifs

I see variations of the above tweet all the time. The replies are telling. One suggests "Actually tackling the underlying issues of inequality of opportunity, the lack of investment in education, healthcare and infrastructure, dealing with the lack of a cohesive and coherent Industrial Strategy, tackling poverty, and strengthening our Union, not tearing it apart".

Another suggests "Investing properly in renewable energy. Coming up with ways to boost biodiversity in a countryside sadly denuded of wildlife. We should be tackling climate change with our allies, not bickering about the sovereignty that was already in our hands"

The general theme from remainers is that if only we had firehosed the plebs in the regions with more cash then they beastly oiks would not have voted to leave. In remainer luvvie world (the Twitter echo chamber) this is all sound thinking. There is but one small problem. What they suggest is essentially already happening and people still voted to leave.

There's been hundreds of millions spent on places like Hull and Hull can now boast of being a pioneering renewable energy port. Yet strangely Hull voted leave by 67.6%. How can this be?

Hull is reputed to be a ghastly place. I don't get it it. I happen to quite like the place. Seen with a historian's eye the place really speaks to me because it has so many tales to tell. Port cities are exciting to me and the drive through Hull is a journey through time. Some of the surrounding countryside is the best anywhere.

That doesn't stop it being a sad end of the line post industrial ghost town. It's had a lot of spending on the waterfront in recent years and EU funding for the modernised marina, but it's still a place which has largely outlived its traditional purposes.

A wind turbine factory doesn't really make up for the loss of its reason for being and the jobs it creates will be high end engineering roles where the employer will recruit not just from Europe but from all over the world. So this investment doesn't actually solve anything. All it does is create an enclave for the well-to-do middle classes and the only real opportunity for locals is to set up a bacon butty ban outside the front gate.

Much the same can be said of South Wales which is a huge recipient of regional development funding, much of which comes from the EU. Regeneration has been transfromative in recent years but only on the surface.

Like Liverpool and Glasgow, the mid nineties were boom time for waterfront development in Cardiff. Yuppie flats built with cheap money to provide workers for the vast call centres built in business parks peppered throughout the district. It plugged a gap but it was far from a solution and call centres in recent years have taken a pasting thanks to online banking and self-service motor insurance.

One other major employer was internet service providers running technical support desks as the nation struggled with 56k modems and AOL CD-ROMs. That's all gone now. Thank the Lord. But this was only a sticking plaster that never really addressed the core issue. Our cities evolved for a purpose. Now they have no purpose. Newcastle doesn't build ships or mine coal, Cardiff is no longer a global port, Glasgow shipbuilding consists of the occasional Royal Navy destroyer contract and Hull's fishing fleet is a couple of large foreign registered boats crewed by Filipinos on slave wages.

As to the regions in South Wales, being from West Yorkshire I thought I knew quite well what a shithole looked like, but the Welsh Valley's boats some weapons grade shitholes that you simply would never go to unless you were a Channel 4 reporter on poverty safari. These places, however, are not short on regeneration funding. Much of it wasted on unfathomably stupid vanity projects.

But it's not just the small beer. The districts around Blackwood boast engineering centres of excellence and life sciences labs along with vastly improved college facilities and not entirely useless public transport. Now here you have to ask yourself why these corporates would move their facilities to the arse end of nowhere? Quite simply they wouldn't because it's hellishly difficult to get people to move there without paying over the odds. Unless there was a subsidy and a loan guarantee from the local council.

This is where EU regional development funding turns into a giant gravy train. For every headline project you see creating a thousand jobs (usually a figure plucked out of the air and in no way realistic) there's a dozen other projects that never see the light of day but generate millions in consultancy fees. The company set up to deliver a motorsport racetrack in south Wales has debts of more than £31m. Heads of the Valleys Development Company (HOTVDC) intended to build the Circuit of Wales on moorland above Ebbw Vale in Blaenau Gwent.

As an idea I don't hate it if it's linked up with the local economy and open to public use with strong links to local colleges and universities. The region is a magnet for superbike riders and day trippers. But we know how this goes. They will spend half a billion on it and a few years later it will go into administration and them become a storage depot for sea containers. These things always seen like a good idea but the justifications for them are flimsy and the justifications often read like a GCSE geography project. 

Thankfully, the more lunatic schemes like the Swansea Tidal Lagoon will never go ahead. Local MP Stephen Kinnock expressed his disappointment at its cancellation citing the loss of jobs it would create. And that right there is the mindset at fault here. The job of the energy sector is not to create jobs in deprived backwaters. The job of the energy sector is to produce energy at the cheapest possible price. How can heavy industry be competitive if to subsidise make-work jobs in the region through their energy bills?

What all of these madcap schemes share in common is that they are little more than sticking plasters that in no way address the underlying social stresses. Bradford Council has spent millions on city centre regeneration and though it looks million times better than it ever did it's still a dead end for social mobility and recent trends have absolutely devastated working class culture. No trendy retail complex can ever replace the pubs in town that used to serve as community hubs. they may have modernised it but in so doing they ripped the soul out of the city. All of its best music venues are gone. Redevelopment and regeneration is just a byword for sanitising the grubby culture of the plebs.

I've seen a dozen incredulous articles remarking how the largest recipients of EU funding spurned the EU at the referendum. Among the well-to-do remainers there is a sense of bewilderment that the plebs could turn on their gracious benefactors. They simply don't get it. All of these places evolved organically for a reason. Regional funding, however, is essentially pissing in the wind trying to slow the rate of natural atrophy - and it isn't working.

This central economic planning often coupled with fanciful fads like renewable energy serves only the vanity of our political masters. They feel perfectly entitled to vandalise my beloved Pennine wilderness with wind turbines but you'll ne'er spot a wind farm in the home counties where the good Doctor Galsworthy hails from. A tweeter just this week remarked that the BBC loves regional accents, but hit hates regional opinions. That is the very essence of the culture dispute at the heart of Brexit. 

This is coupled with an ever growing political disconnect. There exists a "Welsh government" but in essence it is a quasi-democratised regional development agency that mainly exists to squander grant funding while cutting local councils out of the loop. This is not devolution. All we've done is create another local fiefdom for developers to get their noses int the trough. Regeneration slush funds have filled up the back pages of Private Eye for the last twenty years. 

Doc Galsworthy can lament the opportunity cost of Brexit dreaming about what we could do, but doesn't think about what we actually would do. What we would do is continue on with sticking plasters aimed at fobbing off the regional oiks while the Westminster bubble congratulate themselves for their progressiveness. For all the patronising whinging about "austerity" and the housing crisis, these people would be in uproar if we actually proposed any radical measures to do something about it. Meanwhile the political class would continue to indulge itself in the micromanagement of our lives

You can cry "Stop Brexit! Let's build wind farms instead", but supposing any of this was a good idea it would in no way address the fundamental stagnation of the status quo. It would simply further entrench the privilege of the shrinking middle classes failing to spot that the social fabric is eroding before our very eyes. What needs to happen is something much more radical.

Here we really have to ask the tough questions. Tax freedom day in the UK is now in late May. The state takes almost half of our income in one way or another be it income tax, VAT and stealth taxes but increasingly we are seeing services obliterated and care provision stretched to the max. The current paradigm does not work and it is only going to get worse.  

We need to ask why we are propping up towns that no longer serve a function. We need to ask whey we are subsidising poverty int he regions with welfare? We need to ask who really benefits from "regeneration". We need to ask if wealthy pensioners should pay for their own care. Can we afford our NHS as it stands? Can we keep propping it up with low wage immigrant labour? We need to ask why we are setting an artificially high rental floor price with housing benefit, turning slums into welfare farms for greedy landlords. 

All of these issues have been acute all of my adult life and though we know the answers to these questions they are uncomfortable and requires a certain level of radicalism, leadership and bravery that our current political class is not capable of. Mrs May's dementia tax cost her a majority. 

Stopping Brexit ducks all these questions. The likes of Doc Galsworthy would be delighted by this. The liberal middle class thinks the answer is more taxation, more spending on the regions and more indulgence in white elephant projects. It doesn't work and it is not sustainable and it underpins a political deadlock that ensures no decisions of consequence are ever made. Since twenty years of voting in general elections has achieved nothing you cannot blame the regions for thinking something more drastic is in order.

If we remained in the EU no government of any stripe would do anything especially radical. Not even Corbyn who is not all that different from Blair. The modern Labour party is a party of social feudalism devoted to expanding its welfare client base. It is not interested in the cause of poverty or the collapse of social mobility. It just wants to ensure that the poor can live a subsistence living on state largesse.

Britain has taken a brave decision to pull the plug on the status quo and to let an economic and democratic correction do it thing. It won't be pretty, and it won't be easy. But we know we have endured worse. Ultimately I do not see a workable future for the UK as we know it unless we radically alter the paradigm of UK governance which is coupled with the EU command and control mentality. The world is changing, technology is changing us, work is changing, and we need to organically adapt to the brave new world. We cannot do this with a government actively using our own money against us to prevent radical change and quell disaffection.

No racetrack or tidal lagoon is ever going to bring back working class pride to the regions. There is no going back to mass factory employment and there is no EU utopia. The EU is a defunct idea that simply hasn't kept pace with global changes. Only the people can build the future. It cannot be built to the obsolete grand designs of technocrats deep in the bowels of the Commission. Bradford is never going to be an industrial powerhouse again and Hull will always be sixty miles east of England. The moment we accept that the sooner we can start to build the future. Trying to freeze the past in aspic only makes the democratic correction more severe.

I can appreciate how "believe in Britain" sounds like an empty slogan but we have the know-how, we have the talent and we need to do is unlock that human potential which is currently squandered by pampering ourselves with unaffordable entitlements. I think we are better than our rulers give us credit for. Our ruling class is presently a poor reflection of Britain, bu they are the problem, not us plebs who had the temerity to vote leave. 

In the end there are two ideologies in conflict. We have a ruling class that thinks decisonmaking should be the exclusive domain of experts on the basis that they have superior knowledge and greater moral clarity. Their dangerous delusions have caused energy bills to skyrocket, made travel more expensive and facilitated the rise of the far right in Europe. Their trade liberalisation policies have created a low skill, low wage insecure workforce and made our communities transient. It is anti-human. 

The second ideology is that the people should be the authors of their own destiny and that human freedom is the source of all prosperity and superior to the Utopian ideals of kleptocrats and control freaks. The two ideologies are irreconcilable. 

If the politics of Brexit tells us anything it is that, as much as tribalism is frustrating, we are a tribal species and we seek out our own kind. Increasingly that is along ideological lines rather than geography thanks to the internet - but now we need a new idea that can unite us under one moral mission. Like it or not, that is not the EU. It divides more than it unites. 

We have a turbulent path ahead but from that will emerge a new consensus for the new era that includes those excluded for so long. It may be inconvenient, it may interfere with the grand designs of spreadsheet sociopaths and there is never a good time to do it. All I know is that it must happen. Our survival depends on it. If the old regime was ever going to deliver, it would have by now.  

Friday, 31 August 2018

The EU isn't collapsing... but Europe is.

The EU is many things to many people. Some think it is a pillar of the twentieth century peace architecture. It isn't and it never was. It was always parasitical and using the mood and post-war political momentum to advance an idea of a united Europe. The problem, however, is that it was a bad idea for the simple reason that there is no particular desire for a politically united Europe and one could only ever come into being through the collusion of political elites.

Over the decades our political elites have built both the EU and the WTO with only one purpose in mind. To eliminate national sovereignty and to prevent political change. That's why it's a crap idea. You cannot prevent political change and, more to the point, it is human nature to desire change.

The reason Brexit is happening ultimately boils down to one singular factor. Societal boredom. It wouldn't matter if the EU was perfect. Humans need to innovate, experiment and evolve. Everything changes, nothing last forever and to all things there is a time. The EU was the brainchild of anonymous officials in the previous generation and its survival depends on the the officials of today having absolute power over us. Every generation needs its own idea yet my generation is expected to maintain the ideas and the constructs of the last.

Being that the EU is a sophisticated and influential construct it has withstood a number of body blows and will likely survive more. It withstood the financial crash of 2008 and it will withstand Brexit. There are those on my side of the argument whop would have us believe that the EU is collapsing but I think this is wishful thinking. For as long as the EU is useful to the power-brokers in Europe it will continue to exist. Institutionally it is safe as houses.

We Brexiters, however, continually point out to those who like to abuse language, that the EU is not Europe. And while the EU perseveres, Europe is gradually imploding. Poland is not a country at ease with itself and for all that remainers wail that the UK is undergoing a swing to the far right, the UK doesn't even know the meaning of far right when contrasted with Poland, Hungary and Austria. The UK manifestation of "far right" is a handful of grunters holding banners in Newcastle on a wet Saturday morning.

The thing about being "far right" is that it actually requires a lot of energy and commitment and for reasons I do not fully understand, Brits are just not that politically committed. Perhaps it is the weather? It is part of our residual self image from World War Two that we are generally disapproving of racialist movements. More likely, though, we are simply politically lazy, which is both an asset and a liability.

From a distance we have viewed the EU as a utilitarian relationship where even now the main arguments for remaining are almost entirely economic arguments. Very few actually buy into the EU big idea and those who do are in some way employed by the EU machine. For mainland Europe, however, economic and political union seems far more logical since crossing borders for a great many is mundane daily routine rather than a novelty.

The problem, however, is that the EU is very much a commitment of mainstream politics and the EU does little to address the concerns of ordinary people and in many respects the EU exacerbates the local problems, be it immigration or liberalisation of markets. The EU likes to claim credit for successes but blame member states for the fallout, whereas member states do the opposite. This is not sustainable.

With geopolitical pressures from every direction and resurgence of old grievances, the EU can only really put out brushfires but is unable to offer a Europe-wide remedy. This is the problem with having such a diverse demos. Brotherhood and unity did not work on the scale of Yugoslavia so it is somewhat demented to believe it can work on a continental scale. Consequently while the political classes are ever more convergent, this cannot be said of European peoples. Government is going one way and the public is going the other.

Being that the UK is not invested in the single currency and holds a number of opt outs it stands to reason that the least interested would be the first to depart. An island nation has no need of microscopic levels of integration. Ireland is only an enthusiast because subservience to Brussels is a safeguard against London rule. On recent form I can't say I blame them. Many in Scotland want a divorce and the only surprise here is that we haven't seen a credible Yorkshire independence movement.

Something is happening that we cannot yet explain. The reaction to hyperglobalisation seems to be a demand for hyperlocalisation where the EU's subsidiarity principle is not sufficient in that under such a system the people themselves are not sovereign. The bureaucrats are the ones deciding who gets to decide what. As an idea that was never going to succeed.

Whenever I make the argument for more local and regional autonomy people often scoff that I want to return to the Heptarchy of yore. As it happens, I don't think that is a bad idea. The UK has a common language, culture and heritage but we do need a model that recognises that the regions are distinct with politics vastly differing from London. Our power pyramid needs to be inverted EU membership is incompatible because the real power resides with EU institutions. For as long as we are members the people cannot be sovereign.

Many predict the demise of the EU. I don't think they are right. Like the Commonwealth I think it will fade into obscurity as Europe leaves it behind. Its institutions will remain for as long as they serve a function but unlike the Commonwealth we won't even have a quasi-Olympics held in its name. It will simply linger as a redundant enterprise until a new idea puts it out of its misery.

All the mainstream political political energies of the next decade will go into shoring up the worn out European ideal but gradually they will cease to be the mainstream and democratic movements throughout Europe, though cast as populist, will take Europe in a new direction. What that looks like is anyone's guess but the writing is on the wall. The peoples of Europe are moving on, evolving and real politics is reawakening. The EU was always capable of withstanding the financial crash, and it can withstand Brexit. It cannot, though, withstand democracy - not least because the EU is designed to prevent it. That was never going to be tolerated.     

Thursday, 30 August 2018

Vacating the field

News that Frank Field has resigned the Labour whip should give Labour pause for thought. I've heard Field described as a socialist a non-socialist could vote for. I completely agree. That he is a Brexiter is nether here nor there. He has a track record as a dedicated constituency MP and a thinker.

Field won the respect of (c)onservatives during the Blair era when he came out against the rampant welfarism that had taken root. This was a man who had studied the root causes of poverty and had a genuinely devotion to tackling it. His proposals, though, did not get very far. They were incompatible with the Labour strategy of building a welfare client base. And this tells us all we need to know about Labour.

It tells us that Labour sees the role of the state to be a universal provider. They are not actually interested in solving poverty, rather they think the poor should have enough to get by on from the state and that will keep them voting Labour. Power for its own sake. Though Blairites are now described as centrists there is actually only one crucial difference between Blair and Corbyn. Blair thought it necessary to do those things one has to do to win elections.

At the centre of the Labour philosophy is the notion that the world is one giant conspiracy against the poor. Talk to any leftist for long enough and soon they will go off on a rant about the Rothschilds which is a veiled version of "the joos control everything". It's the politics of petulant teenagers.

These sorts of theories tend to go hand in hand with crackpot 9/11 conspiracy theories because it's born of the belief that the that somebody is in control of everything. This explains leftist politics. They think that since everything can be controlled then it should be controlled by the state. Since it can't be controlled everything goes to hell when left wing governments try it.

This sort of politics, though, has always gone hand in hand with antisemitism, and even if Corbyn wasn't an antisemite, a Labour leader subscribing to the politics of petulant teenagers will mainstream antisemitism and put antisemites closer to power. The real question, therefore, is why on earth did it take a man like Frank Field this long to resign the whip?

Wednesday, 29 August 2018

Brexit: the importance of taking back control of trade

In the wake of Mrs May's trade mission to Africa we see all the predictably tedious debates unfolding about EU protectionism whereupon the Brexiters will claim EU tariffs freeze out African producers, to which the remainers reply with references to the Everything But Arms agreement. The Brexiters then point to some obscure example of milled rice or processed coffee subject to EU rules of origin and then the trade nerds pile and bore us all to death.

Both sides are missing the point on this. Tariffs are not the barrier. Take, for instance, EU inspections for Citrus Black Spot - a fungal disease in fruit. Typically reports cite "EU regulations" as the reason for import restrictions. It isn't that. It's an EFSA risk assessment leading to a higher rate of inspection creating delays that cause South African growers to voluntarily terminate trade even though it meets the standards and qualifies for trade preferences.

The South African view is that the risk assessment criteria is the product of internal lobbying and is scientifically questionable. The Spanish government's position will undoubtedly be the product of lobbying by the Valencian Growers Association AVA-ASAJA. They have identified the weak spot in the system that allows them to push for EU level protectionist measures.

What we find is that, notwithstanding cooperation agreements on standards convergence, the risk assessment criteria is still more a political than scientific issue, it rests largely with the Commission, and though the IPPC can investigate, it can only challenge the validity of the risk assessment process rather than the actual verdict. If the process is found to be transparent and the specialists are sufficiently qualified then there is little anyone can do.

This is where it's possible to overstate importance and usefulness of certain institutions and instruments within the trade ecosystem. Though WTO members can normally raise issues for consideration, panels must be formed, investigations undertaken and hearings scheduled. The process is time consuming and expensive thus, in most cases, an EU decision to exclude produce is usually final.

The EU, therefore, does not need to tinker with tariffs. If it wants to exclude produce on protectionist grounds there is little to stop it from doing so and plenty of means to do it. Out side the EU, the UK could very well operate an independent risk assessment system and one less vulnerable to industrial lobbying. The issue, therefore, becomes one of whether the EU assessment of our own risk assessment system has ramifications for our exports to the EU. Consequently every decision made in respect of third countries has to be stress tested against its potential impact on UK-EU trade.

The EU can subsequently make demands for standards improvement but then when it comes to standards improvement under the aegis of an EU cooperation agreement, we often find the goalpost shift time and again on the whim of EU producers - which is why we still manage to exclude Argentinian beef exports some twenty years after the BSE scare. That issue will run and run and will remain a talking point of trade debate for a decade or more.

What we have here is an attempt by both sides to extract simplistic narratives from what is inherently complex and far more complex than even I imagined. The remainers are making hay of it in pointing out that the "deal" struck by May is nothing we didn't have via the EU. This completely misses the point.

For now the main mission is to ensure trade continuity and if Mrs May has succeeded in rolling over agreements then that is certainly not a bad thing. Obviously these agreements will need revisiting and there is scope for future refinement and that will happen in due course. What it means is that the UK will have its own offices dedicated to managing trade relations with third countries. The UK already has a dedicated unit for trade with China. We will see more of these established over time. This is the process of repatriating trade policy thus reclaiming an essential instrument of foreign policy. And that matters.

Theresa May is reported to support South African land reform but it's worth examining what she actually said. "The UK has, for some time now, supported land reform that is legal, transparent and follows a democratic process," May said. "I welcome the comments he has already made about approaching land reform, bearing in mind the economic and social consequences - and that land reform will be no smash and grab".

Having direct control over our bilateral trade relationships means that we can take our own decisions in respect of any potential illegal land expropriation. One of the great evils of the EU is that it has turned trade into a technocratic discipline entirely divorced from politics. Member states, therefore, are reduced to making impotent statements in the face of human rights abuses and any action we would ordinarily take unilaterally has to be cleared with Brussels. It then depends on other member states and their overseas interests. Here we find that "European solidarity" is only skin deep - especially if it trespasses on France's colonial interests.

Having repatriated trade, public campaigns can compel our own politicians to take political measures. We are are a market of 65m wealthy consumers. Of itself that is influential when dealing with developing countries. Not so though if domestic political pressure is inert. I am just old enough to remember when grassroots politics did speak of imposing trade sanctions and lobbying for them. Brexit once again puts trade back into the political realm and once again becomes a policy tool of substance. The amalgamation of trade policy in the EU means trade is a foreign policy weapon of the EU elites, but not the people. We cannot instruct or demand that the EU acts.

Brexit does not necessarily mean better trade deals. It is possible that they can be bettered configured for the UK economy. Some will be better, some will be worse, but the point is that we will have greater control over our external relations and be able to take measures against predatory practices without first grovelling to Brussels. There is nothing to stop us coordinating our actions with the EU, but nowhere does it say we have to be subservient.

Though I am an advocate of multlateralism and and the global rules based system, the left wing critique of it is essentially correct in that it seeks to strangle national sovereignty in trade affairs, essentially making it a corporate playground immune to any kind of democratic impetus. Trade is ringfenced from politics.

While that essentially provides stability in global trade, and consequently is a pillar of the peace architecture, it once again raises the question as to whether globalisation is compatible with democracy. Being that the EU is a middleman, muting the voice of member states, our foreign policy will more likely reflect that of the technocrats over the peoples of Europe.

We are often told that sovereignty is an archaic concept and increasingly meaningless in the modern world. This blog has also made that argument. That is not to say, though, that it is useless, or that we should tolerate any further erosion of it.

The EU has sanitised trade and removed politics from it. The political engagement we see is anaemic campaigns from NGOs and lobby groups in respect of GMOs and "chlorinated chickens". This is a pastiche of politics. Trade and aid are fundamental tools of foreign policy and foreign policy must serve the people, not the the ambitions of a supranational proto-state. If we do not have control over these things then we are not a country in any meaningful sense and our elections aren't worth a damn.

May's great deception will end the Tories

Whether intentional or not, pretending the Chequers deal is "Brexit in name only" is a strategic masterstroke on the part of the ultras. It makes it look like Brussels is playing hardball even when Theresa May has capitulated to their demands. It plays into the narrative that Brussels is not an honest broker and isn't doesn't even want a deal. It even serves May well in that she can say she made her best possible offer and still she was slapped down.

It's actually so ingenious one could even speculate that May never intended to present a plan the EU could accept. Either way as political scheming goes this up there with the most devious. It doesn't need to fool everybody. It only need fool the party faithful and that doesn't take much doing. The public will believe whatever they are told. They were told David Cameron had "used the veto" which passed into common legend without question.

What we can expect from here on in is every branch of government parroting the same handful of talking points. We've been subjected to a barrage of pro no-deal propaganda from the Tory apparatus for a while now - but from today the government is a willing participant in the deception and is setting the EU up to take the blame for failure. Everything else is pantomime.

A more generous assessment would be that the government is simply preparing its own strategic backstop, ensuring all the excuses are in place, but still hoping for a final hour breakthrough. That being the case there is a danger the government creates a self-fulfilling prophecy where it believes that no deal is survivable thus will let it happen. 

Should we leave without a deal a lot will depend on the success of whatever contingency plans are in place. We don't have much of an idea what such plans look like in that the government is keen to keep a lid on it and the specifics are only really known to the civil services. No doubt there will be political orders in place to ensure the headline impacts are kept to a minimum.

This will likely prove futile if airlines are grounded. About 40% of the UK’s trade by value travels by air, which indicates how critical this mode of transportation is to the domestic economy. If we find ourselves in that position then it really is game over for the Tories. There's no coming back from that.

The greater worry is that it may take some time to realise the seriousness of our predicament. Trade in overseas services is not counted in GDP and restrictions on movement and loss of single market rights may take a while to filter through into economic metrics. It is entirely possible that the economic activity in mitigating the effects of Brexit could well prop up GDP for a while.

In this I am reminded of the scene in A Bridge Too Far where Major General Robert Urquhart details his method of retreat by placing the dead and wounded on machine-gun posts to give the impression that his forces were still in place, while the main force slipped away quietly in the night. He describes this as like a collapsing paper bag.

For a while it may look like things are holding up and the press will run a barrage of optimistic stories failing to spot the underlying trends which will point to a longer term collapse of trade. Unemployment is a trailing indicator and the first wave of job shedding will with nothing in comparison with the longer term bleed.

Even if by some miracle Brexit preparations prove adequate we will still find business caught unawares, many of whom have simply assumed the government will sort something out and that the consequences of no deal are so dire that neither side would allow it to happen. That complacency runs all the way to the top of the business world. 

The next few weeks will feed that false sense of security as we see a drip of reports that trade deals will be rolled over with third countries. Businesses who don't trade with Europe will assume Brexit doesn't affect them. They are in for a few nasty surprises.

At this point I think our fate is sealed. Complacency runs deep and there is no chance of sufficiently popularising the EEA option in time. Remainers have thrown all their energy into remaining while leavers are now determined to leave at any cost. Elements of the remainer media are half-heatedly unspinning the myths they created about the Norway option but it's too little and too late. All the while no warning, however drastic, will deter the Tory ultras. Events have taken on a life of their own and the fever has to burn itself out.

What happens thereafter is really anyone's guess. Tory excuses won't last and the party will likely rip itself to pieces. The political incoherence we see now will look like relative stability in contrast. The power will form up around anyone with a coherent recovery plan and the public will even stomach Labour if they come up with something halfway achievable. The only certainty is that the Conservative Party as we know it is a dead man walking. 

Right now politics is held together only because the consequences of Brexit are hypothetical, highly debatable and not yet upon us. We won't know until we know. When we do, the whole political landscape will change. There will be a political bloodthirst on all sides and the Tories will have to account for their arrogance and dishonesty. Since the internet never forgets, the Ultras will have uncomfortable questions to answer. Brexit will be a graveyard for the careers of Tories.

Brexit is going to redefine politics. Moreover it will be a reckoning for our media too. All those thinks tanks and Tory publications who told us we can trade on WTO terms will have to account for themselves. This will haunt them for years to come. They can't say they were not warned. They can't say none of this could be predicted. They can't say it wasn't their fault and the EU is not going to take the rap for it. There is no passing the buck on this one. It is ironic that we should have fought for Brexit for greater political accountability because the first to be held accountable will indeed be the Brexit ultras. It's quite delicious isn't it?