Friday, 27 May 2016

Rick, it's more complicated than that

Blogger "Flip Chart Rick" says "I’ll go with the elites that have done some proper work". As it happens, none of the organisations he cites have done any proper work at all. Every single Brexit economic analysis is predicated on the assumption that Brexit is an event and not a process and ignores the politics of the process.

This analysis is based on the assumption that nobody wants Brexit talks to go on longer than the mandated two years. Nobody wants the risk, or the hassle. The EU has said as much.

Let's take a for instance. Erasmus, the academic cooperation programme. That is the mechanism by which we facilitate cross border exchanges and research funding. There is no renegotiating that in two years, not least because it would need to be ratified by all states (including non-EU members if I understand it correctly). But as much as we cannot renegotiate it in two years we cannot design a replacement for it either. So we keep it.

Apply that same logic to air traffic control, public health surveillance, port inspections, Europol, and all the other cooperation areas where we have ongoing projects, budgetary commitments and contracts to be upheld. The very idea that we're going to dream up an FTA that ties up the loose ends and addresses the shortfalls experienced by both parties is fanciful. So much so that we can rule it out as an option. And then there's the WTO option that pretends none of the peripheral areas of concern and cooperation agreements even exist. That can be ruled out for similar reasons.

And in this the EU is not going to be in any mind to sod around and let us pick and choose which bits we want. It has one interface for cooperation and that is the EEA. The ultimatum will be that we take it all if we want their help in getting it ratified. And we'll take it because there's no other option on the table.

But to take an EEA analysis and do a projection on that based the Norway Model is equally naive because it assumes way too much. Were we negotiating entry into the EEA with no previous integration then you could get away with it - but we're not. We're forty years in and a member of the CAP and CFP.

You all remember various celebs piling in to pour scorn on the CFP discards system? It took six years to get a marginal reform to that system. And you want to tell me we're going to take back fishing inside a decade? It's going to take ten years just to design our fishing policy. There's no picking up where we left off because foreign boats have acquired rights, technology has changed and so have fishing techniques and navigational rules. We're looking at a complete rebuild of our domestic system of governance. We can say exactly the same for agriculture too.

And so as much as we will adopt the EEA ultimatum on offer, we will also need a transitional agreement for at least ten years, with option for extension. In order to do that we will have to adopt the entire EU acquis. Every last law will have to be adopted to ensure no change. And so when the Remain camp ask what does Brexit look like - the answer is, for the following ten years, pretty much exactly the same as it does today.

We will have to take baby steps to evolve out of the EU as we develop our own domestic competence. In the process we will gradually decide which of the cooperation agreements we want to keep as and when they come up for review or renewal - which is part of the normal business of government.

What this does mean is it blows all the claims about deregulation, immigration and saving money out of the water. Brexit is going to involve maintaining roughly the same budget contributions for ten years at least. Whatever savings we make will be directed into developing our own domestic competence. In that regard we can discount building any new hospitals as Vote Leave claims.

However, it's the real world practicalities that dictate how we leave and since your average beancounter can't see beyond the spreadsheets we can't expect them to be able to do a thorough analysis or even model what the process looks like. That's why I wouldn't give you tuppence ha'penny for the IFS report.

The short of it is, the process of leaving will be gradual and there will be no radical moves in the first ten years, thus the Treasury can bin its fifteen year projections. They're just not on this planet if they think we're going to be ready to move on anything inside a decade. We have to wait for various contracts to expire before we do.

Now if any of these prestigious economists want to run some sums on that scenario, I will afford them some of the credibility to which they believe themselves entitled - but even then they will have to demonstrate that they have a grasp of what is changing at the global level and the obsolescence of the bilateral trade deals they are so obsessed with.

But it seems to me that the economists putting forward their pet theories (on both sides) are not actually interested in a genuine enquiry even for reasons of personal curiosity. And what we get from the Remain camp is successive appeals to authority. What we are looking at in advancing these flawed Brexit models is either obfuscation or profound ignorance in which case they should be ignored. Brexit will be a process and not a radical one.

But for Vote Leave to accuse the Institute for Fiscal Studies of being a “paid-up propaganda arm of the European commission” and for John Redwood to call them “part of the cosy establishment” is crass in the extreme. It may be true to an extent, but when you are proposing the biggest shake up of modern governance since the war, opinion formers like Flip Chart Rick need a little more to go on and something a little more credible. It is that negligence that will ultimately lose this referendum for us.

The leave campaign have given the grown-ups absolutely nothing of substance to cogitate over. Nothing that doesn't deserve to be met with the sort of scorn and derision poured on by Janan Ganesh - and using the witless meandering of David Davis as your lead ideas deserves to be trounced. Thanks to Vote Leave we are going to see the EU issue buried along with any hope of recovering our democracy. Well done Mr Cummings. That's real genius right there.

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