Friday, 21 April 2017

Plenty of options, none of them good.

I can't really come out strong for anybody in this election because I am faced with two equally depressing choices. On the one hand we have the left who want to drag us back into a stagnant status quo and keep us under the dead hand of Brussels, and on the other we have demented Tories intent on severing important ties with the EU for absolutely no good reason to no commercial or diplomatic advantage.

For all that is said about the insanity of Jeremy Corbyn's economics there is nothing all that sane about present Conservative policy either.

Politically, I am in a very weird place. I'm very much down with the whole reinvention and renewal vibe of Brexit - and I will fight the remain crowd to the death to make sure it happens, but at the same time I find myself at odds with Brexiteers who are going off half cocked with some very silly and damaging notions. They seem to think absolutely everything is up for grabs and we are free to do as we please.

The latest fad among Brexiteers in CANZUK which is one of those unflushable turds. It bares no relation to anything going on in the real world even if it were technically achievable and economically worthwhile. Which is isn't. The EU is our neighbour, our largest single trading partner and a regulatory superpower. Leaving the EU does not mean escaping its gravitational pull and erecting barriers in order to do so serves no advantage since EU agreements with third countries ties them into EU rules as well. They are unable to tinker with their regulatory regimes in order to accommodate us and more to the point, unwilling.

What we can safely assume is that the UK will retain most regulations forever and will probably carry over most EU directives for at least a decade. I don't really expect much deviation from the current regime in fishing and the only immediate changes we are likely to see is in agriculture. That is going to be a stone cold mess. Agriculture reform is never done well.

What this means is that any free trade agreements will be limited to those presently geared toward serving the EU market and since regulation isn't up for trade that restricts the nature of such deals to commercial cooperation and tariffs which are already low. The latter makes little difference and will be eaten by currency fluctuations and the former was never prohibited while we were in the EU.

The main focus beyond trade agreement with the EU will largely be replicating those deals we already had via the EU. This is when tedious little Toryboys will be gloating pointing at all the "bumper deals" we have rolling through the door, when in fact they will be worthless bits of paper that we didn't really utilise even as EU members. Certainly any deal with China is likely to be asymmetrical and impossible to exploit. You need serious investment capital to overcome Chinese trade barriers. It's barely worth the bother. SMEs can't really take advantage of them - and if trade is not geared for SMEs then they are unlikely to be beneficial so far as you or I are concerned.

When it comes to Brexit we are told this means a global Britain flying the flag for free trade yet bizarrely the Brexiteers can't put up barriers to trade fast enough. It doesn't matter how many times you patiently explain the system it doesn't seem to sink in. They regress.

The ultimate silliness of all this is that if you want a good reason to leave the EU then it is that this bilateral approach takes years and very often falls flat. The only reason many of them succeed at all is simply because of the EU's economic might. Singapore made significant concessions in order to obtain an agreement with the EU. Out of the EU we don't have that so the very last thing you would want to do outside of the EU is adopt the exact same approach to trade. You need entirely different approaches using an entirely new methodology.

When we first started to examine the process of leaving the EU it rapidly became apparent that in the best case scenario the best we could hope for was an economically neutral Brexit deal and only by seeking to keep as much of the single market as possible. The strategy we proposed was to use the EEA agreement which has its own system of waivers, safeguards and opt outs where we could gradually discard the elements we did not want. Instead the Tories are going to sever the whole lot all at once meaning that we will end up begging for single market readmission when we face the consequences. Obviously we will pay a price for that.

It was never a good idea to campaign for Brexit on economic grounds. Trade wise there are no silver bullets and there are no sunlit uplands. At best we will see a re-ordering of trade and some market movements by way of trade substitution which at least restores a degree of dynamism to the domestic market but in net GDP terms this still comes at a loss.

As far as I see it, Brexit is more a cultural and social revolution than an economic one. From that perspective I just don't see a downside to it at all. The consensus establishment had run out of ideas and is on borrowed time. As soon as Brexit is wrapped up the Tories are as dead as Labour. This for me cannot come soon enough. When that happens we will start to ask serious and long overdue questions about the viability of the party system. Perhaps an utterly botched Brexit makes this more likely.

My only cause for hope in all this is that the EU has doubled down on its stance that the integrity of the single market is not up for debate. One by one the EU is closing down the options. May is faced with a long transition under EU jurisdiction and a weak deal at the end if she insists on keeping her red lines. She will have to crack eventually in which case she will be faced with an ultimatum. An EEA style agreement with guest membership of Efta or ejection without a deal. More than likely May will have realised by then that walking away is not an option. I think that penny might have dropped already. A no deal scenario is too horrible to even contemplate.

Hard Brexiteers would have it that without a deal we would be totally free to do as we please, slash regulation ans taxes and become a tax haven. Shock doctrine. Historically this has never worked and results in authoritarian oligarchies. More to the point we would have to break with a number of global treaties to make this happen in which case we would lose a good deal of soft power and international trust. The "freedom" we would gain from dropping out without a deal is the same freedom you have when you are evicted and all your belongings are thrown into the street.

Presently I am not placing any bets as to the outcome. I do not have a good track record when it comes to political predictions. May keeps her cards close to her chest and she is prone to u-turns. That makes the success or failure of Brexit a fifty fifty split. There is still a high risk of accidental Brexit and if the EU plays hardball all the way and doesn't play it well then May could conclude there is nothing in it either way and go for broke.

In the end the EU cannot flex too much. For all the issue illiterate grunting we have heard from Tories about the German auto industry being keen to do a deal the reality is turning out to be different. German firms value the single market more than they value trade with the UK and can easily find ways to sell their overpriced unreliable barges.

With all that in mind I cannot in good conscience support the Conservative Party without a clear indication of intent. The empty mantras and sloganeering is not enough to go on. I have zero confidence that they have understood the issues and they are extremely lacking in competence. Since they are set to win regardless in the absence of an alternative I think I will vote for an independent candidate if I bother to vote at all. The fullest extent of my efforts over the next few weeks will be to highlight the incompetence and stupidity of May's Brexit approach, if for no other reason than historical record.

The one good thing that will eventually come from this is that it will finally expose Tories as shallow, ignorant, anti-knowledge tribalists. If it wasn't already abundantly clear, that is.

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