Sunday, 30 September 2018

Our politics is dying because it has to

The right wing case for Brexit is not compelling at all. The Tory right are pushing for a minimalist trade deal with the EU for the sake of regulatory independence which they believe can be traded away to achieve more open trade with the rest of the world - namely the USA.

In this they are deaf to all of the warnings. If we become a third country with n regulatory cooperation then we cannot expect anything approaching the same level of frictionless trade with the EU and being outside of EU approvals systems means that a number of sectors from pharmaceuticals to automotive will see their export costs ramp up substantially.

Before we joined the EEC, there wasn't any significant ro-ro traffic at Dover. It wasn't even introduced until 1965 and was only handling a few hundred lorries a year until the early 70s. Then, the real growth came with the single market. Out JIT production lines along with fresh produce exports are effectively the children of the single market.

Should the UK diverge on standards then as much as we are looking at increased red tape at the borders we also face a higher frequency of inspections which could very well kill value chains entirely. This is a dilemma faced by Canadian producers who have to decide on either the USA or Europe as a market because it cannot be both.

This is the sort of detail that Tories are avoiding and being that they do not understand the system and being creatures of conformity they will latch on to whatever is spoonfed to them by the various lobbyists masquerading as think tanks. The fashion at the moment is a fixation on a US deal, contrary to all the best advice of expert functionaries from Ivan Rogers to Hosuk Lee-Makiyama.

What we are going to find is that any such deal falls flat on its face. If not we are looking at years of negotiation to produce an FTA far shallower than we might have expected and one which opens us up to the US dumping its agricultural surpluses while having nowhere near the freedom to trade in services that we would have in the EEA. We would be servicing a far smaller market and having deviated from the global standards employed by the EU we would find that market shrinking. 

Of course producers are free to mix and match if they can afford separate production lines but in all this time I have yet to see any serious analysis from a serious source that shows how we can replace single market trade, not least because as a general rule we will do less trade with more distant partners.

Being that Tories are Tories, they will not listen to expert advice on this and instead have cultivated their own ecosystem of quasi-expert soothsayers who steal the terminology of experts so as to appear plausible but to the trained ear are spouting gibberish. The good news is that the Tories won't be around long enough to complete negotiations with the USA. At this rate they may not even be around to negotiate the future relationship with the EU. Assuming we get that far, that is.

But what of the left wing case for Brexit? Trade Unionist, Paul Embery, sees a hard Brexit as a positive development in that it puts barriers up to low wage competition and prevents the further encroachment of globalisation. 

On the first count I am somewhat ambivalent. The spreadsheet sociopaths tell us there is no measurable impact on wages but that's ignoring the black market in labour and multivaried analysis. The experts on that matter tend to be ideologues and prone to dishonesty. See Portes, Jonathan. But then less trade equals fewer jobs. I'm not sure how the bottom decile wins either way. 

The second count is a much more complicated question in that technology is as much the culprit. Online transactions allow corporates to evade taxes depriving governments of legitimate income, forcing them to cut back on spending thus, if you're a Keynesian, shrinking aggregate demand. 

This actually points to the need for more intergovernmental cooperation to close down the loopholes and tackle tax havens, but there we see moves toward harmonised tax policies designed to eliminate arbitrage. That then is seen as an attack on sovereignty - which is about right in that it centralises economic policy. 

The right wing view is that we should be able to lower taxes and become a Singapore on Thames, but the EU most certainly will wield its soft power in retaliation and the imposition of non-tariff barriers might still deter business. Not an easy one to crack. 

There are a lot globalisation issues I have not fully reconciled in my thinking - but I'm relieved to see that none of the top thinkers in the field have either. The only solution I have settled upon is that democracy is really the only legitimate judge and that nation states are better able to respond to pressures in time. The EU is many things but it is not agile or responsive. Democracy is more at liberty to experiment. The Guardian this week takes a stab at outlining the left wing view
A small number of people in the Labour party and in the trade union movement take a different view. For them, Brexit is to be welcomed because the EU’s bias in favour of multinational capital, its hardwired monetarism and its obsession with balanced budgets means it is more Thatcherite than social democratic. For those remainers who say this is a caricature and that the EU is really about protecting labour rights and defending the interests of workers in a harsh, globalised world, left leavers have a one-word riposte: Greece.
In recent weeks there have been two publications that have challenged the mainstream view. The Left Case Against the EU by Costas Lapavitsas, a Soas economics professor, takes issue with the idea that the EU is all about cooperation and togetherness, a borderless paradise of interrailing and Erasmus schemes. The EU, Lapavitsas argues, is not a nation state that the left could battle to capture and then shape the way it is run. Rather, it is a transnational juggernaut geared to neoliberalism.
The European left’s “attachment to the EU as an inherently progressive development prevents it from being radical, and indeed integrates it into the neoliberal structures of European capitalism”, Lapavitsas says. “The left has become increasingly cut off from its historic constituency, the workers and the poor of Europe, who have naturally sought a voice elsewhere.”
This seems a pretty accurate assessment. The European left sees the EU as promoting democracy, egalitarianism and social liberalism, but the reality is somewhat different. The four pillars of the single market – free movement of goods, services, people and money – are actually the axioms of market fundamentalism, which is why Mrs Thatcher supported its creation. Meanwhile, the European court of justice has gradually turned itself into a body that enforces a free-market view of the world, placing more and more restrictions on the freedom of member states to make their own economic decisions.
This explains the division in the Labour party between the old left and the Metropolitan London "progressive" left. For the latter, the EU embodies much of the soft left Blairite social agenda and it affords them a number of entitlements and perks which is just enough for them to turn a blind eye to the many faults of the EU. This is why we see the neo-Blairite bratpack headed by Mike Galsworthy pounding the streets of Birmingham this week at the Tory conference.

It is actually this schizophrenic nature of the EU that leads to such a diverse array of criticisms. It all depends which prism you look through. For the right the EU is a centrally planned distinctly socialist affair, eliminating dynamism by bogging the labour market down with regulation and red tape. The old left, on the other hand, see the EU as a barrier to a socialist utopia.

Remainers point to nationalised utilities in European states arguing that the EU is no barrier to socialism, but this ignores the services liberalisation that forces even stated owned enterprises to open contracts to European bids along with various directives which, while they do not dictate private ownership, certainly govern the structure of markets and lead toward their liberalisation. See image. This is why the EEA is the least popular outcome for Brexiters of all stripes in that these such directives apply - and though there is scope to shape such rules and opt out of elements, EEA states still have to keep their markets open to the EU to the same governance methodology. 

As it happens I am not the biggest EEA fan for that exact reason. I just accept, unlike my fellow leavers, that the alternatives are worse and that many of these directives are in response to global obligations be they WTO commitments on government procurement to environmental measures agreed under international treaties. To repeal many of them we would also have to pull out of a number of climate accords which is politically improbable. I am also of the view that any combination of free trade deals is not likely to replace the trade we enjoy via the single market. 

There is also one other reason. I'm not a socialist. The idea of a Labour government meddling with the energy market, especially one intent on creating 400,000 "green jobs" is absolutely horrifying. The one thing Lexiters are right about is that the EU very much does stand in the way of Utopian left wing economic ideas and that is probably one of the few things in the EU's favour. Were I a Tory right now staring at an election defeat with Corbyn waiting in the wings I would be all the more keen on the EEA. 

But that then makes me a hypocrite doesn't it? Having argued for the supremacy of sovereignty and democracy, leaving a number of key policy areas inside the current system of controls is antithetical to much of what I have written. But then I am not a purist. If there is one thing I have learned in the last few years about politics is that you can never have it all your own way, there is always a trade off and if we are going to leave the EU then we shouldn't throw the baby out with the bathwater. 

More to the point, there are a lot of issues where Brexit doesn't actually solve anything. It won't make Stoke-on-Trent great again, it won't bring back the mines, it won't stand in the way of automation and in many cases, especially if the Tories get their way, it will exacerbate a number of known problems.

The essential problem for the UK is that its politics is so wildly out of touch and tribal. The Tories are pushing free trade dogma which has long ceased to be relevant while the left are talking about a reversion to a mode of socialism that was only really appropriate for its time in the era rebuilding the UK after the war. It is certainly incompatible with modern norms of porous borders - which, Brexit notwithstanding, we are not going to solve any time soon.

Essentially the have been seismic changes over the last forty years and governance has become more complicated than any one person can fully understand. For a lot of the problems we are fighting against the tide and struggling for solutions and in some cases there simply aren't any solutions. I do not see a satisfying resolution to the trade versus sovereignty dilemma. 

Being that these issue are of a complex and technical nature, and the public tends to gravitate toward politics of a more cultural nature, our politics isn't equipped to deal with many of these problems which is why we see them looking back in time and seeking to impose outdated doctrinal solutions. Of itself that is bad, but it is amplified by an ever more polarising media and one which struggles with nuance at the best of times.

What further compounds our problems is a very distinct cultural divide exacerbated by insecure labour and transient populations combined with high immigration. The culture war. Being that the EU adopts any passing progressive fad, using its soft power to impose its values, much of the hostility toward the EU is actually nothing at all to do with economics. Brexit is as much an attempt to reclaim British values (whatever they may be) and ensure UK legislation is made according to those values rather than the progressive values and Keynesian ideas of globalists.

While we are on heightened alert for a no deal Brexit and a serious economic collapse, it rather looks to me like we are on course of a political collapse come what may. Though there is now more of a discernible difference between Labour and the Tories than there has been in recent years, there is still a gaping gulf between Westminster and the rest of the country. Britain certainly didn't vote to leave the EU as an endorsement of hardcore libertarian free trade ideals any more than they especially wanted to bring about a new socialist order. 

For the moment I am politically homeless but I think I am in good company. I think I am in the ranks of the sane majority in my dismay and contempt for Westminster. There is certainly a demand for an alternative even if there is no supply. I think it will take a political collapse for that alternative to make itself apparent. 

As the Guardian notes, "almost all the energy on the remain side has been spent on keeping the UK inside the EU come what may. There has been nothing from remainers that would suggest that they have a serious plan for tackling the symptoms of Brexit. The same applies to reform of the EU". This is why stopping Brexit doesn't actually solve anything at all. Britain is in the midst of a full blown , economic, political and identity crisis where neither leave nor remain can provide any clarity.

What we are looking at here is a democratic correction as the institutions and politics of yore gasp their last. the world has changed and our politics needs to change with it. The EU certainly does safeguard the status quo but there is an instinct afoot, globally, that the status quo is ill-suited to whatever the new era is going to look like. In respect of that I think perhaps turmoil is the new status quo until there is a satisfactory one nation resolution. Our politics is dying because it has to die. 

As this blog has noted previously, there are too many time bombs in store for the near future that our current economic paradigm is not prepared for, from our housing crisis to our pensions crisis to our care crisis. All of these are thorny issues that require radical change when we have a political stalemate that actively discourages radicalism and reform. We talk about reform but we have forgotten the meaning of the world. All we do now is timid tinkering and top down reorganisation. 

If there is one thing we can say about Brexit is that it is disruptive. Reality will very rapidly torpedo the delusions of Tory free traders, and soon after Brexit the socialists will find there simply isn;t the money to implement their half-baked ideas. They are still making policy as though the UK will have anything like the same tax receipts and credit rating. Brexit will be a bucket of cold water and will seriously impact on public services to the point where we have no choice but to explore new ideas be they along the lines of big society voluntarism or privatisation.

We are often told that we Brexiters didn't know what we were voting for. But we did. We voted for a departure from the status quo because as much as it isn't delivering it is not sustainable. It's fairer to say we did not know what we'd be getting. But then none of us do. It comes down to one very simple estimation as to whether you think we can go on having elections where voting makes no difference and nothing ever gets done. I do not think that we can and I think ducking the issue has a far greater price than any mode of Brexit. 

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