I’ll stop “Brexit whining” when I see some solutions

Please note: this post is a “fisking” of an post Brexit article written by Allister Heath (deputy editor of the Telegraph) entitled “Britain needs a ‘can-do’attitude revolution, with solutions rather than whining”.  Although I include quotations you may want to read it first, its fairly light and wont take long.

I’ve written a follow up called “The answer to the Brexit Paradox is…The EU” which analyses the groups within the Leave vote and talks primarily about “anti-globalists” (concerned with immigration, poor quality jobs, wages and pressures on public services and housing) and “pro-globalists” (concerned with “excessive” regulation, impacts on external trade deals and limitations on the UK’s flexibility).

Mr Heath’s article, which is a call to arms for us to roll our sleeves up and get on with our bright Brexit future, should hopefully have something to say to each of these groups.  With this in mind I’m going to go over the major points, examine the evidence and in particular, try to determine if this vision meets the concerns of pro and anti globalists (as well as the other groups within Leave).  Like Mr Heath I will provide links to support particular statements, however unlike Mr Heath these will link to external sites and not simply to other Telegraph articles.

 

Executive Summary

Unfortunately this ended up being longer than I hoped so it might be helpful to summarize:

The aim of this article from Mr Heath was to illustrate that things are already picking up, that we have everything to gain from Brexit and that if only a few pessimistic remainers would get with the program we would move full steam ahead.  The article then intends to propose a unifying 3 point plan which the government can implement to bring everyone together.

The reality is unfortunately rather different.

Mr Heath ignores what’s actually happening post Brexit and instead references other articles by himself or Telegraph colleagues.  When he does refer to external information he cherry picks comments without providing links and generally provides a wildly overoptimistic view of the reality facing the country.

Further, his 3 point plan is essentially a free marketeers charter of privatization, large scale free trade, significant deregulation and tax cutting with the aim being to turn the UK into a trickle down tax haven style economy.

Absolutely nothing speaks to the needs or concerns of the anti-globalists however this article probably does reflect quite accurately the aspirations of the leading figures in the pro-globalist Vote Leave campaign.  This may even be the best future for the UK, however it is almost certainly not what the anti-globalists thought they were voting for.

 

Analysis

Much of the 1st half of the article is evidence free fluff, for example we have statements such as “On the one hand we have the optimists, Brexiteers as well as ex-remainers, who are gradually coming together in their embrace of our new future and  that “(Theresa May) is going to implement (Brexit) with gusto”.  However the only evidence provided are links to other Telegraph articles.  In terms of this “gusto” we already know that  Article 50 wont be triggered and negotiations won’t start  until next year at the earliest.  We do not even know the UKs opening position, there are legal challenges ahead and so at at this point the Brexit process may not even formally start for a year or more.  It’s difficult to see the “gusto” the author refers to.

“Support for the now officially pro‑Brexit Tories has jumped to 40 per cent, according to YouGov” “Consumer Spending is holding up”, no, lets be honest, support for Labour, whatever your politics, has suffered post Brexit and this has resulted in an uptick in Tory support.  Consumer spending may be holding up, but business confidence is dropping significantly which isn’t surprising and the day after this article was published the PMI Index tumbled..  Business hates uncertainty, and we are in for 2-5 years of it and so   attacking remainers for pointing out the obvious is a particularly ironic form of victim blaming.

The first external “evidence” follows, and its interesting to see what Brexit success looks like for the author:

“Take the President of the Royal College of Surgeons: she has urged the NHS to “seize the moment” and use Brexit to tear up red tape that damages patient safety, including rules that prevent hospitals from demanding a proper mastery of English and working-time laws that mean surgeons don’t undergo enough training. ” 

Those pesky working time laws that stop people having to work more than 48 hours.  As Mr Heath did not provide a link I found the article from Clare Marx, President of the RCS .  This is the 3rd paragraph from that article:

“Maintaining and enticing staff to work here has to be a top priority. Over 40% of surgeons trained outside of the UK. Attracting and training more UK graduates is clearly important but losing our non-UK colleagues would be cataclysmic. Within surgical teams are the thousands of technicians, porters, and cleaners who have moved to the UK to serve our NHS. Toughened migration rules often particularly affect such groups of workers and we must send a clear message to the Government that the NHS also needs to retain these vital staff.

The reader can judge the actual balance of the article – some upsides potentially to Brexit, but significant risks as well in terms of staffing, access to the latest equipment, a return to overworked doctors and other areas.  These issues, which I would argue override the ability to enforce better English tests, are not referenced by Mr Heath.

He then goes on: “One leading regulator has told me privately that leaving the EU would allow a much more robust pro-competition policy“.  I can only interpret that as further privatization of the NHS, I’m not sure what else “pro-competition policy” could mean.

He follows with: “Siemens, a pro-Remain company, now insists that it is fully committed to Britain and that it would build a “huge manufacturing place… in a heartbeat” if it receives enough orders for its train carriages”  So a manufacturer will build more capacity if it receives more orders?  In other news, water is wet and the sun has a tendency to go down at night.

A few lines on:  “SoftBank, one of Japan’s biggest companies, is making the largest-ever Asian investment in the UK, arguing explicitly that it believes in a post-Brexit Britain.”

ARM is one of the UK’s great success stories and is already global.  Its chip designs are in 90% of Mobile phones and it is poised to be the major player in the upcoming Internet of Things.  You may feel this purchase is a good or bad thing for the UK, but it has absolutely nothing to do with Brexit and everything to do with a global revolution in technology.  Actually I’ll correct that, it may have one negative connection to Brexit, and that is this deal may have been blessed by May and Hammond to provide a “quick win” for post Brexit Britain, whether or not it is in the national interest.

In the same paragraph “A number of companies have also agreed to rent or commission new offices in the City since the referendum.”  As far as I know half of all commercial property funds remain frozen to prevent a run on these funds.  Its hard to see how Brexit is a positive for the City when  Financial passporting is under threat.

The first section ends with more “just roll our sleeves up” fluff which underplays the vast complexity in signing new trade deals.  We then see the first reference to anti-globalists: “This latter group often hail from deprived communities; they voted Brexit in part to give the London establishment a kicking but fear that they will continue to be ignored.”  On the strength of this article so far they are right to be concerned.

Overall the first half of the article cherry picks a few items on the economy, ignores the weight of evidence starting to come in, reinforces its position via circular references to other Telegraph articles and tells remainers to just get on with it.  However in no way is it a credible assessment of the post Brexit economy.

 

The second half opens with an appeal to the wider community of professionals (Architects, University administrators etc) asking them to fill in the blanks on a Brexit plan many of them certainly did not ask for and do not want.  We then get onto a section starting with “The government, for its part…”, which is the first time we see any ideas or possible direction.  This is Mr Heath’s 3 point Brexit plan and the main thrust of the article:

“The first pledge should be to turn Britain into the nation that is the most open to trade of any Western economy in five years’ time. To reach this target, the Government would seek to limit the reimposition of tariff or non-tariff barriers with the EU, while urgently pursuing as many free-trade deals as possible with faster-growing economies worldwide.”

In other words, retain access to the single market but also push for”most open to trade”, “as many free trade deals as possible” .  This is wonderful news for the pro-globalists, but the anti-globalists may start to get worried as this is full fat globalization.  Notice however there are no ideas in here, just a blanket platitude of “we’re open for trade”.  There is nothing to suggest exactly how we will negotiate multiple complex services- inclusive trade deals, in parallel, in double quick time from a standing start with no negotiation infrastructure in place.

The second pledge should be to make the UK the most entrepreneur-friendly country in the West by 2020. This would include tearing up red tape, cutting tax, making it easy for tech firms to continue to hire skilled migrant talent”

This can only mean extensive deregulation and tax cuts to essentially turn the UK into a Tax haven style regime.  It is the return of trickle down economics – if we cut taxes drastically and free the markets, the rich will get richer and the wealth will naturally percolate downwards.  This approach does not and has never worked as a means of wealth distribution.  Finally, there is the first and only mention of Immigration, as in “more immigration”.

“Last but not least, the Government should make an explicit promise to Britain’s poorer groups and regions that their opportunities will drastically improve. (1)The free school programme should be turbo-charged by allowing for-profit companies to open new ones, starting in the north of England and Wales before being rolled out nationally; (2)new selective schools should be opened, as part of an extension of parent choice; (3)much more land should be made available for building in the south of England; and (4)expensive green energy rules should be ditched. Britain is also in desperate need of (5)several low-tax, low-regulation new enterprise zones near universities in poor parts of the North and Wales, with a vision and management structure similar to London’s Canary Wharf.”

There’s so much in this last but one paragraph that I’ll have to take it bit by bit.

  1. Lets be clear, this is the privatization of education.  Businesses taking over schooling for profit
  2. “Selective” schools are either grammar or faith based schools.  Whatever feelings you have on these, they will only service a minority
  3. I am pretty sure the home counties didn’t vote for extensive building on their land.
  4. “Expensive” green energy rules.  Because climate change is something we can’t afford to be worried about.
  5. This is the only item I can’t comment on, it may or may not be a benefit.

Its difficult to see how the above 5 points represent “an explicit promise to Britain’s poorer groups and regions that their opportunities will drastically improve”, especially the scrapping of green energy rules and freeing up land in the south of England.  A cynic might say that the author suddenly remembered the other 3/4s of the Leave voters and thought he’d better throw something in, but forgot the goal of the paragraph half way through.

Conclusion

So let’s revisit.  Allister Heath is deputy editor for the Telegraph.  He writes in the business section as well as the main sections and so we would hope he represents the “intellectual” side of the Leave argument.  And essentially his article breaks down into the following:

“Everything is great, everything is awesome, and as soon as those whining remainers can get on board the future is rosy.  Meanwhile I’ll ignore the major flashing red lights in the economy and cherry pick a few minor/irrelevant points as proof of this position”

and

“We need to keep access to the single market but beyond that cut as much regulation as possible.  Working hours, green regulations, consumer protection, trade barriers all need to be dropped or reduced immediately and we need tax cut to the bone.  The UK’s destiny is as a low tax, regulation lite, max free trade economy  To keep the poor happy however, we’ll put the bright ones into new Grammar schools and get private companies to provide schools for the rest.  Oh and we’ll throw in a few enterprise zones in the North as well”.

Immigration is mentioned only once, and in the context of “more immigration”.  Public service gaps will be addressed through increased privatization, necessary because of tax cuts needed for this vision.  Job security, wages,everything else that might be concerns of the anti-globalists are not mentioned at all, other than an implied assumption that trickle down economics will eventually sort them out.

Of course this is what the pro-globalists were fighting for.  They have little interest in the concerns of the anti-globalists. This is both sad and ironic as the anti-globalists are certainly the majority and were used by the pro-globalists to get the win.

Overall this article will satisfy these pro-globalists who essentially are now running the show.  The anti-globalists, the vast majority of Leave voters, will find nothing here to justify their vote.

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8 thoughts on “I’ll stop “Brexit whining” when I see some solutions

  1. Thank you for the analysis, sparing me from the Tellygraft.
    All very good points; your comments match reality and are easily checked elsewhere.

    I need to differ in one aspect: the concept of globalisation. Your use of the label matches what is popularly believed to be the Ogre of Free Trade, and you disparage “trickle down” economics in a way that reminds me of the diverse “occupy” movements.

    Social-economic reality is a bit less black-and-white, as it is not possible for any economy to be a zero-sum game. Meaning that the rich get richer if, and only if, the “rest” of the population buy the goods and services they finance. If there is no trickle down, the flow stops. Any “distribution of wealth” fails when there is no wealth being created.

    National and supra-national regulation is never a burden, when applied neutrally and professionally. Regulation does not constrain a free market, but makes it stronger and sustainable. A free market does not mean that all players have the brains and vision to avoid harm; so protecting the consumer actually enhances profits.

    To reinforce the point: it is not enough to have static wealth, like a hoard of natural resources or a stockpile of bullion, and its distribution will not benefit anyone if there is nothing to buy. True distribution, or efficient trickle down, only comes with the empowerment of the whole population to participate in the economic process, through education, health care, infrastructure, food security, law and order.

    An ignorant, sick, immobile, homeless and starving population, robbing each other for any possible luxury, does not produce wealth.

    For a while, short-term exploitation may work for the production of exportable goods, the way slaves were abused to produce sugar in the Caribbean and the Chinese were used by the Party to build a modern economy. Only the slaves wouldn’t last long and refused to improve work practices, and the Chinese wanted and needed some of the goodies they were producing.

    The result of this inevitable trickle down is freedom.

    You say that trickle down economics has never worked, but it has. Our lives are immensely better, longer and healthier and safer today than they were in the whole of human history.

    What we have here is a false competition of ideologies, an artefact of socialist thinking, between something that does not exist (capitalism) and something that cannot be accomplished (socialism). Socialists like to take credit for anything that even remotely benefits the masses, forgetting that the improvement of everyone’s lives is a direct consequence of the production of wealth, and necessary for its continuity.

    I absolutely do not care if the billionaire banker, who keeps my meagre pennies and finances my mortgage, buys a new 50-room mansion, as long as I have a comfortable home of my choice. Can everyone have the comfortable home of their choice? No, every individual has a different history. But, thanks to trickle down, more and more of us can live well – preventing the banker from buying their mansion is not going to speed up the trickle.

    There is only one side to that story, which is unscrupulous people – too lazy to do anything else – using widespread ignorance to get rich. They will swing right and left, following the mood resulting from the failures of the previous lot, to maintain their comfy niches. That is what we are seeing today, with the attempt to remove a supra-national regulator that does not let any government abuse the market too much.

    What the Brexit promoters want is a free rein to carry on playing their destructive, albeit short lived, zero sum games.

    Liked by 2 people

    1. Flavio, thank you for your detailed comments. I was possibly a bit lazy in disparaging trickle down so thanks for pointing this out. So let me say I agree largely with your points. I’m not “anti-globalization” and I’m certainly not anti wealth creation. My main point was there are 2 factions in the Brexit leave camp, but only one of them is likely to be happy with the outcome. A deregulated, low tax, highly agile and free trade economy is one vision for the UK future. I don’t think it will work, but I understand the vision. I’m not a socialist (at least, not any more) so I’m not anti capitalism but I suppose I am anti uncontrolled capitalism. So whilst I agree that wealth creation is important, I suppose I just don’t trust the wealth creators enough to believe their “success” without any constraints will naturally make us all better off.

      However, I was trying to be “neutral” and obviously I failed. As I said the aim was to show that there are 2 distinct world views that came together on June 23rd, but its extremely unlikely the larger of the 2 will get what they thought they were voting for.

      Liked by 2 people

  2. You were neutral, no question about that. Tinged by socialist vocabulary, to a point. My intention was to compliment and to complement, taking the opportunity to use my little soap box. Thanks for the opportunity.

    Liked by 2 people

  3. The Softbank takeover of ARM is actually a direct result of Brexit. In £, they were able to give a 50% premium over the share price. Thanks to the drop in Sterling, it only cost Softbank about a 25% premium in yen.

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  4. It’s worth disparaging “trickle down” economics. As, it turns out, it doesn’t trickle down. The wealthier you are, the smaller a proportion of your income and wealth gets spent out into the wider economy. i.e. the wealth ends retained, rather than recirculated. Thi smeans it never flows (or “trickles down”) to the larger part of the population.

    As it turns out, since trickle down economics started being espoused as policy, inequality and wealth concentration have both significantly increased. I saw one study that measures inequality in contemporary USA as higher than iniequality in the “bread and circuses” era of the Roman Empire.

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    1. Retained wealth, or hoarded treasure, is a myth. No capitalist pig worth his bacon will keep capital idle. Idle wealth, be it money or gold, erodes away. Even if the overprivileged exploiter of the masses does not reinvest his ill gotten profit and spends it all on yachts, sports cars, 365-room mansions, diamonds and fur coats for his 144 concubines, the down-trodden unwashed will have to supply all that. The more luxurious the goods, the more skilled the labour required, the higher wages get paid, and so on…
      Inequality only matters if the less affluent do not have the means to live healthy, well fed and sheltered lives; if they have no access to further education and no means to improve their lot, no social mobility.
      All else being equal, given a free market economy, the only creator of inequality is the government. Politicians can only have power when they have some degree of control over our lives; they exert control when they are seen as the means of redress, for ideological evils that they foster on a gullible public.
      Lefty literature, beginning with that imbecile Karl Marx, is but a series of manuals on how to abuse the proletariat’s credulity to acquire power. Myths and misunderstandings about Economics are but a tool in the arsenal.

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