The Right Honorable David Davis MP loses his way on brexit

Davies

I used to have a lot of time for the Right Honorable David Davis MP and won’t forget his brave stance on defending civil liberties when he spoke out against storing the DNA records of a million innocent Brits on their National DNA database. He also led the Tory opposition to the government’s plans to hold terrorism suspects for up to 42 days without charge.

But today he is proudly tweeting why he thinks Britain leaving the EU (#brexit) is such a wonderful idea using tired UKIP clichés and I am going to rip into him.  I will “block quote” some of the more pretentious statements from David Davis’ speech on Brexit at the Institute of Chartered Engineers – 4 February 2016

“Economic growth on the continent has ground to a halt. Since the turn of the century, the EU has grown at a third of the rate of the global average, and the Eurozone has grown even more slowly than that. Europe’s share of global GDP is falling, as is its share of global trade. This trend is expected to continue.”

This is a classic line stolen of incorrigible Eurosceptic Daniel Hannan MEP who also likes to bang on about the fact that Europe’s percentage of global GDP is in long term decline. You would think that educated people like Hannan and Davis realise that it is a mathematical certainty that when you add up Global GDP percentages the total cannot rise above 100%?  Yet they express amazement and dismay that when the percentage of the so called BRIC countries rises from just a few percentage points to 30%, the percentage shares represented by the US and EU economies drop in relation. Did they really think we could keep our disproportionate share (USA 25%+EU 25%) for ever? What about the rest of the world, as China growth 8-9% year on year, are ROW going into negative percentages to keep the total restricted to 100%? This kind of talk just doesn’t add up if you think about it for just one minute. While Europe’s share of global trade as a percentage maybe declining, that doesn’t mean the EU market doesn’t grow in absolute terms; that market is still bigger tomorrow than it was yesterday so no reason for #brexit, bricking up the channel tunnel and start building another Titanic in Belfast again.

“The Euro has become a destroyer of jobs. Unemployment across the continent is running at almost 10%, with youth unemployment double that at 20%. For individual countries, these figures are even worse. Greece and Spain are suffering from youth unemployment rates of nearly 50%, and Italy almost 40%. Unemployment is destroying the prospects of a whole generation of young Europeans.”

Here we go again.  A simple coin called the Euro has single handedly ( does a coin even have hands?) destroyed millions of jobs. Of course corrupt politicians and greedy banks giving dodgy loans had nothing to do with this debt fuelled economic burst bubble? Sure when bubbles pop, jobs are lost, but if it was the Euro’s fault, why don’t we see the same percentage of job losses in The Netherlands, in Germany? After all they use the same poisonous Euro. I have a totally different take on this: The same corruption existed in these countries before the Euro, but in the days of the Drachma, Lira and peseta, when corrupt political classes in these countries made a mess of things, they could always resort to devaluing their currency. Using the common Euro currency just made politicians deceit and corruption more visible and societies more transparent. That’s a good thing in my opinion. By the way have you seen the value of sterling crashing recently? And 20% more devaluation is on the cards with Brexit. That will not destroy jobs and ruin people’s live savings and pensions?

“Then there is the Schengen Zone. The passport-less travel area once held up as the pinnacle of European integration is crumbling before our very eyes. The migration crisis that has brought more than a million refugees to Europe’s shores, with many more expected to come, is a stake in the heart of a borderless Europe.”

What a lot of bullshit David. Passport-less travel between Schengen members is dead? Well I travelled between France and the Netherlands several times these last few months since the Paris attacks and I can assure you I was not stopped once at the French Belgium border. I did see a Gendarme checking a few cars at Lille, but then I saw several more doing the same thing at the big motorway péage terminals. Don’t believe everything you read in the Daily Express Davis. A few pictures of gendarmes checking passports for public reassurance is not the end of the Schengen agreement. We don’t have the manpower to go back to that nonsense. We’d rather strengthen our Schengen external borders don’t you know?

“Even with justice, the EU causes conflict. From the faulty European Arrest Warrant, that has led to innocent Brits being detained for months overseas in terrible conditions without trial, to the slow steady creep of the jurisdiction of the European Court of Justice, we are increasingly finding that our justice system is incompatible with the one on the continent.”

This is a weird one David coming from one who was so vocal in condemning the illegal practice of Britain storing the DNA records of anyone that passed through police station doors, even when later cleared by a court of any misdoing? S. and Marper v. United Kingdom indeed proved that sometimes the British justice system is incompatible with the one on the continent, but it was the British system that breached Human Rights laws and you clearly sided with a Strasbourg court in that case!

“Take immigration.”

I am not going to attack you on this one as in your own words you quite effectively debunk the nonsense of kippers claiming EU immigrants only come to the UK to claim benefits. You said: “In the first year after arrival, only 10% of EU nationals claim tax credits.” That what I expected. Anyway we need those people to prop up our economy. And don’t forget that there are over two million British so called ‘ex-pats’ living working or enjoying their retirement in EU countries. You don’t want them all sent home do you? No I didn’t think so. Let those elderly Brits clog up French A&E departments right?

Economic Consequences of Brexit”

So you have listened to Professor Minfords sharing his ‘free trade’ bullshit with the foreign affairs select committee? Well done David! You have done your homework. I have dealt with that idiot’s testimony in a separate blog post to which I refer you here. Whole countries were destroyed following the advise of Milton Friedman and his ilk. Chile was a showcase of de-regulation gone berserk. I will let you read about that here: Note to readers: Chile’ industry keeled over and died. Chile’s GDP dropped 19%. Unemployment went from 4.3% to 22%. Minford is of the school of Friedman, never forget that folk!

David Davis also mentions so called academic work done by Michael Burrage in an exercise for the right wing Civitas think tank. Fortunately I also dedicated a whole blog post debunking his arguments here. So you can read that David and see where you were misled. Never heard of that old Mark Twain warning : Lies, damned lies and statistics? The main lesson of that particular blog post is: Politicians do not enable trade to start flowing simply by signing a new trade deal with a lot of pomp and ceremony, they are always running after the facts and as I demonstrated, so is Burrage.

“We are too valuable a market for Europe to shut off. Within minutes of a vote for Brexit the CEO’s of Mercedes, BMW, VW and Audi will be knocking down Chancellor Merkel’s door demanding that there be no barriers to German access to the British market.

Here we go again. The we buy more from them than they from us ukip mantra. Can I ask you a personal question David. If a UK captain of industry asked you to rush a law through parliament for them, would you hold out your hand for a bung? Why would Angela Merkel? Remember ‘Honi soit qui mal y pense

Anyway what is the worst that could happen to the motor industry? The kind of people that buy new BMW’s, Audis, Porches, Mercedes, they are not going to be dissuaded if
-‘in retaliation’- the UK felt it had to slap the same 10% common import tariff on quality German cars as the EU no doubt would be forced to slap on Nissans from Sunderland.

Yes because it would be Britain that would be shutting down doors to trade after a #brexit, not the EU commission. Why would they try to raise barriers for member states exports to other parts of the world. I’d worry more about the CEOs of Nissan, Toyota, Honda and Tata knocking on Cameron’s door Davis? Or rather his replacement at No. 10.

UKIP_NISSANS

It’s the Nissans Stupid

“And then there is the City.”

“It is extremely unlikely”,you say David, “that the City of London would be damaged should we leave the EU”. Well we have heard the same worthless assurances from Nigel Farage. Politicians do not have to back such reassuring noises with actual personal guarantees. Their government pensions are safe in any case. But are the jobs of all those foreign banks already making contingency plans for brexit? Kippers, and now it seems you too David, say these things so smugly. It is as if you have never witnessed ‘an ugly divorce’ in your family or circle of friends. If I asked you, would the US Government let Wall Street move from New York to Havana, you’d laugh sheepishly and say “of course not”.  But after brexit the rest of Europe is going to continue letting Britain pick the cherries out of every financial pie? Dream on David. Wake up, smell the coffee!

“Trade targets: We must see Brexit as a great opportunity to refocus our economy on global, rather the regional, trade. This is an opportunity to renew our strong relationships with Commonwealth and Anglosphere countries.

This delusion deserves my greatest scorn. Learn to run before you can walk David. Most wannabe UK traders can’t even be arsed to take English spoken orders from UK ex-pats for delivery in France or Spain where so many Brits retired. Not even when you wave your UK Barclaycard in their face and tell them which well known international carrier they should use for logistics and safe delivery. And it is with this kind of SME entrepreneurs the UK would be more successful trading globally? Selling to Pakistan Tribal lands or Malawi herds men? If it wasn’t so funny you’d just have to cry and cry.  I know you are only regurgitating economic nonsense from fellow conservative MEP Dan Hannan, but you really ought to read this particular blog how ridiculous that dream of reviving the old Empire is.

The EU per capita GDP is $35,000 instead of the Commonwealth’s $3,500.  And that $3,500 average becomes a lot lower if we take the two richest Commonwealth nations Canada and Australia away from this figure. Go figure where the biggest market is for Jaguars, Bentleys, Rolls Royce?  But also for more down to earth UK Nissans, Tiptree Marmalade, Cadbury chocolate bars, McVitie’s Hobnobs. Not in some village in rural Africa! Not in the tribe lands of Pakistan. The truth is these countries may be growing fast, but we just don’t make the kind of goods their developing economies need, let alone can afford.

Nissan_hut

Our Chief has a Range Rover!

Now go back defending the causes you are really great at like civil liberties, but please Davis, don’t do any more speeches on the economic benefits of brexit. It makes you look like that fool Dan Hannan.

Davies2

Posted in #brexit, DNA Database, EU, EURO, Europe, Human Rights, Paris Attacks, UKIP | Leave a comment

Letter 3 to François Hollande

This is the third time I have taken the opportunity to write direct to the President of my new home country France. You see followers, I am not just complaining about #ukip and my former residence in Britain wanting to desert the EU. I am sorry  my kipper friends, it’s in French, but here is an extract: (version Français en bas)

Many governments have embraced e-Government as a useful way to reduce the administrative burden on its citizens but only in France, even with their famous ‘École nationale d’administration’ their civil servants are so ignorant of the opportunities on the internet to streamline public administration, to make it that more effective and efficient, that they simply make available their ancient and stupid multi page and multi coloured tax forms and think that represents e-progress. Of course they have no intention of becoming more efficient, to make life simpler for the citizens that pay their wages, they don’t want to lose their precious civil service jobs. They count on the French mentality to just shrug their Gallic shoulders and mumble words to the effect “Well in France it’s always been like that and it will never change”. No wonder the French economy is in such a mess when the French state absorbs 56% of their Gross Domestic Product.  It’s a crying shame and I intend to fight it in my old age. This ‘lettre’ is and example of the course taken by me. We will fight them on the beaches, in the courts of the land and on the internet ;-) Here it goes in my best French

Cher président de la République

Je vous écris au sujet de l’élargissement de l’obligation de recours aux téléprocedures depuis 2012-2013 pour les entreprises et particuliers.

Je suis Chef d’une exploitation agricole et expert dans la domaine de la gestion d’identités sur l’internet en retraite.

Dans tous les pays du monde gouvernements prennent recours aux opportunités de l’e –gouvernement afin de réduire le déficit public et de rendre le secteur public plus efficace.

C’est seulement en France que les fonctionnaires de la république pensent que ça suffit de télécharger formulaires multiple qui parfois datent des années cinquante en format .pdf

En faisant ça ils perdent une grande opportunité  qui se présente une fois dans notre vie de rationaliser les systèmes de l’état, au même temps économiser et augmenter les revenus fiscales en abaissant les seuils administratifs.

Je vous donne un petit exemple, mon problème avec le Ministère des Finances en France :

Depuis les années cinquante le Code Général des Impôts, article 65 permet certains agriculteurs, plutôt des  petits exploitants, afin d’éviter la tenue de livres pour la comptabilité, de opter pour un régime forfaitaire en supposant un taux général de rendement à l’hectare.

Une fois que cette loi peut avoir été utile aux certaines agriculteurs analphabètes. Aujourd’hui le fisc Français utilise cette loi obscure pour faire croire les Euros poussent sur les arbres, même si on ne travaille pas ls terres de son patrimoine. En effet on dirait on paye ses taxes foncières deux fois comme ça.

Bien sûr tout le monde sait qu’en Europe on ne peut pas gagner sa vie avec une exploitation moins de cinquante hectares et même le plus petit agriculteur à sa tablette ou son smartphone et est passée du régime forfaitaire au régime réel.

Personnellement, comme millions des gens a la campagne, je considère mon exploitation agricole plutôt que un ‘hobby’ pour la retraite. Ce hobby me coute environs mille euros par an et je fais la comptabilité nécessaire en cas l’inspecteur des impôts soit en doute de ma parole.

Mais qu’est-ce que fait le Service des impôts ?  Quand on répond sur l’internet (par ne pas avoir coché la case appropriée) de ne pas avoir des Revenues agricoles (parce que on n’avait aucune) ils vous disent il fallait cocher la case que on a ces revenues et puis (plus tard) opter pour le régime réel en en déclarant, en effet on a un revenu négatif. Puis ils vous donnent une amende pour dire la vérité !

Au même temps le SIP Bellac m’ont dit, si je passerai au régime réel, qu’ils envisageraient mon hobby comme évasion fiscale illégale. On dirait ce n’est pas possible mais c’est la vérité !

Je ne suis pas expectative que mes concitoyens me fassent une subvention pour mon hobby en réduisant mes impôts sur mes autres revenus. C’est pour ça que je n’ai déclaré aucun revenu agricole sur l’internet. Il me semble ce n’est pas un crime de ne pas cocher la case que on a certaines revenues quand en effet ils sont négatif. C’est a la SIP a Bellac a faire la preuve que j’ai eu des revenues positives et c’est pas suffisant de dire il faut leur avertir de ce fait avant le premier Avril chaque année, quand en effet les téléprocedures pour declarer ses revenus pour l’impot ne sont pas disponible juste que a le fin d’Avril et tout cas. C’est ‘Mission Impossible’ :-(

Je vous rappelle d’article 15

Déclaration des Droits de l’Homme et du Citoyen de 1789

établi par La République Française pour protéger les citoyens :

Art. 15. La Société a le droit de demander compte à tout Agent public de son administration.

Par cette lettre a vous cher Président de la République je espère que vous allez demander compte au direction Générale des Finances et des Comptes Publique et leur expliquer en 2016 on peut pas  demander aux citoyens de cocher la case ‘oui’ quand en effet c’est ‘non’; même si ça se faisait à l’époque avant l’internet et les téléprocedures.

Comme se disent les Anglais : Si la loi dit ça, la loi est un âne. La loi devrait être modifiée, pas les citoyens qui doivent s’adapter à des insuffisances de la bureaucratie Française.

You can write your own letter to President Hollande by clicking on the featured image belowpresident

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This EU porridge is just right for me.

This is a rather long reply I posted on UKIPS Roger Helmer’s blog just now, which I thought I’d share with you.

You can read Roger’s original post and replies here:

My initial response to Roger was:

So basically only 1% want’s what UKIP wants which is to leave, never mind the consequences. Thanks for another pro EU post Roger and a thumbs up to what little Cameron hopes to achieve. Let’s face it, just by tweaking the question in a poll or referendum just a little bit you can get any result you want.

As usual the comments section is the real interesting thing about Roger’s blog. I usually skip the ukip sycophants that praise Rogers common sense. Interspersed we see  the more ‘well read’ Eurosceptic replies. This time commenter David Lonsdale  caught my attention. I just block quote a  very small section here concerning ukip’s  ‘Great EU conspiracy’ which he copied from Professor Sked.

“Macmillan left Edward Heath to take matters forward, and Heath, along with Douglas Hurd, arranged — according to the Monnet papers — for the Tory Party to become a (secret) corporate member of Monnet’s Action Committee for a United States of Europe.”

I leave you with my reply, which is now my thought of the day for you:

“That’s a nice bit of plagiarism copied from your nutty Professor Skidmark or whatever his name is, but like all conspiracy theories it doesn’t stand up to scrutiny.

The flaw in the thinking behind his polemic is to subtly sneak it into our head that big supra-national government is always bad, National(listic) government infinitely preferable, because they give us all this wonderful growth with infinitely adaptable economic policies, which like like Goldilocks porridge, will be ‘just right’ for the UK.

Anne Palmer (see comment below) stumbles much closer to the truth when she says ‘National Governments are pointless’. They increasingly are in this globalised world.

I’ll give you a simple example: The way national governments tax their citizens on income is a huge mess. I know because I’ve paid tax in UK, Netherlands, Belgium and France. Over decades governments of the day introduce so many loop holes and exceptions that you need expensive tax lawyers to navigate through the morass. Simple citizens just pay up and shut up. Ultra rich people pay nothing, apart from their expensive tax advisors. Countries like France put paper forms dating back to the fifties on-line and call that e-progress. People fill these huge colourful forms in on-line, only to print them off and for some other bugger to type it all in again, mistakes and all.

So this leads me to make my point in case: I’d rather have one expensive but well thought out simple EU tax return, rather than having to deal with the stupidity and national quirks of 28 member states. So ok, to build such a system would take years and it would probably overrun cost estimates three times before it was delivered like all EU projects; but still the result would be infinitely better than 28 individual nonsense system like the French one I discussed. This is just one small repeatable example. We could do this for VAT returns, government requests for statistics on trade, you name it. One system replaces 28.

So I say bring it on, let’s have more EU, let’s have less waste in national governments doing redundant things and please stop pretending, if one part of the EU is doing a bit better than the other, that it was because of their nationalistic government serving porridge that was ‘just right’.

It’s EU business people that create wealth, not the likes of Cameron and Osborne, not Juncker or Timmermans, certainly not UKIP’S beer swilling Nigel Farage and clueless climate change denier Roger Helmer.

And you know which country would benefit most from building all these simplified super efficient EU wide systems? It would be the British service companies and IT professionals, because at least that’s one thing we’re rather good at.”

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Hannan twists the facts – again

It’s always nice to see one’s accusations confirmed by other bloggers who spot the same lies. Hugo doesn’t actually use the colourful language I used, when I called Dan Hannan nothing but an ordinary #brexit liar

Source: Hannan twists the facts – again

Another vindication of what I have been saying in my blog came  today in a fantastic article By Jeremy Warner in the Telegraph

The wider story of a country living beyond its means is told by Britain’s “other deficit” – the shortfall between what it earns abroad and what it spends, or the so-called “current account deficit”. This has been at alarmingly high levels for a long time now, and among advanced economies is equalled only by Australia, which imports virtually everything outside raw materials.

Time was when a shortfall as serious as this would have caused a balance of payments crisis, a collapse in sterling, a calamitous rise in interest rates, and a deep recession to match.

Source: Here’s the real threat to the UK economy, and it’s got nothing to do with China

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Who is the idiot in this select committee hearing?

Today I was invited by a kipper to comment on a clip on Youtube posted by someone who calls himself Robin HoodUKIP for reasons best known to himself.  I captured the main point our nutty Professor made in the visual. The kipper comments below the clip are hilarious!

Minford

You really have to wonder ‘who is the idiot in this select committee hearing’. Prof Minford is clearly of the free market persuasion we talked about in the previous post. If it was up to Minford there would be no trade pacts, making the EU redundant. But only if the world corresponds to the professor’s ideal, which of course it doesn’t.

The fact is China may be a country rather than a trade pact but it behaves in a very neo-mercantilist way towards us in the west. One of their practices is to dump their steel and other produce on the rest of the world at ridiculous prices that our industry (what remains of it after not joining the Euro) could never hope to compete against. China does play by the Professor’s rules. Not many developing nations do. He’s not in the real world.

In the same breath Prof Minford says: “If you’re very small, you can’t influence the price of the goods you trade. You’re part of a huge market of 7 billion people right? And we’re only 30 plus million. Trade agreements are totally irrelevant to you. You are a small player in a global market”. Well the EU with a $18 trillion economy and 500 Million consumers is not small by any standard.

Let’s examine the part where Minford says only 10% of UK GDP is involved in export to the EU: why burden the other 90% with unneeded expensive regulation he wonders? The vacuousness of this argument can be easily demonstrated. For arguments sake we have 10 UK manufacturers of baby milk (formula). One of them prints on the tin they comply with the strictest EU quality regulations, the others just have a picture of a cute baby and nothing else. Who do you think sells the most formula milk? In the Netherlands Chinese gangs cleared super market shelves of EU baby milk because in their unregulated market some idiot put melamine into the formula and babies actually died. Hand’s up, who thinks UK baby milk does not have to comply with regulation (standards). Now hand up, would it be cheaper to develop our own UK rules for local consumption only or copy EU standards with the advantage of a much bigger potential market. OK I guess I won that argument again. Want another about UK manufactured safety belts for cars? Still think we don’t need regulation?

Minford just isn’t coherent in his anti EU brexit rant.  I notice in the beginning of his testimony he complains Germany can sell us cars at deflated prices thanks to an undervalued Euro, but next he says prices would drop immediately by 8% after a Brexit.

These trade agreements [that Britain would sign after a #brexit] are totally irrelevant!” Minford repeats several times, making out committe members are a bit thick. What is for sure, kippers don’t understand the implications of what Minford and his ilk are after. After all, they blame the EU for not protecting British steel workers and in their manifesto they say they’ll continue supporting British farmers. In other words, the complete opposite of Minford’s free trade for all medicine. But that doesn’t stop them holding him up as some sort of leading light.

 

 

Posted in #brexit, EU, EURO | Tagged , , , | 1 Comment

Ukip’s inversed neomercantilism

One of the phenomena on the twitter #brexit hash tag that baffles me most is the incessantly repeated mantra that the EU has more to loose from a British exit than Britain itself. Invariably this argument is supported by quoting the huge trade deficit that the UK runs with a few large EU economies, notably Germany, the Netherlands and France. I give you two examples as an illustration.

trade_deficit_desp

I don’t know about you dear reader, but to me the kipper conclusion that running a permanent trade deficit makes your trade partners beholden to you is, shall we say, rather counter intuitive. So I started wondering: “Where does this ukip mass delusion stem from?”

Rather than assuming UK Euro sceptics just copy it from the Daily Express or other tabloids, today I was wondering: “Is there in effect a past or current economic theory prevailing in kipper circles, that is at the basis of this thinking?

If you study the history of economic theory you usually start with 16th century Bullionism and 17th century Mercantilism. This theory, by its very nature, appeals to the ukip nationalistic mindset that money talks. Kippers and Tory backbenchers are always dreaming of their old Empire, one where Albion plundered the entire planet of its wealth and filled its treasury coffers with gold and silver, although very little of the stuff was mined in Britain itself.

Then Adam Smith wrote his treatise ‘The Wealth of Nations’ and what we now call Classical Economic Theory (18th and 19th century) took over. When convenient kippers also like to quote from this economic theory, especially while going on and on about the benefits of the ‘Free Market’ as opposed to interfering Government. They forget that wealth this free market trade undoubtedly brings to some in society at the same time can be detrimental to native  UK industries and agriculture which they say the EU is destroying. Kippers have no problem in having their economic cake and eat it. This goes well with their multiple plans of spending the same EU membership savings of £55 M. a day on NHS, Doctors, Nurses, housing homeless army veterans, you name it.

Modern day economic theory of the 20th century, as shaped by the likes of Keynes and Friedman, also appeals to kippers. They interpret this as a green light to turn on the money printing machine, should the economy get into difficulty after a brexit. Just spend your way out of trouble. They seem less bothered about paying a billion interest on the UK’s 1.5 trillion pound national debt each week (for which they get nothing in return) than paying ten billion a year to belong to the biggest customs union and free market this world has ever seen.

But where does this kipper idea come from that running a permanent trade deficit is good for the UK and makes the EU desperate to sign a  ‘Free trade Agreement’ after a brexit? Are all divorces in Britain amicable? Why is there this blind spot? Can’t kippers see this move away from our natural home market only will make the existing trade imbalance worse? I can’t find a single economic theory backing them up. Could it be that kippers are just so stupid that they get the wrong end of the stick which ever economic theory you throw at them? They say a little knowledge is a dangerous thing.

Yes running a trade deficit with just about every country on the planet does mean your mercantilist trading partners get to stock pile your currency in their foreign currency reserves. This is great if you are of a neomercantile persuasion like China, but it’s the wrong country stupid! It’s Britain’s state coffers emptying and China’s state coffers filling! Few kippers realise that all that pound sterling winging their way to China doesn’t actually remain there like gold bullion, locked up in China’s central bank’s version of Fort Knox. Some of it returns to the UK as Direct Foreign Investment (FDI). That’s why China now part owns a French nuclear reactor in Suffolk and half of London’s prime real-estate.

Eventually most of that cash wings their way to place like Switzerland with an order to anonymously buy as much gold and silver from those stupid Brits as they can, without driving the price too high of course.  Conveniently the UK export statistics office since 2008 now includes ‘sales of precious metals’ to countries like Switzerland. Because the Swiss are not in the EU, this has a pleasing effect for a kipper; they can now claim exports of goods to countries outside the EU are on the rise, while blissfully unaware that a large part of it is just the UK’s family silver being sold behind UK citizens’ backs by the UK Chancellor of the Exchequer. All this of course until Britain’s reserves of gold and silver are totally depleted. What then? So much for the ukip mercantile ideals.

Brexiteers like to exalt benefits of ‘Free Trade’? Yes, if we got all our milk from New zealand mega-dairies with thousands of cows and robots doing the milking; what we poor over our Weetabix could even be 10P. cheaper. But on the flip side: Who would look after our countryside? What jobs will our own herdsmen do? The ones that haven’t been found hanging from the rafters, because they couldn’t afford to feed their cows at those prices?

The same cautionary tales could be told about British Steel workers, car makers? How would we protect against Chinese dumping practices if we left the EU? We just shout Boo!..and they comply? Remember they now have the UK in their pockets, not the other way around!

Finally we have our precious £-Sterling; the one John Major fought so hard to preserve for Britain in Maastricht. Remember Gordon Brown with his  five economic tests? I reckon these joining criteria have been fulfilled many times over, but hey, who’s still counting? Yes we still have the sovereign right to turn on the £-printing press. But how long can we keep on pretending that ‘paying with sterling’ for our foreign imports is the same as trading real UK manufactured goods for cheap Chinese electronics and expensive German cars?

Oh…you think the UK services industry will come to the rescue? Well they’re good and they’re sound, profitable and represent 10% of UK GDP, but if they were to be taxed to support the remaining 90% of the UK’s real world economy; what would happen after a brexit? Would they move to Frankfurt or Paris?

In short, I give up: There is no economic school of thought that can underpin the ukip and Tory Eurosceptic train of thought that somehow running a trade deficit with the entire world is an asset; a brexit negotiating strength. The UK economy is skating on thin ice provided by its booming financial services sector. Foreign Direct Investment (FDI) is making up for the rest of our real world trade failures. #brexit might well create the crack that sees us all tumbling head over heel in the ice cold water of the UK’s worst depression. The outlook for the pound is sombre.

There is of course an alternative; a way out of this mess. That is to stay in EU and for once seriously start exploiting this huge market on our doorstep, rather than giving in to Dan Hannan’s wishful thinking of a new ‘Anglosphere’ or good old Commonwealth galoping to the rescue.

Instead of dreaming what might be, spend your energy on creating a more just UK society and a more balanced UK economy in the EU. A future where the UK’s northern Industrial heartland becomes an economic powerhouse again. An economic future where Great Britain has two legs to stand on again and the power to help Germany support parts of the EU that are limping behind. We’ve done it before and we can do it again: Lead not Leave!

I leave you with a glimpse of how the unflappable pragmatic Dutch look on a possible brexit. It’s a block quote from Ernst Economy for YOU! He doesn’t beat about the bush; a divorce won’t be pretty

Will everything than remain the same ol’, same ol’ for the United Kingdom after their abandonment of the European Union?! In other words: their dreaded Brexit?!

I truly doubt that, to be honest… When you want leave a hotel room, because the costs of it are too high, you cannot stay in that same room for free afterwards. I think that the whole structure of visa, working permits and free trade with the EU might take a turn for the worse for the UK after their Brexit.

European borders might become more closed for British exports of knowledge workers, goods and services, of which especially (financial) services are traditionally the economic cork on which the UK floats and new excise duties and levies might be imposed on British goods and services.

deficit4

 

 

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Where’s the outsider advantage ?

Today I was asked by a fellow UKtoStay Campaign Volunteer Dario Mazzola to have a look at a widely circulated Tory #brexit whitepaper.

The ‘Where’s the insider advantage’ Civitas pamphlet is often quoted by Euro sceptics that want to appear knowledgeable on international trade; they think it contains the ultimate statistical proof and economic arguments that EU membership has given no particular insider advantages for the UK economy. In this post I will gladly spend some time debunking the pamplet.

But before getting deep into the nitty gritty of trade league tables and historical graphs supporting weak economic arguments, it bears reminding the reader of that old Mark Twain warning : Lies, damned lies and statistics.

I admit sometimes I am guilty of this: I see a gullible #ukip twitterer and global trade wannabee produce a graph purporting to show how well UK exports outside Europe are doing and I have no problem producing a later graph from the same Office of National Statistics showing, that since that obviously ‘rare’ occurrence, those same exports have recently taken a massive tumble again. In other words, if you pick your time line carefully, with trade statistics you can underline any weak brexit or UKtoStay point.

This cautious approach to the use of graphs was well beaten into us at the Rotterdam School of Management (RSM): The dutch say it is easy to find a stick to beat a dog. Finding statistics to prove or disprove an economic point is even easier.

So spotting an upward or downward trend in trade statistics is easy. The correct economic analysis of the drivers behind those trends is the difficult bit. Let’s look at exhibit number one from the Civitas report. Note Burrage has used a good long term perspective, which he divides in three periods we will discuss.

civitas1

If you are blessed with the selective perception of a Eurosceptic, one might come to the same ‘quick and dirty’ conclusion of the Civitas report:

“The proportion of goods going to the future EU member countries grew rather sharply, by 12 per cent, over the twelve years before the UK entered the Common Market, from 49.6 per cent in 1960 to 61.6 per cent in 1972. However, over the 40 years of EU membership, the proportion of UK exports going to the UK’s future EU partners has changed hardly at all. To be precise, it has fallen by two per cent, from 63.9 per cent in 1973, the year of entry, to 61.9 per cent in 2012, with 0.5 per cent of the fall occurring during the years of the Single Market, despite the insider advantages the UK was supposedly enjoying.”

If you are equipped with a more critical approach to statistics it is not hard to spin a totally different narrative around the same graph. First of all I would like to point out that the first part of the graph is almost a complete inverse of a similar graph of the UK’s export percentage to their blessed Commonwealth. I reproduced this rapidly declining graph in a previous blog post entitled ‘ukip economics and brexit’. Over the same pre-European Community period, UK to commonwealth exports dropped from about 30% to 18%. Funnily, graphs that express a percentage on their Y-axis invariably do add up to 100%. Such graphs do not explain the forces at work that cause these percentage shifts: Rise of European economies or decline of the British Empire? Cause or effect?

If we look at the second part of the graph where UK enters the EEC, Mr. Burrage postulates we should see a sudden surge in EU trade going forwards from 1973 due to the newly acquired EU inside advantage. Mischievously he wonders why he doesn’t see it. He will spend most of the 83 pages of his report barking up this same fruitless tree. Maybe it’s for the same reason we don’t see a marked drop in UK trade with the Commonwealth upon joining the EEC? I would argue it’s the wrong hypothesis to put forward: Politicians do not enable trade to start flowing simply by signing a trade deal with a lot of pomp and ceremony. If there were deals to be signed in 1973, Heath did this to protect trade with Europe that already existed. Certainly more so than wishful thinking EU trade would take off overnight! When Queen Victoria opened the Grand Union Canal between London and Liverpool, it was safe to assume trade would start flowing on it the very next day. If today a UK Prime Minister signs a piece of paper purporting to be some new Free Trade Agreement (FTA) with another country, you can bet your sweet bottom dollar he is already way behind the times. Nothing much will happen the next day. He’s just mopping up glory after the prior hard graft of private sector entrepreneurs who negotiated the deals in the first place. The ones who saw a new market opportunity abroad and jumped on it.

Politicians may proclaim it gives their country new ‘Insider advantages’ to sign a trade deal abroad, but more likely they are just making sure other politicians after the next election don’t cock things up for UK Plc. Afterall the government now depends heavily on the additional foreign reserves generated by this new foreign trade and resulting growth in Gross Domestic Product (GDP). Britain’s structural current account deficit remains a constant worry since WWII. The last thing politicians want is local industry lobbyists demanding higher tariffs on foreign imports. Cheap imports that threaten native manufacturing (or rather what’s left of it). Above all politicians fear new barriers to trade might jeopardize promised Foreign Direct Investments (FDI) that keep their precarious trade books balanced.

Let’s finally face our attention to the third phase highlighted in the above graph. This is the period where we see the rise of the BRIC economies of Brazil, Russia, India and China. This is not a period where the EU enters some sort of lethargic terminal decline after swallowing a bitter Euro suicide pill. Sure the EU was hit by global financial crises, but so was every other major western economy. So it’s this same law of GDP percentages at work again. One nation’s GDP percentage goes up, another’s goes down. This is not how lying Eurosceptic politicians like Dan Hannan MEP like to portray it. Even Civitas admits the EU will remain a high-value market to the UK for a long time. Even be it a slow-growing market (p39). It also admits, reading between the lines, that just looking at countries growth percentages can be “misleading” in terms of economic policy making. It is easy for small GDP economies to achieve double digit growth figures. For mature economies this is rather more difficult. We cannot infinitely increase the number of cars each EU family owns. Where would we park them? Same with white goods and TV sets. Which rooms do we put them in? We are being encouraged to consume less food to curb obesity and buy more durable consumer appliances to save the planet. Try telling that to a poor African who has nothing? Still 0.5% growth in an $18 trillion EU economy is an awfully big number to get a slice off. Nothing to be sneared at like Farage and Hannan tend to do! The relative maturity of the EU ‘goods’ market also explains why UK exports of ‘services’ to the EU have been growing at a relatively faster rate.They’re harder to saturate as they are instantly consumed. As ‘services’ is now the UK’s primary strength, we should be focussing our next phase of EU participation on the development of a ‘common market in Services’, not turn our back on it and on 500 M. cash rich EU consumers. The remaining surplus of our industrial and agricultural ‘goods’ production we can allways flog off to the emerging BRIC economies in a ‘ship and forget’ kind of way. They will love our E-numbers and EU quality marks as a sign they can trust over their local unregulated produce. Forget the bonfire of EU regulations after a UK brexit. Local markets need regulation too. Remember the Chinese rush on EU baby milk? There is nothing in EU treaties stopping us exporting this stuff, whatever kippers may tell you. Germany does it, Holland does it, Britain can do it too. There is no choice to be made here. We can benefit from the EU’s reputation of highly regulated quality, its bargaining power and multiple existing trade agreements with the rest of the world. Here we really can have our cake and eat it.

In Chapter 9 Burrage is rather dismissive of the EU’s formidable negotiating clout. Like usual no examples are given of trade deals signed by the EU that are sub-optimal or detrimental to the UK’s interests. In true kipper style the old bug bear of Switzerland and Icelandic trade deals are paraded and the childish ‘if they can, why can’t we?’ argument. If Burrage had studied economics rather than sociology he might have come across the Milton Friedman quote “There is no such thing as a ‘free’ lunch”. Well if we study these often quoted Swiss and Icelandic trade deals up close we soon come to realise that in trade dealings size really does matter.

In conclusion I would like to offer a more sober and balanced analysis of our EU inside advantage, than that of the notorious Eurosceptic right wing think tank Civitas. Mr. Burrage is to be commended for having a decent go at some form of quantitative econometric analysis of the UK’s insider benefits as a member of the EU. He does not fall in the trap of selectively quoting time x-axis lines and fiddling with Y-axis to distort trends like Eurosceptic Business for Britain or Hannan. He does however fall into the ukip trap of barking up the wrong tree.

What was signed in 1973 at the time of the UK’s accession to the EEC was IMHO reflective of what was already happening in the UK’s ‘real world’ changing trade patterns long before before the first referendum. We should forget about Heath and Wilson’s wishful musings of what might or might not happen to trade after Britain joined the EEC. The Civitas report showed increased EU trade had allready happened and was merely confirmed in treaties.

The same is happening all over again today with Cameron’s planned EU referendum. Presumed insider or outsider benefits are a side show at best. It is clear that Eurozone leaders are surging ahead in their next phase of integration regardless. Britain again feels left out on the side lines isolated and threatened. Again Britain is playing catch up, rather than leading. Again the UK thinks it has to protect something illusory. In 1973 it was the Commonwealth remnants of its old Empire, today it would seem Cameron is mainly concerned about Britain’s opt-out from the single currency. He is doing ukip’s bidding egged on by his Eurosceptic back benchers.

In the UK’s political climate of today it takes a brave man to admit that the UK’s real mistake was made way back in 1991 in Maastricht with Britain’s opt-out of the single currency. Cameron tries to put a brave face on it by trying to secure some form of ‘protection’ for his chums in the City. He knows the Tories have already dealt a lethal blow to UK’s manufacturing heartlands with an over valued Pound. He has lost the manufacturing plot to Germany who put the common currency to good use. He hopes to secure some obscure deal that might allow Britain’s current status as a global financial hub to survive a wee bit longer, some sort of Singapore or Hong Kong like free trade area just off the coast of Europe.

I am still optimistic that the majority of UK voters will remind him that there’s more to the UK than the City of London and that there’s a lot worse to imagine than ever closer union with our EU fellow citizens and a different coin in our pockets.

China FTA

PS for those who think with my conclusion about the Euro I have taken a complete leap into the dark, I advise the following additional reading about EU ‘Inside advantage’

UK would have fared better inside the eurozone by Martin Sandbu

or an interview with the same brave Financial Times journalist

 

 

 

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