Have Remain’s arguments have been proven false?

I just read this post which was also published here under a different title and could not resist responding.  I wish it were true – I really would like to be proven wrong – but this post is extreme wishful thinking. It is highly selective in its use of data and  seems to think we should be seeing the results of leaving the Eu when we don’t leave until March 2019.

Here are my item by item responses (his text is in italics):

“Peace in Europe is due to the EU”

Whether or not Peace in Europe was due to the EU we can now see it had nothing to do with whether the UK should Remain in or Leave the EU.  The EU has not broken up after the British decision to leave and the remaining 27 countries are still keeping the peace in Europe.  We now know Brexit has almost nothing to do with keeping the peace in Europe (see note 1).

While I am delighted that the rest of EU is not going to break up, it is far too early to assess the effect of Brexit on peace in Europe.  If there is trouble then it is unlikely in the foreseeable future to take the form of war between European nations. But that is not the only form of conflict. For example, it may well lead to a rise in Irish terrorism and  destructive (if not violent) tension between the UK and Spain over Gibraltar.  These are two examples of potential sources of trouble which looked ridiculous while the UK was a member of the EU but are now potent.

“Only racists support Brexit and I am Anti-Racist”

Few if any of the issues around Brexit, even the issue of migration, were racist (migration is about fellow Europeans occupying UK jobs, population density, housing etc. etc.).  The UK did not suddenly elect a UKIP or BNP government after the referendum and indeed, support for what is called the “right” in UK politics collapsed. Although there was a spike in racist reports after the referendum these returned to pre-referendum levels within 2 months.


Many Remain voters are still inflated with the idea that they are holy because they support Peace and Anti-Racism and they have not spotted that the EU and UK are still at peace and still have the same laws and attitudes about race after the referendum. This is because being holy had nothing to do with the referendum.

(The Racist and Peace in Europe arguments were spread during the referendum by PR companies in an attempt to divide the campaign into “holy” Remain versus “evil” Leave.  The arguments are now known to be irrelevant to Brexit).

I agree that most Brexit voters were not racist and this is not a good objection and few remainers I know have used it. It is true that almost all racists voted to Leave and that many of them interpreted the vote as support for their views.

“The pound has fallen because of Brexit!”

The pound has indeed fallen, but not because of Brexit.  The UK has an ongoing Balance of Payments Crisis (see Single Market: good or bad for UK? ).  No-one in the broadcast media was moaning about the larger fall in the pound that happened in the 18 months before the referendum as a result of the Balance of Payments Crisis.  Don’t believe this? See Raw data here

The pound fell more in 2014-15 than it did in 2016-17 but the media said nothing. The continuing fall in the pound since 2014 is due to the persistent Current Account Deficit of the Balance of Payments:

“A persistent current account deficit could lead to a sudden adjustment in capital flows or depreciation of the exchange rate, with adverse consequences for UK financial stability.” Bank of England
It is of course almost impossible to prove for certain why the devaluation happened but the speedy drop in the months immediately before the referendum (when Leave  started to gain ground in the polls) and the dramatic plunge after the result was known suggest strongly that it was related to the result. By only referring to changes over one year you hide the dramatic speed of the changes (in the course of a day or two in one case) in 2016.

“Inflation is terrible because of Brexit”

Inflation rates in the UK are not far from the target value of 2% per annum. Prior to the referendum economics journalists were bemoaning the low inflation rates and spreading fears of deflation.  The recent rise in inflation is a global phenomenon.  Don’t believe this? See raw data here

Countries are printing money to increase government ‘funding’ of the economy and to stop a dangerous deflation that happened in 2015-16.

 You are being rather selective with your choice of data. Most OECD countries showed an increase in inflation in late 2016 early 2017 but only from close to zero about 1.5%.  In recent months this has pretty much flattened out while we are at 2.9% and rising. I don’t think any serious economist would disagree that the drop in the pound is a major cause of this rise. Of course the rate is a lot lower than e.g. in the 1970s but the important thing is that is significantly higher than the increase in average wages.

“Economists say Brexit will wreck the economy”

They don’t say this any more!  Remoaners are out of date.  Don’t believe this? See raw data here
(See Review of Remain Predictions)

If you were a Remain voter you should be getting worried that so many of the “truths” you are being sold by the BBC, Channel 4, ITV, Guardian and other Remain supporters are lies.  Especially when they all run “fact-check” and other propaganda services. Don’t believe this article? Check the links to the original data for yourself.

You have reproduced the IMF chart completely out of context.  There were two other lines on the chart which you omitted.

Furthermore the charts are introduced with:

“The scenarios are intended to be illustrative and are not predictions; nor are they meant to indicate upper and lower bounds to what could happen”

Like most of the analyses and predictions before the referendum it did not allow for 9 month delay from the referendum result until article 50 was signed. So the dates should be moved 9 months to the right.

More to the point, as the man from the FT said on more-or-less, predicting the effect of Brexit on the economy is like predicting the effect of drinking a bottle of Coca-Cola a day on your weight. You can’t predict what your weight will be in 10m years’ time but you can predict it will be worse than it would have been had you not drunk the Coca-Cola.

“No-one voted to leave the Single Market”

The Single Market was called the Common Market until 1993, when the EU renamed it. Don’t believe this? See data source.  Most Leavers were voting to leave the Common Market.  What you should ask is why are the broadcast media failing to tell you that the “Single Market” is the “Common Market”?

Who said most voters were voting to leave the Common Market? The referendum said European Union.  Throughout the campaign prominent leavers repeatedly extolled the virtues of the “Norway option”.

“Without the Single Market (Common Market) trade will collapse”

The UK is undergoing a severe balance of trade crisis with the EU but trade with the rest of the world is buoyant:

Don’t believe this? See Balance of Trade in Goods and Services EU 28Balance of Trade in Goods and Services NON-EU 28  and Single Market: good or bad for UK? 

This trade deficit with the EU is partly causing a balance of payments crisis which is affecting the pound and damaging the whole economy:

“… a reduction in the current account deficit from its current record [peacetime] levels will be important for any government wishing to claim that the UK is making a balanced and sustainable economic recovery.” See Parliamentary Report to confirm this.

Read the report (my bold)

“In the past, worsening trade balances have been the major cause of deteriorating current account positions in the UK. But this has not been the case in recent years: at £34bn, the trade deficit in 2014 was £3bn lower than in 2010.

“The main factor behind the worsening current account position has been a growing primary income deficit, which moved from a £19bn surplus in 2011 to a £39bn deficit in 2014.”

“The deterioration in the primary account was driven by UK residents receiving lower income on their overseas foreign direct investments (FDI). This in turn was a result of both lower returns on those investments (thanks in part to economic weakness in the Eurozone), and a reduction in the total stock of UK overseas FDI”

“The OBR forecasts that the primary income balance will gradually return to more normal levels, leading to a fall in the current account deficit overall. Whether and how fast this happens depends in large part on developments in the global economy, and particularly the Eurozone: an upturn could boost the return on the UK’s overseas investments and increase demand for exports”

Note the Eurozone is now recovering.

“Nationalists are all racists”

This is just a slogan.  Those who lead the Internationalists have promulgated a belief amongst their followers that Nation States are nothing more than reservoirs of racism that elevate their own ethnicity above all others.  The truth is very different, Nations are organised groups of people who operate an economy and social system based on a particular area of land.  They have cultures and economies that are usually dynamically adapting to local conditions and to the relationship between the locality and the world at large.   Nations are the diverse socio-economic organisations that are essential for the flowering of humanity.  Without Nations most differences will disappear. Independent Nations are a “good thing”: they saved the world from the ideology of fascism in the 20th century.  Few people seem to realise that WWII was a battle between the Allies and the Axis,  the Axis being much of Europe, including Vichy France, which supported National Socialism. (See Axis Powers). WWII was just not a battle against Germany but a fight against a whole political system.

The true racism is the desire to destroy the diversity of nation states because of fear.

I agree that nationalists are not necessarily racists. They are nationalists who put a high value on loyalty to their nation. This is particularly confusing in the UK. E.g. Are you English or British? Of course nations saved the world from fascism. They were the prime source of power at the time.  Fascism also took advantage of nationalism. Since then things have changed a lot – globalisation has happened. The role of the nation in the modern age is a long and fascinating discussion that cannot be handled in a few blog paragraphs.  My belief is that strong supranational organisations are essential to address the global nature of the modern world – climate change is a prime example. But anyhow it is certainly not been proven true or false by events since March 2016!

The remaining sections are just bog standard internet abuse.

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Fred Dyson and the EU

Fred Dyson came out as a Leaver with this interview in the Telegraph. I have great respect for him as an inventor and business man but there are some very strange things in the interview – charitably they were a result of the interviewer not understanding what he was saying. Below are quotes from the interview with my comments in blue italics below. You can always check the original interview to see if my comments are fair.

“When the Remain campaign tells us no one will trade with us if we leave the EU, sorry, it’s absolute cobblers. Our trade imbalance with Europe is running at nine billion a month and rising. If this trend continues, that is £100bn a year.”

He is exaggerating slightly (actual goods deficit in April 2016 was EU: £7.9 billion). While we had a deficit in goods we had a surplus in services. This is much smaller than the goods deficit (about a fifth) but has grown much faster over the last 10 years (the goods deficit doubled in the period 2005 to 2015, the services surplus with the EU grew thirteen times).

However, that just means we like their stuff more than they like ours.  We have had a persistent current account deficit since the  mid-1980s and we still have one of the most successful economies in the OECD.

He jabs at a graph. “If, as David Cameron suggested, they imposed a tariff of 10 per cent on us, we will do the same in return. We buy more from Europe than they buy from us, so we would be the net beneficiary and based on these numbers it would bring £10bn into the UK annually. Added to our net EU contribution, it would make us around £18.5bn better off each year if we left the EU,” he concludes with quiet triumph.

This is daft. If we impose a tariff that is like imposing a sales tax. It is possible that the exporter in the country of origin would reduce its price to compensate and then our government would gain (not the consumer). Much more likely is that the exporter in the country of origin would maintain its price and it would be the UK consumer that pays the tariff in the form of a higher price.

But the main advantage of the single market is not the lack of tariffs – it is removal of the non-tariff barriers –consistent standards on environment, workers rights, safety etc so you don’t have to meet 28 different sets of standards. We could continue to conform to them of course but that would be allowing ourselves to be controlled by the EU without having any say. Any UK exporter to the UK would be lumbered with proving that it conformed to those standards.

…….

“Anyway,” he hurries on, strangely not taking the hint, “the EU would be committing commercial suicide to impose a tariff because we import £100bn [of goods] and we only send £10bn there – I didn’t want to get too graphy, but here are a few graphs.” He’s not kidding. The man is nothing if not meticulous.

Not that meticulous! It is not clear what time scale this chart is referring to but clearly we don’t import 10 times as many goods as we export to the EU. Anyhow this is a complete fallacy. To take an extreme example, I have a substantial trade deficit with Waitrose – I buy many times more from Waitrose than it buys from me. It would hardly be commercial suicide for Waitrose if we stopped trading. What matters is the size of the trade between us compared to the overall size of our businesses. About 16% of exports of the rest of the EU go to us. About 44% of our exports go to the EU. In addition we are more dependent on international trade than the EU is.

Dyson exports far more to the rest of the world (81 per cent) than Europe (19 per cent). “We’re very pleased with the European market – we’re number one in Germany and France – but it’s small and the real growing and exciting markets are outside Europe.”

Good for him – he seems to doing just fine while we remain in the EU exporting to both EU and non-EU. There is an important difference between his German and French markets and say China. As long as he continues to produce a good product at a good price he will continue to sell in the EU.  At any moment China can decide it wants a home-grown vacuum cleaner market and decide to introduce tariffs or more likely create rules he cannot comply with – it might even decide to dump subsidised low-cost vacuum cleaners on the UK market. If so, his only course of appeal is to the WTO – an lengthy and uncertain business (look what China is doing to the steel industry).

He says the much-trumpeted single market isn’t really a single market at all. “They have different languages which, for an exporter, means that everything from the box to the instruction manual has to be in a different language. The plugs are different. The laws are different. It’s not a single market. The only communality is that there’s no tariff, but the pound going up against the euro is far more damaging than any tariff. If the pound rises, £100 milion is quickly wiped off.”

He is right that the tariff is not the big issue but while there are still differences in each country there are a massive number of non-tariff barriers that have been removed – maybe they aren’t a big factor in the vacuum cleaner business.

The problem with the EU’s free movement of people is that it doesn’t bring Dyson the brilliant boffins he needs. “We’re not allowed to employ them, unless they’re from the EU. At the moment, if we want to hire a foreign engineer, it takes four and a half months to go through the Home Office procedure. It’s crazy.”

This is truly bizarre. If we leave the EU then he will have to go through whatever procedure the home office has in place for all foreign engineers. He has just given a compelling example of why freedom of movement is good for business.

He produces another staggering fact. “Sixty per cent of engineering undergraduates at British universities are from outside the EU, and 90 per cent of people doing research in science and engineering at British universities are from outside the EU. And we chuck them out!” He gives a trodden-puppy yelp.

Staggering because it is false! 67% of engineering and technology graduates are UK . I think what he meant to say was that 60% of non-UK engineering graduates are from outside the EU.

So hiring a low-paid barista from Bratislava is no problem, but a prized physicist from Taiwan is a logistical nightmare. The Government claims that, if a non-EU citizen gets a job within two months of finishing their research, then they can stay here for two years. “The point is that it’s completely mad not to welcome them,” he says, “why on earth would you chuck out researchers with that valuable technology which they then take back to China or Singapore and use it against us?

The EU does not place any constraints on our rules for hiring staff from outside the EU. It is entirely a UK government decision that it is a nightmare to hire a physicist from Taiwan. It is a EU decision that is really easy to hire either a physicist or a barista from Bratislava.

Softly spoken, Dyson’s Home Service Received Pronunciation tones become incensed when he talks about what he sees as our disloyalty to Commonwealth countries. “They fought for us in two world wars. So that particularly upsets me. We’re missing out on all those people who have helped us and with whom we have a great affinity, often a common language.

"Culturally, it’s all wrong. We’re not only excluding them from our country, we’re charging them import duty because we’re forced to by the EU. And the food’s cheaper, too.”

The prime ministers of India, Canada, Australia, and New Zealand have all said we should remain. I am not aware of any Commonwealth leader who has said we should leave.

His views on Brussels have been shaped by bitter experience. Dyson sits on several European committees. “And we’ve never once during 25 years ever got any clause or measure that we wanted into a European directive. Never once have we been able to block the slightest thing.”

He doesn’t say what committees he has been on or what he has been arguing for. See this video for an explanation of how very influential the UK is in the EU as one of the “big three”.

From then on it becomes a rant about how he has not been able to get what he wants from the EU. I think this may be behind the whole confusing interview. He has a hard time getting his way in some EU committees and this has coloured his view of the EU. Quite possible a justified complaint – who knows – but hardly sufficient reason for leaving.

Notable people who believe the UK should stay in the EU

This list is based on Sir-Rom Nivlac’s much shared Facebook post. I added a few more. Has there ever been a decision which has such unanimous support amongst people who have some kind of qualification to talk about it?

  • Governor of the Bank of England
  • International Monetary Fund
  • Institute for Fiscal Studies
  • Confederation of British Industry
  • Leaders/heads of state of every single other member of the EU
  • President of the United States of America
  • Eight former US Treasury Secretaries
  • President of China
  • Prime Minister of India
  • Prime Minister of Canada
  • Prime Minister of Australia
  • Prime Minister of Japan
  • Prime Minister of New Zealand
  • The chief executives of most of the top 100 companies in the UK including Marks and Spencer, BT, Asda, Vodafone, Virgin, IBM, BMW etc.
  • Kofi Annan, the former Secretary General of the United Nations
  • All living former Prime Ministers of the UK (from both parties
  • Virtually all reputable and recognised economists
  • The Prime Minister of the UK
  • The leader of the Labour Party
  • The Leader of the Liberal Democrats
  • The Leader of the Green Party
  • The Leader of the Scottish National Party
  • The leader of Plaid Cymru
  • Leader of DUP
  • Leader of Sinn Fein
  • Martin Lewis, that money saving dude off the telly
  • The Secretary General of the TU
  • Unison
  • National Union of Students
  • National Union of Farmers
  • Stephen Hawking
  • Tim Berners-Lee
  • Chief Executive of the NHS
  • 300 of the most prominent international historians
  • Director of Europol
  • David Anderson QC, Independent Reviewer of Terrorism Legislation
  • Former Directors of GCHQ
  • Secretary General of Nato
  • Church of England
  • Church in Scotland
  • Church in Wales
  • Friends of the Earth
  • Greenpeace
  • Director General of the World Trade Organisation
  • WWF
  • World Bank
  • OECD
  • Sir David Attenborough
  • The London School of Economics
  • The Economist
  • The Financial Times
  • All 103 vice-chancellors of British Universities
  • David Beckham (well they have Ian Botham)
  • Jeremy Clarkson – just about the only thing that we have in common I suspect

Brexit the short and long term

I fear a sort of group insanity has taken hold of the nation. Boris has charmed and lied effectively and is leading the population into making a disastrous decision so he can fulfil his childhood dream of being Prime Minister. It is probably too late but there are a few days to go. So, in the hope that a few undecided voters get to read it, here is what I think will happen if/when we vote out.

In the short term it will be chaos. This is not scare-mongering, it is virtually certain.

1) There will be a financial crisis. Almost every expert you can think of has warned us of the economic consequences. This is nothing to do with elitism and organisations in the “pay” of the EU. This is 200 leading academic economists, the Financial Times, the London School of Economics, countless Western Leaders, the bulk of the unions, British Scientists, popular financial advisors such as Martin Lewis – the list is endless. But you don’t even have to listen to the people who know about it. Just look at the markets. The pound dropped to its lowest level since 2008 (remember that) just because Boris decided to support Leave. Every time the probability of Leave increases the pound drops further. 

2) David Cameron will resign. Whatever he may say there is no way he can hang on.

3) So we will get an unelected PM – maybe Boris but he has lied so blatantly and been so disloyal to the Tory party (look at what people like John Major, Michael Heseltine and Chris Patten have written about him) this is by no means certain.

4) The new PM will need to address the financial crisis and quickly. There won’t be time to negotiate trading deals. He or she will also have deeply divided party, a narrow majority, and a parliament where most MPs support REMAIN. The one thing the markets will need is certainty – without that investment will grind to a halt, the pound will continue to plummet and the recession will begin.

5) There is only one solution – apply to join the EEA (assuming they will have us). There is a well-defined trading relationship with the EU and one that is likely to get the support of parliament. Economically it is the least worst option – although it will mean we have to accept the bulk of EU rules, freedom of movement and contribute to the EU budget (having just sacrificed our rebate!).

6) Hope this does not cause the EU to collapse. The EEA is really a sort of EU-lite. A bit more flexibility at the cost of less power in EU decision making. But it is dependent on their being a EU to trade with. If the EU collapses then so does the EEA and we truly have a global financial disaster on our hands. Many commentators think that the UK leaving will sound the death knell of the EU – in fact some of the Vote Leave positively want this to happen.

What about the Long Term?

After four or five years presumably the short term chaos will sort itself out (assuming the EU manages to survive). But what do we want the UK and Europe to look like in 20 years? The world is globally interconnected – climate change, mass immigration, the rise of China and many, many others are problems that cannot be addressed at the national level. Europe is a set of countries with common history, values and approaches to government and it has to respond in a coordinated way to these challenges. If the EU did not exist we would have to invent it. I would be the first to admit it has not functioned well recently and needs to change. But the solution is not to ditch it altogether and operate as individual competing countries. The solution is to use our influence to improve it.

The good news is that it has shown it is capable of change and that we can influence it. It has moved to be more democratic – giving more power to the European Parliament. We did a lot to reform the CAP policy (where the butter mountains now?) and the disastrous fishing policy has changed in part as the result of an initiative by a British celebrity chef! However, we cannot be part of that solution if we are not in the EU in the first place.

What Happens if the Vote is Out?

An Out vote is looking increasingly likely so it is time to think about what happens. A few things to consider:

* The referendum only gives a mandate to leave (or remain). It says nothing about what should replace the EU should we leave.

* We can hardly settle this by having a series of further referenda.

* So it will be up to the government of the day to decide and get the necessary legislation through parliament.

* There is 40 years of legislation made under EU or Common Market membership to unravel and replace with whatever alternative the government comes up with.

* Much of this will depend on negotiating agreements with many other parties including the EU which itself takes years.

* There is a large majority in the house in favour of remaining who will not be inclined to cooperate.

* The PM (whoever that turns out to be) will have a slim party majority which is extremely divided.

* The fixed term parliament act means this cannot be solved by calling a general election unless parliament supports it.

* Other parties will demand a price for cooperating. In particular the SNP will have an extremely strong case for another Scottish referendum (we too want our sovereignty and we didn’t like being forced out of the EU by the British parliament)

* Even Brexit supporters admit there will a short term financial crisis (you only have to look at the relationship between the pound and the probability of Brexit)

* Financial crises are made worse by uncertainty.

On the whole I hope that if we leave Boris gets his wish of becoming PM. Then he can sort out the mess he helped create.

The EU and Unemployment

Today Gisela Stuart of Vote Leave said the EU had been "a disaster" for workers, saying unemployment levels across the eurozone were "in the double digits". Vote Leave’s approach to facts and data has been creative to say the least so I thought I would look at the actual figures. First – it is worth noting/remembering that unemployment rates are notoriously hard to interpret. They are meant to reflect the proportion of people who are able and willing to work who cannot find a job. But how do you define/know who is willing and able to work, in this age of freelance and self-employment how do you decide if someone is working, and how long do you have to be looking for a job to count as unable to find a job?

Setting this aside let’s assume reported unemployment rates for different countries are comparable.   Here are the figures for individual countries in the EU from Eurostat, for the Eurozone (EA19), and for the EU as a whole (EU28).

https://i1.wp.com/ec.europa.eu/eurostat/statistics-explained/images/6/65/Unemployment_rates%2C_seasonally_adjusted%2C_April_2016.png

Note that the while the overall unemployment for the Eurozone does creep into double digits (10.2%) the figure for the EU as a whole is well below (8.7%). While the UK does well at 4.9% there are a few other countries that do better (Czech Republic, Germany, Malta and Ireland). With the exception of Croatia, the countries, like the UK, that are in the EU not in the Eurozone have are doing pretty well (Czech Republic 4.1%, Hungary 5.6%, Denmark 6.0%,  Poland 6.3%, Romania 6.4%, Sweden, 6.9%, Bulgaria 7.1%).

Unemployment levels are not in double digits across the Eurozone and it is unreasonable to describe the problems of some countries in the Eurozone as a disaster for the EU.

The Leave Campaign’s Immigration Proposal

To day the Leave Campaign announced its proposal on how immigration could be managed if we leave the EU.

There are several problems with the proposal which have been picked up in various places.

* It entails rejecting freedom of movement with the EU. This would make it very hard to have a reasonable trade agreement with the EU countries (the EEA counties and Switzerland have all had to accept freedom of movement in order to trade with the EU) and would therefore have a severe economic impact.

* It is a points based system and these systems have a very mixed track record. Points based systems allow people into the county based on their qualifications and experience – the idea being to have the immigrants we want and exclude the ones we don’t. It is hard enough to do manpower planning for a company – doing for a nation is almost impossible. The result is frequent and gross mismatch of the jobs available and the qualifications of the workforce. We already have a points based system for non-EU immigrants and meant the NHS was unable to recruit badly needed nurses from abroad because they didn’t have the points. In Canada and elsewhere it has famously lead to taxi-drivers with PhDs. Immigrants from the EU who respond to specific job opportunities have an excellent record of being employed.

But the thing that really strikes me is that this is a proposal.  Normally we get proposals from political parties who, if they win the election, are expected to implement them.  Vote Leave is not a political party but they are acting very much like a party looking for power and this referendum is rapidly taking on the appearance of a general election. There is little doubt that Johnson and Grove are expecting to be senior figures in the government if Vote Leave wins – indeed one of them will almost certainly become PM. Given the split nature of the Conservative party and the majority in parliament for REMAIN they will need all the support they can get from UKIP and its ilk.  Where does this leave Labour members of Vote Leave such as Kate Hoey and Gisela Stuart? They are effectively campaigning for UKIP.