European Union

The Economic Challenges Beyond Brexit

Samuel Hooper1 Comment

Bitter, swivel-eyed (and unrepentant) europhile he may be, but the FT’s Martin Wolf makes some valid points in his latest column, warning against any complacency that Britain’s persistent economic weak points will be automatically restored to health upon leaving the European Union.

Wolf writes:

British economic policymakers confront big challenges. They have to manage departure from the EU with the minimum damage. They also need to make the UK economy far more dynamic. The latter cannot be achieved if they do not abandon the myth that Britain is already an economic success, albeit one choked by the dead hand of an over-regulated European economy.

Simon Tilford of the Centre for European Reform provides a far more realistic picture in his Brexit Britain. Measured at purchasing power parity, the rise in the UK’s gross domestic product per head between 2000 and 2015 was smaller than in Germany, Spain and France. Over this period, the UK outperformed only Italy, among the EU’s largest pre-2000 members. In 2015, the UK’s GDP per head was lower relative to the average of the 15 pre-2000 EU members than in 2000: its GDP per head was a mere ninth within this group.

The UK also has the highest income inequality among these countries. Furthermore, notes Mr Tilford, UK real wages fell by 10 per cent between 2008 and 2014, before a tiny uptick in 2015, while German and French real wages rose. In 2015, only London and the South-East had higher GDP per head than the average of the EU-15 countries. Other UK regions were at or below that average. In all, it is hardly surprising so many UK voters feel left behind, as shown in the EU referendum.

True, the increase in French real wages has coincided with high unemployment. But that is not true in Germany. UK workers also work longer hours than those in other EU-15 countries. This is presumably to make up for low real wages, themselves largely due to the UK’s poor productivity. According to the Conference Board’s invaluable “total economy database”, the only EU-15 countries to have lower output per hour than the UK are Greece, Italy and Portugal, while the UK’s productivity per hour has stagnated since 2007. Again, of the biggest five EU-15 members only Italy performed worse on this measure. The UK also now runs the largest current account deficit, relative to GDP, in the EU-15.

The UK, then, has low unemployment. But it also has high inequality, mediocre real incomes, at least by the standards of its European peers, and poor external competitiveness. Above all, recent productivity growth has been truly awful.

These are hard, inescapable criticisms – particularly in terms of productivity growth and purchasing power parity, which is ultimately the only yardstick that matters in terms of whether people actually feel better off.

And concludes:

The implications of a realistic view of the UK economy is that, even without the looming shock of Brexit, the economy suffers from big weaknesses relative to the European economies that many Brexiters despise. Some argue that a real depreciation of sterling is mainly what is needed. If sustained, the post-referendum devaluation should indeed help, though it means a fall in real incomes and wealth. Yet devaluation alone will not cure UK weaknesses.

The UK has to rectify longstanding supply-side failings. The list includes: low investment, particularly in infrastructure; inadequate basic education of much of the population and the innumeracy of much of its elite; a grossly distorted housing market; over-centralisation of government; and a corporate sector whose leaders are motivated more by the share price than by the long-term health of the business. Not surprisingly, given all this, the UK economy is highly dependent on inward foreign direct investment, which Brexit would seem virtually certain to weaken.

If the UK is to thrive economically, it will not be enough for it to manage Brexit, hard though that will surely be. Its policymakers must also start from a realistic assessment of the UK’s mediocre performance. This is no world-beating economy. It is not even a Europe-beating economy, except on creating what are too often low-wage jobs. It will have to do far better if it is to deliver the higher living standards its people want in the tougher environment ahead.

The danger with Brexit was always that the sheer complexity of managing our secession from the European Union would prove too much for a mostly unremarkable generation of politicians and civil servants, nearly all of whom have never known life outside the EU and can scarcely imagine self-government. Even now, three months after the historic Brexit vote, there is little evidence that the government has started to get to grips with the challenge ahead of them.

Therefore, it is not unreasonable to ask – as Martin Wolf does – how much mental capacity will be left to tackle other burning issues like Britain’s low productivity, the low-skill / low-wage segment of the economy or decades-old weaknesses in British management, identified by Thatcher’s Conservatives in the late 1970s but still barely tackled even now.

And I’m not sure there is a quick fix to this problem. Brexit will inevitably dominate the political agenda, probably for the next decade, to the near exclusion of all else. And even if there was excess capacity, there is precious little evidence to suggest that Theresa May’s new government has a blazingly clear vision for reforming Britain anyway – as Isabel Hardman outlines in this excellent Spectator piece.

In short: many of these problems, though long-festering, are probably going to have to wait to be tackled, unless the government surprises us all with its radical zeal and far-reaching reform plans at the upcoming Conservative Party Conference, which seems unlikely at best.

If you wake up to discover your house is ablaze and smoke pouring into the bedroom, you don’t waste precious minutes ensuring that you are beautifully dressed and immaculately turned-out before evacuating the building. Likewise, in whatever shape Brexit ends up happening, Britain will likely emerge from the EU in much the same shape as before, with the same nagging issues and weaknesses clamouring to be addressed.

Inspiring? No. Ammunition for assorted bitter Remainers, EU-lovers and anti-patriots? Sadly, yes. But that is our lot. Brexit is likely to be a grinding, painstaking, lengthy process at the end of which the same Britain will be blinking back at us, largely unchanged, with all the rest of our work to realise the benefits of Brexit still ahead of us.

But does that mean the enterprise is not worth the effort? Hell no. And it is very telling to see those who are prepared to steel themselves for the work ahead, and those who seek to use it as a whinnying justification for giving up.

 

Thousands Of People Take Part In The March For Europe

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Brexit Catastrophisation Watch, Part 2

Samuel Hooper2 Comments

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Suffer and roar

The other day, while in an uncharacteristically high-minded mood, I wrote:

During the EU referendum, I genuinely wanted the Leave campaign to win more than I wanted to defeat the Remain campaign. Despite immense provocation from the political establishment and many on the Remain side, I was generally motivated more by a desire to secure a better and more democratic future for my country than to make Remainers sad or to wipe the smug smile off George Osborne’s face.

Well, today I take it all back.

Ordinarily I would feel bad about sharing what is basically an hour’s worthy of weepy young ignoramuses whose mourning for their lost “European identity” is matched only by their ignorance about what the European Union actually is and how it works – but many high-profile Remainers have been so insufferably tedious and ungracious in defeat that any reserves of goodwill I possessed on 24 June have long since been exhausted.

One can only take hearing one’s perfectly legitimate and non-extreme political views (i.e. believing that Britain should be like every country in the world outside the EU and not outsource swathes of our governance to an unaccountable supranational government) described as the first step toward the return of fascism before feeling tempted to hit back, hard.

So enjoy: sixty glorious minutes of morons who who think that painting the EU flag on their faces and singing hymns of praise to Brussels makes them Virtuous People and Enlightened Citizens, weeping bitter tears because the Evil Old People and their nasty racist views have set in motion our foolish secession from the greatest and most noble organisation in human history, the European Union.

Money quotes:

1.30 – pinch-faced, morally righteous young woman on the verge of tears

“I feel like we are watching the stirrings of fascism in Europe again, and I genuinely never thought it would by my country that did that”

Yep, vote for freedom from supranational political union one day and we’ll all be polishing our jackboots the next.

And:

2.17 – a hipster girl wearing an outfit seemingly made entirely of feathers:

“London is like a little bubble, and the outside world, especially like regional places, is quite right wing. And it’s really really scary for our generation?”

And yes, her statement does end with a question mark.

And:

2.26 – the pinch-faced, morally righteous young woman, again

“The majority of these people are over 75 – they don’t have a future in this country.”

Children, respect your elders.

And finally:

23.18 – MP / industrial vacuum cleaner salesman Keith Vaz, crying to the BBC

“This is a crushing, crushing decision. It’s a terrible day for Britain, and a terrible day for Europe with, you know, immense consequences [..] Frankly, in a thousand years I would never have believed that the British people would have voted in this way, and they have done so and I think they have voted emotionally rather than looking at the facts, and it’ll be catastrophic for our country, for the rest of Europe and indeed the world.”

Ah, the arrogant Remainer head vs heart explanation again. Sorry to let you down, Jim.

To be fair, though, I myself was a rabid euro-federalist from the beginning of my student days until my early twenties. Had the EU referendum happened back in the early 2000s, I could easily have been one of those people having a weepy nervous breakdown into any passing TV camera.

Hopefully, like me, some of these petulant voices will come to recant their pro-European views as they grow in age and wisdom – and as the realisation slowly dawns that Brexit, however badly managed by politicians, has not ushered in the apocalypse.

 

People hold banners during a demonstration against Britain's decision to leave the European Union, in central London

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Bottom Image: Huffington Post, REUTERS/Neil Hall

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Brexit Catastrophisation Watch, Part 1

Samuel Hooper9 Comments

Since there seems to be no imminent end to the petulant, childish rage of disappointed Remain supporters at the prospect of being forcibly ripped away from their beloved European Union, we may as well start cataloguing some of the most hyperbolic and far-fetched tales of woe and prophesies of doom.

The inaugural submission comes, naturally, from the Guardian:

Social services for older and disabled people face crisis because post-Brexit migration restrictions could cause a massive shortage of care workers, leading care organisations have said.

The 1.4-million-strong UK care sector’s reliance on European migrant workers means it is vital they are given the right to remain in any future migration arrangements, the charities Independent Age and the International Longevity Centre UK (ILC-UK) said.

Currently about 84,000 care workers – equivalent to one in 20 of England’s growing care workforce – are from European Economic Area countries. About 90% do not have British citizenship and their future immigration status remains uncertain.

The charities said failure to tackle workforce shortages would mean thousands of older people would lose out on support, meaning they could be left housebound, struggle to recover properly from a stroke or fall, or fail to get assistance in getting up and dressed in the morning.

Translation: overturn the EU referendum result, or granny gets it.

(Note too the hyperbolic doomsday assumption of “a scenario which closed off all migration”, something which no serious person expects to happen).

The counterargument to this mini-tantrum, of course, is that cheap, young foreign labour from the EU and elsewhere has helped to ensure that care workers in Britain are paid an absolute pittance – often hovering around minimum wage – for performing a physically and mentally taxing job requiring skill, tact, empathy, good humour and great emotional intelligence in order to look after our loved ones in their final years.

The surly Guardianista charities moaning about the potential impact of Brexit on their sector clearly have no qualms or concerns that a worker can often make more money flipping burgers at a fast food restaurant than caring for our elderly and infirm senior citizens. This is just fine, apparently. But the mere possibility that free movement of labour restrictions might force employers to pay less desultory sums of money to frontline staff sends these “charities” into paroxysms of terror and rage. Whose side are they on? Not that of the patients or the care workers, that’s for sure.

Want to stop the endless drip-drip of care home abuse scandals? Try getting outraged that care is a borderline minimum wage occupation in this country, understand that people who might just as easily be flipping burgers for a living won’t always display the same dedication as Florence Nightingale – and be inordinately grateful for those care workers who do possess these criminally undervalued qualities. And in the meantime, forgive me for questioning the calibration of these charities’ moral compasses.

But why should we be surprised by their intervention? Everything about modern leftism and pro-Europeanism revolves around signalling virtue and ostentatiously displaying the “right” progressive beliefs to the right people.

And right now, it is far more important to be seen opposing those awful racist Brexiteers than it is to question the moral sustainability of an industry which hits its profit margin targets by providing our oldest and most vulnerable citizens with a Tesco Value standard of care.

 

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Even Remainers Who Accept The EU Referendum Result Are In Denial As To Why People Voted For Brexit

Samuel Hooper10 Comments

rachel-reeves-brexit-eu-referendum

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The EU referendum was not a question of “head vs heart”. When Remainers pretend that they occupied the intellectual high ground, they only delay their necessary and inevitable reckoning with the will of the British people

Remainers simply cannot help themselves. They cannot stop being arrogant and condescending toward Brexit voters, even when making otherwise admirable attempts to extend the olive branch and accept the nation’s verdict on leaving the EU.

Here’s Rachel Reeves MP, writing in the New Statesman:

Two days before the referendum, I visited the largest private sector employer in my constituency. I had spoken to many of the workers during the general election campaign a year earlier.

Although the chief executive works with a community centre to recruit local young people, like many businesses they also hire many Eastern European workers. It was a tough audience, as many blamed the EU for the squeeze on living standards and most felt immigration was out of control.

The people I met believed leaving the EU would mean less pressure on services and more money for them, because the downward pressure on wages would ease with fewer EU migrants.

[..] I knew in my heart at lunchtime on the day of that visit that we’d lost the referendum. My head had told me – the economist – that we would win because the consequences of leaving were a risk voters wouldn’t take. But, by Friday morning, we knew the Leave campaign’s emotional message was stronger than the rational arguments of the Remain campaign.

My emphasis in bold.

And there it is again – the infuriating “head vs heart” conceit, beloved by Remainers, that they unquestionably held the intellectual high ground when it came to arguing for Britain’s continued membership of the EU, and that the only reason for their defeat was that the base emotions and fears of Brexiteers somehow clouded their rational judgment and (to quote Lincoln, since Reeves tries and fails to do the same) shut out the “better angels of our nature”.

According to this cognitive dissonance-soothing rationalisation of defeat, Remainers were unquestionably right to warn of economic armageddon, and the economy was the sole worthwhile measure on which an existential question about national identity and democracy should be determined.

If this is the fruit of the Left’s attempt to understand Brexiteers (and we know it is, because the bottom of the article states that “This blog is based on a chapter Rachel Reeves MP wrote for the Fabian Society edited collection Facing the Unknown: Building a progressive response to Brexit“) then they have done an unspeakably lousy job.

The immediate post-referendum polling clearly showed that the strongest driver of the Leave vote was widespread concern about sovereignty and democracy:

The biggest issue, according to Lord Ashcroft’s post-referendum poll, was the overwhelming desire to preserve what remained of British sovereignty.

In “How the United Kingdom voted on Thursday … and why,” a survey of 12,369 voters in the United Kingdom conducted the day of the referendum, Lord Ashcroft found the No. 1 issue propelling people to vote “leave” was their belief that the U.K. should remain a self-governing entity not responsible to some supranational body writing rules and regulations about the economy and other matters.

Not hankering for a return to the 1950s.

Not an acute discomfort with dark-skinned people or eastern Europeans.

Not “Daily Mail lies” about curved bananas.

The people of Britain voted to leave the European Union because a majority of us quite rightly refused to accept the false claim that close and fruitful trade and cooperation with our European neighbours is somehow only possible by subsuming ourselves into the relentlessly integrating EU superstate. They were smart enough to realise that an organisation with a parliament, flag, anthem and ambitions for a combined military force has its sights set on something much grander than “friendship and cooperation”, and quite rightly wanted no further part of this doomed experiment in euro-federalism.

What’s more, the Brexit-voting people of this country were enlightened and dedicated citizens enough to see through the hysterical scaremongering propaganda of the Leave campaign, and accept that even if there were some short-term economic costs associated with Brexit, the Remain campaign clearly value our country and democracy too cheaply if they would remain part of a European political union through fear of a potential recession.

Were there oddballs, cranks and racists among the Leave campaign? Yes, of course we had our fair share. But the Remain campaign had Eddie Izzard, so let’s not tar an entire side based on its worst cheerleaders.

Look, I get it – daring to consider that one might have campaigned hard on the wrong side of history must be immensely difficult. The emotional investment of Remainers in their worldview, rhetoric and “identity” as super-progressive, tolerant and all-round awesome people is very strong and hard to see past. But if anyone should have the capacity to move beyond their own intellectual comfort zones it should be our elected MPs, people like Rachel Reeves. Sadly, there is little evidence that many are doing so. Nor will there be, probably, until a couple of decades’ time at which point warnings of economic cataclysm will have been taken over by events.

It is good that Rachel Reeves and some others at various points on the left-wing spectrum, Jeremy Corbyn included, recognise that the EU referendum result must be honoured and are reconciling themselves to the will of the people. But it is one thing to accept the country’s verdict while still sanctimoniously proclaiming that the people were manipulated and hoodwinked, and quite another to reach deep inside for some humility and admit that the people may actually have been right all along.

Nobody expects the Labour Party and other Remainers to make the transition overnight. But well-meaning articles like this from Rachel Reeves suggest that the majority have not even begun the urgently-needed process of reconciliation to the national will. And that is a real concern, for their own tenuous future political careers if nothing else.

 

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Top Image: Express

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A Crisis Of Identity: When Global Elites Forget How To Be Patriotic

Samuel Hooper7 Comments

global-elite

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The global, liberal elite are increasingly transcending any lingering commitment to patriotism and national identity, setting them on a collision course with the small-c conservative majority

Michael Lind has an unmissable essay in the National Review this week, entitled “The Open-Borders ‘Liberaltarianism’ of the New Urban Elite“, which manages to explain so much about the rise of Donald Trump and the growing inability of political elites in America and Britain to speak to whole swathes of the country they supposedly control.

The crux of Lind’s argument seems to be that the educated, liberal (to use American parlance) inhabitants of the large cities have increasingly taken on what were always fringe libertarian ideas about open borders and the irrelevance or undesirability of the nation state, leading them to pursue policies and espouse values which alienate the more suburban and rural population.

Key quote:

To date, the public conversation on both sides of the Atlantic has been dominated almost entirely by the elite inhabitants of Densitaria, interrupted only by occasional populist revolts such as the Trump phenomenon or the Brexit vote. In a relatively short period of time, a new elite ideology has emerged that contrasts the dynamic, multicultural, libertarian city-state with the allegedly anachronistic and immoral nation-state. This ascendant worldview unites the open-borders economics and cosmopolitan, utilitarian morality of old-fashioned libertarianism with an idealization of the largest cities and their denizens.

In the 1970s and 1980s, libertarians made all of the major arguments heard from globalists since the 1990s: Favoring citizens over foreign nationals is the equivalent of racism; national borders impeding the free flow of labor and goods are both immoral and inefficient; the goal of trade and immigration policy should not be the relative security or relative wealth of particular countries, but the absolute economic well-being of all human beings.

Until the 1990s, this was an eccentric minority perspective in the U.S. and other democracies, encountered only in small-circulation libertarian journals or in the work of the occasional unworldly academic theorist of cosmopolitan ethics. But in the 2000s, as affluent whites from the professional class and their Latino, immigrant, and black allies displaced working-class whites as the base of the Democratic party, the traditional labor-liberal opposition to low-wage immigration and offshoring of industry was replaced by a new open-borders progressivism distinguishable from traditional libertarianism only by its unworkable combination of support for unrestricted immigration with a generous national welfare state.

This certainly accounts for one of the main reasons behind the Labour Party’s civil war in Britain – from the Blair era onward, Labour has been entirely captured by the open-borders progressives and increasingly turned its back on its former working class voter base. Even under the current Labour leadership election, both candidates hold open borders convictions to their core, even if only Owen Smith is stupid enough to rant about overturning the EU referendum result in public.

It also accounts for the increasing public rage (among non-progressives) about immigration in America, where the Democrats are proud and unrepentant in their support for illegal immigration while the Republicans have talked a tough talk for decades yet done nothing, precisely because the Republican political elites benefit from the current immigration status quo as much as anyone. Enter Donald Trump to an arena where nobody else is even seriously talking about the impact of mass immigration on wages and cultural cohesion, and one cannot be surprised when his crude, simplistic solutions gain political traction.

More:

The combination of open-borders “liberaltarianism” and trendy urbanist hype might lead one to wonder whether leagues of dynamic city-states should replace moribund modern nation-states. Benjamin Barber has published a book titled If Mayors Ruled the World: Dysfunctional Nations, Rising Cities. Barber is one of the founders of the Global Parliament of Mayors, which, according to his website, can help “fill the void left by nation states who [sic] are increasingly dysfunctional.” The economist Paul Romer has proposed boosting Third World development by means of semi-autonomous “charter cities,” which to his critics look remarkably like Western colonial enclaves.

Not even Barber and Romer propose actual urban independence. While cities may teach one another best practices, there is not the slightest chance that leading American cities will secede from the United States, link up with other city-states around the world, and form a new, global version of the Hanseatic League or the Delian League.

We saw the same loose talk after the EU referendum vote, with many Londoners (most of whom have no conception of what the EU really is or how it works) furious at having part of their cosmopolitan identity ripped away from them (as they see it) suggesting that London should somehow secede from the rest of the “backward” United Kingdom and become its own independent city state.

Of course this would never actually happen, but it shows just how disconnected the metropolitan elites are becoming from the country as a whole, and the sheer contempt with which they regard other regions which dared to express their patriotism and belief in self-determination by voting for Brexit. It is also misplaced arrogance of the worst sort – the lights would go out and people would begin to starve in London within days were it not for the arterial links of people and goods from the supposedly terrible and backward rural and suburban regions.

And it is this continual feeling of disrespect, I think, which does so much to drive populist insurgencies like the rise of Donald Trump, and (if I am honest) even those populist causes that I actually agree with, like Brexit. People in the industrial and commuter heartlands, as well as rural folk, are getting increasingly sick of being told that they are too backward, too intolerant, too racist, that their own priorities and concerns do not matter and that they should be led in all regards by an urban elite who don’t even seem terribly attached to the country that gives them life and liberty, and who find the slightest display of national pride or patriotism almost painfully embarrassing.

I’m fortunate. I got into a good university and managed to embark on a career which has seen me work in numerous countries across three continents. But if this had not been the case – if, like many of my peers, an international business career was either never on the cards or simply not what I wanted to do – then I would probably be quite put out by people whose interest and commitment to any one country seems transitory at best telling me what I should think about immigration, global governance and democracy.

Now living in remain-voting West Hampstead, I am surrounded by the kind of people who are aghast at the Brexit vote and who consider it a calamity brought down upon the heads by the kind of ignorant, unwashed oiks whom they would never normally speak to unless they were fixing their car or serving them a burger. I can see how it must grate with Middle England, because it grates with me.

Lind goes on to touch on this point:

What appears to be a debate among globalists and nationalists, then, is really a debate about the structure of the 21st-century nation-state. There are real dangers associated with the coalescing elite ideology of post-national globalism or, to be precise, national-elite pseudo-globalism.

One danger is groupthink resulting from the attempt by the new globalists to equate even enlightened and civic nationalism with racism. When the economist Larry Summers, nobody’s idea of a pitchfork-waving populist, tentatively called for “responsible nationalism,” he was criticized by The Economist, whose open-borders libertarianism, once eccentric, has become near-orthodoxy among the trans-Atlantic elite.

And closes with this stark warning:

The most significant threat is the possibility that the abandonment of national patriotism by many elite citizens of the nation-state for make-believe cosmopolitanism will weaken national unity, to the benefit of sub-national racism, ethnocentrism, and regionalism. The loyalties that succeed national solidarity are likely to be narrower, not broader. If history is any guide, the victims of tribalism and illiberal populism are likely to include would-be citizens of the world who despise the nation-states that make possible not only their wealth but also their security.

Absolutely. This blog has been banging on for years about the continued importance of the nation state as the final guarantor of most of our most precious rights and freedoms. But the nation state is also, in the democratic age, a relatively harmless way of allowing people to feel and express a sense of belonging and community pride without tipping over into other, much darker expressions of identity.

Those weepy europhiles mourning Britain’s imminent departure from the EU because they consider themselves “European citizens” might want to pause and think through the consequences of further undermining the nation state, which is the primary aim of their beloved project. Because enlightened, one-world government is a few centuries away yet, and whatever crops up to replace the nation state that they so eagerly undermine will likely be unpleasant, even violent.

And while it may not be purely libertarian, this blog would much rather live in a world of moderate, familiar nationalist rivalry than descend into the known horrors of ethnic or religious sectarianism. We already see the early fruits of this blinkered commitment to “multiculturalism” in self-segregated and un-policed communities here in Britain among certain immigrant populations. We don’t need to extend those delights to the entire population.

What is the solution? Michael Lind does not offer one, and this blog does not see an easy fix either. But when global elites (Davos Man and the like) and the next tier down (those with international lives and careers) have more in common with each other than with those of other socio-economic groups and communities in their own countries, it is a recipe for political alienation and the eventual fracturing of our civic life.

To avoid disaster and a true crisis of democracy, our ruling elites in the political and commercial sphere must somehow learn to be patriotic again – for if the nation state has no champions it will go on being relentlessly undermined on all fronts. But right now there is little evidence that they are remotely interested in bridging the growing chasm between their own interests and those of the people they supposedly “serve”.

This leaves the field wide open for the likes of Donald Trump and UKIP 3.0 to make inroads with voters left cold by the other options available to them. And the time may soon come when the political elites sorely regret ceding this territory.

 

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Bottom Image: Stefan Molyneux, Globalism versus Culture

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