Corporate interests know that, in a struggle, size is what matters. Multi-national corporations can effectively bully the governments of individual countries far more easily than they can a supranational collection of governments who resist being played off against each other. Faced with a lack of success forcing the EU to deregulate, these interests have instead switched to trying to undermine the institution itself, by funding populist campaigns that blame economic problems on the EU, even though it was under-regulation of finance (championed by the UK) that lead to the 2008 crisis.
A break-up of the EU will lead to outcomes a thousand times worse for poor and working class people throughout its member nations, and consequently around the world. There will be a race to the bottom in terms of regulatory protection and labor rights. There will be massive declines in average standards of living. There will be a rollback of democracy, as strongmen and autocratic governments re-emerge in Europe. There will be a return to war between European states, and pogroms and ethnic cleansing as nationalist governments cast around for scapegoats for their own failure.
If you think the pre-Brexit economic model had "serious faults" then believe me, you ain't seen nothing yet.
Low wage immigration from Eastern Europe has put downward pressure on UK wages. Except in certain sectors wages haven't actually gone down, but they would have gone up a lot more without the competition, and relative to things like rent and educational costs they really have gone down.
I think Remainers' persistent refusal to acknowledge this played right in to the hands of the pro-Brexit lot.
>Brexit supporters are in favour of more global trade with countries like China, and lower environmental and labor standards. They hated the EU because it was precisely the opposite: A self-sustaining trading bloc made up of mostly successful, developed democracies, with (relatively) strong regulatory protection for workers and the rule of law.
Brexit supporters were largely just angry with the status quo and were essentially casting a protest vote.
It's all very well telling people that that was the "wrong" way of registering their protest but British democracy didn't really provide a lot of options in that respect.
How is this Europe's fault? That was a decision made by the UK, not the EU.
Except we already have the powers to stop this low-wage immigration. The EU allows member countries full ability to protect their borders from these immigrants, we just choose not to.
Look at France, Germany, etc. for countries that properly enforce their borders.
In addition, if a proper living wage were enacted for all residents of the UK, including recent migrants, then companies would not be able to pay migrants less for their labour, and companies would no longer favour economic migrants. Although to be fair, the sort of work that economic migrants do is usually considered to be below the capacity of the average British person.
> Brexit supporters were largely just angry with the status quo and were essentially casting a protest vote.
Indeed. But you cannot say that there was no warning at all. The London School of Economics and many others openly stated that leaving the EU would be disastrous. Instead, these people decided to listen to the likes of... Boris Johnson. Someone who has a long history for making openly racist towards other countries.
I know. Nonetheless, nobody who runs a media outlet actually wants to acknowledge this and elites on both sides Brexit campaign didn't either, so it was always going to remain largely unknown to the general public.
>In addition, if a proper living wage were enacted for all residents of the UK, including recent migrants, then companies would not be able to pay migrants less for their labour
Yep, but that would savage profits. Elites on the pro-Brexit side didn't want this, elites on the anti-Brexit side didn't want this. Tories don't want it and centrists in the Labour party didn't want it. The only person with any power who actually wants this is Corbyn and in 2015 almost nobody paid him any attention.
>Indeed. But you cannot say that there was no warning at all. The London School of Economics and many others openly stated that leaving the EU would be disastrous.
Pretty much anybody who claimed to know the effect of Brexit prior to the referendum was lying. Nobody knew. The outcome would be dependent upon the shape of a deal that hadn't yet been made. It was shocking the number of economists who came out with actual numbers. Monumentally stupid and played right into the Brexiteers' hands. sigh...
It's not at all irrational to disbelieve out of touch elites when they tell you that things that they believe will be bad for them are actually bad for you.
The number of times we've been condescendingly told by lying elites that jacking up the minimum wage will only trigger mass unemployment is a testament to that.
Except the groups I referred to were university establishments and thinktanks. Much of the outroar came not from the 'elites', so much as middle and lower class professors...
> Pretty much anybody who claimed to know the effect of Brexit prior to the referendum was lying. Nobody knew. The outcome would be dependent upon the shape of a deal that hadn't yet been made.
No. The main facts that were known before the referendum were:
We do not have enough legal staff in the government to handle such a large negotiation. Thus we would have to borrow or outsource much of the more backbreaking legal work to other countries.
The implication of leaving the EU implies that we must renegotiate a trade deal with every single country that we are parting with, something that took the EU as a collective _decades_ to do.
Britain would be put on the back-foot in any future negotiations, given that other countries are not at risk from completely and utterly losing trade with most of the world given a failed deal, but we are. Strategically it makes sense to not put yourself in such a position.
Britian would have to adopt the regulations that many claimed were harmful, if it wanted to trade with the EU, just like every other country that has trade with the EU.
It doesn't take a genius to see that this is not a beneficial position to be in as a country.
> The outcome would be dependent upon the shape of a deal that hadn't yet been made.
The deal still hasn't been made, but we can still predict that the outcome of this will be negative based on facts that are clearer to us now, but were present before the referendum took place.
The fact that a large proportion of people admitted that in retrospect they did not know what they were voting for, should have been the point at which we started backpedalling and figuring out where we are.
The official response from the establishments of elite universities and the output of think tanks is almost the definition of "out of touch elites", no?
>Much of the outroar came not from the 'elites', so much as middle and lower class professors...
Not in the media read by people in Lincolnshire. They don't hear the outroar coming from those middle and lower class professors going on strike either.
I appreciate that you might have had mates who were postdocs who had legitimate reason to be worried about science funding (so do I!), but not everybody does.
>It doesn't take a genius to see that this is not a beneficial position to be in as a country.
What you described above was the effect of hard Brexit. Hard Brexit wasn't even on the cards until some time after the vote, and is still not confirmed even now.
>The deal still hasn't been made, but we can still predict that the outcome of this will be negative
It's entirely possible to extract some good from this process even if it was better that it was never started. However, paying little attention to the actual shape of the deal, which is highly mutable, and simply re-iterating that any kind of Brexit is the worst possible thing that could ever be happening to us isn't going to do that. One way or the other it's happening.
It doesn't take a genius to figure that out.
Hah. No. I was talking explicitly about the many professors that specialized in law and economics relating to the EU explicitly raising their voices that this would put the UK in a terrible financial and political position.
> What you described above was the effect of hard Brexit.
No. What I described above is the effect of Brexit.
> Hard Brexit wasn't even on the cards until some time after the vote, and is still not confirmed even now.
Eh? Teresa May has been consistent that she wants a "hard brexit", to the point of calling for it months before she defined the fucking term!
(Finally defined in http://time.com/4635762/theresa-may-hard-brexit-britain/)
You seem to be at a severe information deficit concerning the information available to the public about brexit, before the brexit process was enacted. Please read https://voxeu.org/article/economics-brexit-pre-referendum-vi...
Who couldn't be more out of touch. In 2008 the Queen was at the LSE talking to exactly these kinds of people and, quite famously asked "why did none of you see the financial crisis coming?". None of them had a good answer.
Their reputation is literally "the guys who were completely blindsided by the last economic storm". In 2016 they staked their reputation on there being another storm - high unemployment and recession to follow the vote. Two years later we can look back and confirm that once again, they were wrong. We still haven't had a contractionary quarter and unemployment is slightly down.
Now they are telling us that once we finally exit that the promised spike in unemployment and recession will happen. Frankly they might be right this time, but they'll still simply be useful idiots.
>No. What I described above is the effect of Brexit.
No, you didn't. Among other things, you mentioned negotiating a trade deal. If we stay in the common market there is no need for that. That option was firmly on the table during the vote and even now it still hasn't been taken completely off.
>Eh? Teresa May has been consistent that she wants a "hard brexit"
No she hasn't. Originally when she asked what Brexit meant she famously said "Brexit means Brexit" much to the chagrin of... well, everybody.
She's flip flopped all over the place since then.
>You seem to be at a severe information deficit concerning the information available to the public about brexit. Please read https://voxeu.org/article/economics-brexit-pre-referendum-vi....
Yeah? Try reading your article from 2016. Pay attention specifically to the bit where they promised high unemployment and recession following the cataclysmic effect of the vote and went "this is probably right, but it's too early to tell". Well, it's 2018 and it's no longer too early to tell! Unemployment went slightly down and we've yet to experience a single quarter of contraction (and it's not like those are rare, I think 2013 was the last one?).
Try comparing your economists' predictions to reality once in a while. You might be surprised.
Ironically, I find a lot of people who are pro Brexit to be less surprised about the facts I've just shared. That's not because they're smarter, it's just because they are fed a different kind of propaganda.
There are only three real options:
- retain some kind of single market, which requires retaining freedom of movement; this is the Norway option, where we give up our vote but continue paying. Hard to see what the advantage of this is, and it will not give the government the right to deport Polish plumbers and nursing home workers that so many people desperately want to do. This is "pointless Brexit", where we become marginally worse off but the Leavers aren't satisfied.
Care home worker availability is already becoming a problem: http://www.independent.co.uk/news/business/news/brexit-care-...
- Hard Brexit. No freedom of movement, customs barriers, no free movement of services. Some sort of fiasco on the Irish border, the M20 is turned into a lorry park ( https://www.ft.com/content/7ff7c97c-b33c-11e7-a398-73d59db9e... ), and the UK's financial services and just-in-time manufacturing businesses start having to move to Europe.
- Disaster Brexit. The UK persists, Greece-style, in asking for options which the EU has already agreed not to give them. No decisions are made and no planning is done. Home Office issues "go home" notices to the 3 million EU nationals here informing them that they are now illegal immigrants and it is illegal for them to have a bank account, be a tenant, be employed or go to the doctor. Those who have not yet fled, perhaps because they're married to UK nationals who no longer have the right to move to the EU, start mass demonstrations. Retail logistics snarls up and empty shelves start appearing on shops. We go back to the Winter of Discontent.
How can that be? Doesn't freedom of movement imply freedom to live and work wherever you want?
In the UK it seems the government felt it was cheaper to lay off the border control officers and let people do what they want, but then complain that they are doing whatever they want.
Baring a few exceptional cases such as criminal activity, I am not aware of any limitations the UK can implement to control this (for now).
You are correct of course that extra people coming into a profession could cause stagnation of wages, but it is usually far more complicated than that. In the UK, despite all of this immigration we have rather low rates of unemployment, marginally lower than before the 2004 expansion of the EU. This seems counterintuitive if wage growth is an over-supply problem. It is also not true to say that an industry will just keep paying more and more to attract workers from other sectors. This soon hits the point in the modern globalised world that the industry just becomes uncompetetive and closes down, outsources, invests in labour reducing machinery, or moves. Wage stagnation is very real in Britain however, and for pointers to the cause you might want to look at why non wage inflation has been so low for so long, putting aside the last 18 months of FX driven inflation caused by comparatively weak sterling post Brexit vote (This adds around 15% to most imported goods).
[0]:https://en.wikipedia.org/wiki/Freedom_of_movement_for_worker...
It's not fallacious and the UK did do that [0] for 7 years after they realised that the A8 migration estimates were incredibly wrong.
> In the UK, despite all of this immigration we have rather low rates of unemployment, marginally lower than before the 2004 expansion of the EU
First of all, no one here said immigration is causing unemployment, just wage stagnation for certain industries.
Second of all, it's not "counterintuitive", immigrants tend to move to areas with low unemployment so I would expect the above to be the case anyway. Most immigrants wouldn't come if there were no jobs.
> This soon hits the point in the modern globalised world that the industry just becomes uncompetetive and closes down, outsources, invests in labour reducing machinery, or moves
But that's not what's happening here, as you said, the jobs are still here (low unemployment). They're not automated or outsourced, they're done manually for minimum wage (or lower) by hard working immigrants from poorer countries.
I have to say, you kind of changed the topic. We were discussing about the existence of limitations for low skilled workforce, not whether or not Brexit was a good idea.
That's fallacious. Perception of a market does not always match actual figures about that market.
If this new labour force had not appeared are you seriously suggesting that UK employers would just have paid more and more to attract workers from other sectors? How would they remain competitive?
> If this new labour force had not appeared are you seriously suggesting that UK employers would just have paid more and more to attract workers from other sectors?
Yes?! That's how it works... You literally agreed in your previous comment that part of the reason for wage stagnation was the extra new labour force.
> How would they remain competitive?
The same way they were competitive before 2004 I guess.
If your company relies on low skilled manual labourers working 12h a day for minimum wage or you go bankrupt... You should go bankrupt. It stops you from modernising and increasing productivity long term.
Yes they would go bankrupt or move production or automate...like I said originally. Perhaps this results in less jobs in the economy and the low skilled get paid less, the economy shrinks and every one gets poorer?
There is an interaction between immigration and wage growth but it is not a simple or linear one.
Yes you did. Did you miss the part where I replied to that?
> Perhaps this results in less jobs in the economy and the low skilled get paid less, the economy shrinks and every one gets poorer?
I'm sorry but what are you talking about?
Shitty companies going bankrupt does not mean less jobs or lower wages, in fact the opposite. It's natural and a good thing in a free market. So I don't know what you are on about here.
> There is an interaction between immigration and wage growth but it is not a simple or linear one.
Oh for sure. Immigration can definitely increase wages and the economy and create jobs. But you forgot the low skilled part.
Look, this thread has gone long enough and you're not addressing most of the things I write, so I don't see the point of this.
All I wanted was to clarify that the UK did not in fact have any power to limit freedom of movement of workers from the EU, that's it. I never wanted to argue about anything else.
As an EU citizens, I have a right to go there and work. Work requires a tax code. Tax code requires a permanent address in Germany. Most places you can live require a job and good credit history.
I could bootstrap that by buying a place in Germany, and I might still do that if I am confident I understand foreclosure auctions well enough, but it’s amazing what a little creative bureaucracy can do to slow things down.
Requiring a work permit for EU citizens (like the UK did) is a better example of a bureaucracy designed to limit immigration but that doesn't generally fly with the EU.
It's pure madness. I actually run a blog documenting the (sometimes insane) German bureaucracy. It's not nearly as bad as people think, but things like getting an Ausländerbehörde (immigration office) appointment can be a real pain.
Fortunately, it has improved a lot in the last 3 years. The Settle in Berlin article is completely outdated.
http://allaboutberlin.com/guides/berlin-auslanderbehorde-sam...
That's plain wrong. Every EU country must allow freedom of movement for workers from other EU states.
https://en.wikipedia.org/wiki/Freedom_of_movement_for_worker...
> Look at France, Germany, etc. for countries that properly enforce their borders.
Germany currently doesn't even enforce its borders for immigrants from outside of the EU. For immigrants from the EU, it is simply not allowed to just like every other EU country.
Much of what you just wrote is incorrect, please see jimnotjim's comment: https://news.ycombinator.com/item?id=16558745
The parent is absolutely correct that the pro-Brexit politicans are using the working poor as their useful idiots.
Usually trade policy is an attempt to reconcile two conflicting goals:
1. To protect your own industries/producers
2. To grow your export markets abroad
They are conflicting, because growing export markets (by striking trade agreements) often requires concessions that may damage sectors of a state's internal market. States attempt to strike the right balance of protectionism and free trade.
The Brexiteers' trade policy seemingly values neither protectionism nor free trade. They do not care if they damage UK producers by flooding the UK market with cheap imports. And they do not care if they damage UK exporters by throwing away all the UK's trade agreements and reverting to WTO terms.
Why? Because they do not care about trade or industry. For ideological reasons they wish to turn the UK into a low-tax, low-regulation state. Trade and industry are a mere inconvenience to them.
The irony is that the UK was already becoming such a state while it was in the EU, and the loss of financial passporting is extremely damaging to the City and thus to the Brexiteers' project. They just haven't realised yet.
This would probably be true in 2001, but these days most Chinese stuff in my home is of high quality and extremely durable.
Like my smartphone, my furniture, my hobby drone.
Yup. It keeps inflation in check, and allows them to buy more stuff with their salary, including investing into improving their education and don't actually having to work on low paying jobs.
Sometimes I wonder if David Ricardo was from Mars.
Cheap labor keeps inflation in check by keeping the salaries low. The upper middle and upper classes reap those benefits, not the people whose salaries were kept low.
Repressing lower-middle class and working class salaries low to keep inflation in check is how you end up with Brexit, Trump, Le Pen, Golden Dawn, etc. This is a global phenomenon.
You don't need to be posh to benefit from migrants cheaply building your home, cleaning your bathroom, or taking care of the children and the elders.
In America, the options for these folks are basically disability, jail (for men) or being a state supported baby machine. We also offer opiates to help.
I have a hard time being sympathetic to folks that were born in a stable an generally safe country, with access to decent (if not prime) education. And all they care during their school years is girls and pot/meth.
Than they blame their unemployment on piss poor migrants that can't even speak the language, or asians that studied their asses off with the little they could make.
There are good people becoming unemployed due to tech advances. The solution is having them learn new trades - not expelling migrants so they can clean bathrooms for $15/h
Like it or not, representative governments are supposed to represent their countrymen. While the plight of the 3rd world is awful in many ways, I’ll assure you that the policy positions have nothing to do with people seeking a better life.
Natives who were more educated did reap the benefits and they don't want to roll things back to how they were in 2003 when slightly more expensive natives did those jobs.
The educated upper middle classes are, however, a minority.
>You don't need to be posh to benefit from migrants cheaply building your home, cleaning your bathroom, or taking care of the children
Maybe not posh but you do need to be upper middle class. If you're actually doing those jobs you are not benefiting from your wages being suppressed.
Some types of workers, most notably existing immigrants do suffer... in the short term... particularly from migrants from outside the EU.
https://fullfact.org/immigration/immigration-and-jobs-labour...
I think this study is the key, to be honest "Research from University College London finds that an inflow of immigrants the size of 1% of the UK-born population leads to a 0.6% decline in the wages of the 5% lowest paid workers and to an increase in the wages of higher paid workers." (http://www.ucl.ac.uk/~uctpb21/Cpapers/CDP_03_08.pdf)
The actual effect is not large, but the relative increase in distance between very low earners and middle/upper-middle earners is what offends... and the likes of Murdoch are only too happy to stir up that resentment in exchange for keeping their tax loopholes.
Also many of those same leave politicians want more trade with the former colonies, not less.