The United Kingdom Has Gone Mad
nytimes.com
nytimes.com
I think it's still quite relevant though. Especially so after May's resignation - which seems to have left Boris Johnson at the head of the race to replace her.
https://qz.com/1626291/the-british-pound-is-on-a-record-losi...
What a drop in FX rate does result in is a (possibly minor, possibly major) uptick in inflation as imports become more expensive. It also makes the country's exports more competitive since they're cheaper in relative terms.
Some countries actually see a low FX rate as desirable: reduction in the exchange rate is arguably one of the channels that made QE an effective policy.
In terms of GDP its not what it would have been "Brexit had cost the world’s fifth largest economy nearly 2.5 percent of GDP at the end of last year, compared to its growth path prior to the mid-2016 vote on exiting the bloc."
But at least we still grew a little and "UK unemployment falls to 44-year low despite Brexit fears"
https://uk.reuters.com/article/uk-britain-eu-goldmansachs/br... https://www.theguardian.com/business/2019/mar/19/uk-unemploy...
https://tradingeconomics.com/united-kingdom/government-debt-...
Not that things are looking any better now, "no deal" is probably more likely now than it was then.
The brexit fiasco has exposed this very well, and the main parties are tearing themselves to pieces over it.
I'm not especially keen to leave the EU, but I did consider voting that way precisely to provoke this. I still hope for meaningful political change in the uk to come from this time.
> business has “been organized around stocks of knowledge as the basis for value creation. The key to creating economic value has been to acquire some proprietary knowledge stocks, aggressively protect those knowledge stocks and then efficiently extract the economic value from those knowledge stocks and deliver them to the market. The challenge in a more rapidly changing world is that knowledge stocks depreciate at an accelerating rate. In this kind of world, the key source of economic value shifts from stocks to flows.
> “The companies that will create the most economic value in the future,” Hagel says, “will be the ones that find ways to participate more effectively in a broader range of more diverse knowledge flows that can refresh knowledge stocks at an accelerating rate.”
The author dismisses the 'remote control' of the UK by Brussels and the fact that UK citizens can't even vote for their own laws or rulers, saying he "gets all that." I don't think so. If he did, he would understand why self determination is, to many people, more important than self protection. IMHO, this is the issue at the heart of Brexit.
What makes a lot more sense it that while the ideological Economist Magazine and academic economists are Remainer (of the same 125 who jointly wrote to Thatcher telling her how wrong she was in 1982; that didn't turn out so well, haha!), Money Week (which is only interested in making money) and the capitalist pundits at the Daily Telegraph are essentially Brexiters.
They have a pretty disgraceful cookie policy though, I don't think highly of an entity that produces this:
By clicking "I Accept" or "X" on this banner, or using our site, you consent to the use of cookies unless you have disabled them.
Actually countries that are not part of the EU have been trading for thousands of years. And Non-EU countries are even trading with EU countries.
It's quite the miracle.
Win-Win trades to exist.
I find the argument of the bargaining position rather one more argument against the EU. Their value proposition is "if you join us, we won't break your neck with trading"? Doesn't sound like the paragon of the free world they would like to be seen as.
If people don't want your stuff, trade agreements won't save you. If they want your stuff, they'll find ways to trade with you.
Also, again, many small countries seem to do fine without the EU. Presumably they still trade with China.
The article does not suggest that the UK won't be able to trade with anyone once it leaves the EU.
Your rebuttal is extremely convincing, but it's refuting a point that you artificially engineered, rather than the original premise.
Why should the UK be disconnected without the EU?
I think you might be imbuing that word with meaning which isn't conveyed in the article. Or at least: nobody else has yet stated that they also read 'connectedness' to mean 'trade', and even re-reading the article with this calibration I do not see how it is an easily drawn conclusion.
Let me know if you think any of the below is wrongheaded:
Connectedness comes up three times in the article.
Firstly as the CEO of Airbus talks about the possibility for needing to leave the UK due to the economic uncertainty created by Brexit. The author refers to the jobs "connected" to their supply chain: he is, I think, trying to create a sense of the ripple effect of Brexit through employment and trade.
The second occurrence of 'connectedness' is much tighter: Friedman cites Hagel (he of Deloitte fame, not he of Dialectic fame!) in a thread about how connectedness to flows of knowledge and resource are more important than fixed stockpiles. The argument is that building moats and protecting IP, intelligence, systems, etc. from competitors is less important than continuous collaboration and innovation.
I believe this approaches a central point of the entire Brexit debate. The debate is not so much regarding the possible outcomes of Brexit, but whether those outcomes are good or bad news in the final analysis. The argument the author makes here is that the 'leave' instinct is based on an outdated model for how things work in 2019. And perhaps it's wrong. But that's the argument. Not that we cannot trade, but that like the court of Hrothgar, seeking to build up figurative walls (and again: not saying "no trade") is a net negative.
The final mention of 'connectedness' is in relation to trade! But it's a reiteration that our leadership seems to want to unplug us from a connected world (I don't think you would disagree that the European Union is connected, and Britain is trying to disconnect from it; and I also don't think you would disagree that this metaphor of connectedness is not anything to do with trade), and that Trump is pushing for that because he sees us as economically weaker without the European Union, and that the breakup of the EU would be advantageous for him. Again: nothing about trade here.
> Why should the UK be disconnected without the EU?
I'm afraid you're once again submitting a straw man. The article does not say that we are not connected without the EU. It says that we are disconnecting from the EU. The article specifically goes on to discuss ways in which forming connections with other nations are challenging.
I think that is just - vague. It's not even a concrete threat that can be discussed. What exactly is the point? There will be no information flow after the EU? Same argument as before applies: countries have exchanged information for Millenia before the EU. And if they mean "knowledge workers" - highly skilled workers are usually welcome as migrants, aren't they?
As for building "moats" and "walls", I think that is very propagandistic language. Just because you have a moat, doesn't mean people can't come to you. It just means you can decide who is allowed to come and go. These walls and moats have doors and bridges. Just like everybody's home.
As a European, I don't feel particularly connected to other EU countries, by the way. I have no regular exchange with Greek or Italian people.
The EU has made some web sites inaccessible to me, so at the moment it is rather the opposite of "connected". Usually, people communicate freely on the internet, independent of trade agreements. Unless they are stuck in socialist countries like China - and where would I go if Europe would turn into one? I prefer having some smaller countries to fall back on in case of emergency.
Something like: "We are better with closer ties and connections to the European Union. Brexit furthers us from them."
> countries have exchanged information [...] before the EU
This is true but quite a simplification. I don't mean to be rude, but for the sake of a simple analogy, think of Donald Trump when he was questioned about the need for cyber security: he began talking about how good his ten year old son is with computers.
For a slightly more nuanced perspective: only EU Member states can be members of Europol and benefit from full access to SIENA, which is one of the most sophisticated and well-developed cross-border intelligence networks in the world. When the UK leaves the European Union, our ability for full membership ceases and we must enter into a separate form of agreement for limited participation in information sharing and forgo any kind of strategic or governance over the initiative.
So, yes, we can continue to exchange information. But the ways in which we do that change meaningfully, and to the extent that people I know who work in the security services are dismayed by the thoughtlessness of the discourse.
> highly skilled workers are usually welcome as migrants, aren't they?
Again, this strikes me as simplistic. There seems to be a belief amongst some (not necessarily you) that it's simply one type of form for an EU state importing to the UK, and a different type for a non-EU member.
What we are seeing is the erosion of one of, if not the most open, comprehensive trading blocs ever devised. It is not being replaced by like-for-like systems and benefits for trade and immigration precisely because there is already a system for that: it's called membership of the EU. So take it as read that on a structural level trade and immigration cannot be as simple as they were on reciprocal EU terms. The EU will not allow it.
So it's getting harder to trade with the UK or migrate here. The UK will likely see some short term wins -- small UK offices for organisations, commensurate with our market size -- but our strong position for the establishment of European HQs is significantly damaged.
In a world where skilled migrants can work anywhere, why would they be going to the country which just opted to make it harder to do business? Which has seen its currency collapse since the minutes after the vote in 2016? There are no firm answers in either direction, but you have to do quite a lot of gymnastics to explain why making it harder to trade with us is better in any way.
> As for building "moats" and "walls", I think that is very propagandistic language.
It's very simple. We are making it harder to trade with the European Union. We are making it harder to migrate to and from the European Union. These are not qualitative statements.
It's up to you whether you see this as a necessary moat, or a wall of requirement; or a pointless wall. Same as with Trump and his southern border wall. Some people in the US feel it's urgently needed. Others think those who believe it will have benefits are fantasists. But either way the wall is real.
> Just because you have a moat, doesn't mean people can't come to you. It just means you can decide who is allowed to come and go.
Again, very simplistic. I'll refer you back to the Europol explanation to illustrate how just because something is technically possible, does not mean it is still as likely once it is made artificially difficult.
The United Kingdom, many would argue, is not going to be in position to dictate who is allowed to come and go, in a business sense. We will lose the fight for major investment outside of the financial services sector to European nation states.
Also I don't claim EU only has negative aspects. But it also doesn't just have positive aspects.
"What we are seeing is the erosion of one of, if not the most open, comprehensive trading blocs ever devised."
Is it, though? After all, there seem to be an awful lot of regulations on what you are allowed to trade and on what terms. It is not simple a free market once you join the EU. Otherwise, why would the contracts be so complicated?
"So take it as read that on a structural level trade and immigration cannot be as simple as they were on reciprocal EU terms. The EU will not allow it."
Again, I don't find that to be a good argument for the EU. They want to be the paragons of freedom in the Western world. If they then treat other countries like you suggest they will, it doesn't look very credible.
And maybe there IS something to be said for pride. Maybe you don't have to take every too good to be true trade offer, if in exchange you are being humiliated.
"So it's getting harder to trade with the UK or migrate here"
With respect to migration, that seems to be the point of Brexit :-)
Still, again, those things happened before the EU. The UK is also still in Europe. Personally, as a German, I don't feel British people are any less European, EU or not.
"In a world where skilled migrants can work anywhere, why would they be going to the country which just opted to make it harder to do business?"
Some things may be harder, some things easier, though. Again, the regulations - just think of Upload Filters and GDPR, for example.
What's wrong with choice? EU will end up being a mono-culture, take it or leave it. I find it a rather creepy outlook, especially with Socialism gaining popularity again.
I think many people will come to the UK for the same reasons they always did. They already know the language or want to learn it, and they like the culture.
"Which has seen its currency collapse since the minutes after the vote in 2016?"
I don't know - if currency is high, economic comment will be "it is bad for our export business", if currency is low they will cry "we are losing our buying power". It's hard to tell what is true. I also remember when the Euro was introduced in Germany - felt like buying power was halved over night. Many price tags remained the same, but one Euro cost 2 DM...
"We will lose the fight for major investment outside of the financial services sector to European nation states. "
It doesn't seem inevitable to me. In fact many small countries seem to make a living from offering favorable deals to finance businesses, that the big behemoths somehow can't offer. So it seems possible that the UK could maintain an edge over EU finance businesses.
And finance - aren't people trading all over the world? Again, why would the UK be barred from doing financial business with the EU?
"We are making it harder to migrate to and from the European Union."
Might have upsides and downsides. I can not simply migrate to the US even though I am an European citizen. Nevertheless the US economy seems to be going strong.
> "Europol" - sure, OK. But international police does still cooperate, don't they? Why is Europol so important, if you are not in Europe? Presumably it is about catching EU criminals?
The police do still co-operate, yes.
Europol's mandate is intelligence gathering across European member states, irrespective of the nationalities of the suspects they target. They work in both serious organised crime and terrorism. There is still co-operation between police departments.
There are a lot of layers here which I'd love to take you through, but it's axiomatic that organisations like Europol would not exist if there were no benefits to structured cooperation and intelligence sharing across agencies. Being on the outside of Europol is definitely worse than being on the inside.
You could broadly think of the difference in co-operation levels as like having a PC for accessing the internet 1hr a week during class at school only, vs. always available at home. Yes, you still have access in both scenarios, but the parameters are very different. Hope that's a useful illustration.
> Also I don't claim EU only has negative aspects. But it also doesn't just have positive aspects.
I don't think I suggested that you did. My point throughout has been that the quantitative aspects of the situation are not in dispute. What is in dispute is the interpretation of the facts.
> Is it, though? After all, there seem to be an awful lot of regulations on what you are allowed to trade and on what terms.
Can you give me some examples? The EU is remarkable insofar as it has high, well-documented standards for goods and services which once satisfied mean it is trivial to export and import with minimal overheads or regulation.
> It is not simple a free market once you join the EU. Otherwise, why would the contracts be so complicated?
Are the contracts complicated?
> Again, I don't find that to be a good argument for the EU.
It isn't an argument for the EU. It's an argument for why it's worse for Britain to be outside of the EU.
> They want to be the paragons of freedom in the Western world. If they then treat other countries like you suggest they will, it doesn't look very credible.
Sorry if this is something you already know (and thanks for writing in English rather than German! It's making me second guess whether or not you are imprecise with language due to translation, or you're precise with what you mean and there is a genuine misunderstanding - apologies if this comes across as patronising): The European Union exists because, post WW2, many nations were predisposed towards cooperation in different areas (trade in particular, but also atomic energy and other things) and that broad feeling of connectedness the author of the article alludes to was present in voters. They don't necessarily want to be paragons of freedom in the Western world, they want to do what all nations implicitly do: set up some regulatory structures and safety nets which, by and large, curb personal freedoms to a minimal extent whilst generating significant benefits for everyone -- directly and indirectly.
So yes, Schengen meant that freedom was enhanced because of the abolition of passport control for EU member states. But the focus is on forging a common operating playbook for member states which makes countries safer and more prosperous.
> And maybe there IS something to be said for pride. Maybe you don't have to take every too good to be true trade offer, if in exchange you are being humiliated.
I agree that a sense of national identity is important (by which I mean: common values shared by citizens and reenforced through the behaviour of the government).
> With respect to migration, that seems to be the point of Brexit :-)
This is a really fascinating area! Actually before the referendum, amongst voters in the 2015 general election, immigration was a surprisingly small detail. It was only the third biggest issue facing the country according to voters, and the fifth biggest issue facing individual voters themselves (YouGov, Apr 2015). Ipsos Mori went further, saying immigration was only the top issue for 11% of the electorate!
Anyone seeking to address immigration in the UK needs to make a solid argument for why they believe it to be detrimental. Usually the argument ends up as a confused mix of "they steal our jobs" and "they take our benefits". Yet if you look at the countries of origin of benefit claimants in the UK, only three of the top ten "non British" are European. If one assumes that being a benefit claimant is a net loss to the country (it isn't, but let's suspend our disbelief for a moment), preventing migration from China, India, Pakistan, and Africa would be smarter than the EU.
> Still, again, those things happened before the EU. The UK is also still in Europe. Personally, as a German, I don't feel British people are any less European, EU or not.
I think I'm on the verge of repeating myself more often than can be considered polite, but the argument is not whether they can happen, or did happen before the EU, but whether they can happen as efficiently as they do within the EU. Does that make sense?
I'm glad you think of us that way!
> Some things may be harder, some things easier, though. Again, the regulations - just think of Upload Filters and GDPR, for example.
That's nearly the entire argument contained in a single sentence! My position is that things will become harder nad it'll be worse.
> What's wrong with choice? EU will end up being a mono-culture, take it or leave it. I find it a rather creepy outlook, especially with Socialism gaining popularity again.
Because in general I agree with the European Union's monoculture. I don't think it's a monoculture that people have human rights. Or that we ban extremism. Or that we don't believe in capital punishment. I believe that some things are empirically better than others. I believe that the emancipation of women is better than subjugation. I believe that freedom of press is better than censorship. I believe that gender and sexual equality are better than not. These are the things I would fight for and go to war for if they were threatened, in the same way as Dabiq-readers would fight for the caliphate.
The European Union, mostly, legislates and works in areas where there is little disagreement. There may be differences of opinion on the specifics but we all largely agree.
> I think many people will come to the UK for the same reasons they always did. They already know the language or want to learn it, and they like the culture.
I can imagine something like this being true: the UK is, by a thin margin, the second biggest economy in the European Union and the fifth largest in the world. After Brexit I expect we'll probably see a small correction and dip to third relative to the European Union and eighth overall in the world.
This is clearly still a going concern. But if you're a British company trading with the EU, you're likely building a base of operations in the EU, not in Britain. If you're a US or BRIC nation trading with the EU you're again not likely to build an operational base in the UK. The UK has always been a big enough country to merit dedicated teams, but in the past it's always had ease of access to Europe too. This advantage is gone.
> I don't know - if currency is high, economic comment will be "it is bad for our export business", if currency is low they will cry "we are losing our buying power". It's hard to tell what is true. I also remember when the Euro was introduced in Germany - felt like buying power was halved over night. Many price tags remained the same, but one Euro cost 2 DM...
Very true.
> It doesn't seem inevitable to me. In fact many small countries seem to make a living from offering favorable deals to finance businesses, that the big behemoths somehow can't offer. So it seems possible that the UK could maintain an edge over EU finance businesses.
We are already seeing aggressive courtship of financial service industries to move outside of London. It's by no means a forgone conclusion but we are not going to be in the EU, so there's no point building an EU HQ here.
> And finance - aren't people trading all over the world? Again, why would the UK be barred from doing financial business with the EU?
Again :) Not barred. But no longer as simple/efficient.
> Might have upsides and downsides. I can not simply migrate to the US even though I am an European citizen. Nevertheless the US economy seems to be going strong.
But in that analogy you have never been able to simply migrate to the US. In the case of the UK/EU, you once were able to.
I hope I am not conveying that either, and no, you are not. You are taking the time to write long responses, that doesn't seem like ill-will :-)
"Europol" - sure, OK. Although there used to be interpol. There doesn't seem to be a mandatory reason for not cooperating as much. But I know what you are going to say, EU makes it easier. How, though? By what special power? Don't the departments still have to work it out individually?
"My point throughout has been that the quantitative aspects of the situation are not in dispute. What is in dispute is the interpretation of the facts."
I'm not sure - the EU seems like a very complicated construct. Who really knows everything it does?
"Can you give me some examples? The EU is remarkable insofar as it has high, well-documented standards for goods and services which once satisfied mean it is trivial to export and import with minimal overheads or regulation."
I'm not really trading in the EU, so what sometimes surfaces are some extreme cases. Bottles have to have a certain shape, that sort of thing. I think it really can be quite complicated at times - meat being shipped around through different countries. I don't really know details - but who does?
Wasn't there just the other day an article about the GDPR, one year in, saying it cost companies Billions of dollars to comply?
Yes, we had that example before - but it is an example of EU regulations having a high price.
"Are the contracts complicated?"
If they are not, why are they saying it wold take decades to create new contracts for trade with the UK? And why so much bureaucracy to begin with?
"If one assumes that being a benefit claimant is a net loss to the country (it isn't, but let's suspend our disbelief for a moment), preventing migration from China, India, Pakistan, and Africa would be smarter than the EU."
Here in Germany I had the impression campaigning for the EU was more on the lines of "paragon of the free world". And that includes effectively free immigration for everybody from all over the world (asylum and so on) - at least everybody who is worse off than Europeans, which is a lot of people. And these people then are also free to enter the UK. I don't want to debate if that is good or bad, but I think that is a concern many people have.
"whether they can happen as efficiently as they do within the EU"
There certainly seems to be a lot of bureaucracy involved with the EU. That doesn't necessarily seem so effective. At least I think it can be argued.
"Because in general I agree with the European Union's monoculture. I don't think it's a monoculture that people have human rights. Or that we ban extremism. Or that we don't believe in capital punishment. I believe that some things are empirically better than others. I believe that the emancipation of women is better than subjugation. I believe that freedom of press is better than censorship. I believe that gender and sexual equality are better than not."
To me, EU has started to become the opposite of many of those things. Upload filters and privacy rights bring censorship. So do the bans on "extremism", which often seems to mean just things the people in power dislike. And leaving the EU does not equate abandoning human rights and reintroducing capital punishment. Didn't early human rights laws actually originate in the UK? And emancipation of women - I am for equality, but EU is falling in line with socialism and virtue signalling, which means sexist discrimination against men (my opinion - you may disagree). I just don't trust the EU anymore, as a white middle age male.
I will give you, though, that in many of those aspects the UK is actually worse than the EU. Still, as a single country, the odds may be better to change things for the better. Very difficult to move things in the EU, as one vote counts so little.
" in the past it's always had ease of access to Europe too. This advantage is gone."
Again, I don't think that is true. And if the EU really would shut out the UK, then shame on the EU.
"But in that analogy you have never been able to simply migrate to the US. In the case of the UK/EU, you once were able to."
I'm old enough to remember the days before the open borders within the EU. It was still possible to travel. And I suppose, also to migrate.
"The European Union exists because, post WW2, many nations were predisposed towards cooperation in different areas (trade in particular, but also atomic energy and other things) and that broad feeling of connectedness the author of the article alludes to was present in voters. They don't necessarily want to be paragons of freedom in the Western world"
I think people still feel like Europeans and want a connected Europe in principle. Just not the Europe that the EU has become now.
And the paragon of freedom is the big argument here in Germany, especially since the migration crisis of 2015. Other countries may have different angles.
Which is ironic as the UK component started as a division of Hawker-Siddely, before the UK had even joined the EEC. HS managed to participate in the design process and ship wings to Toulouse before there was any free market... Which annoyed the Belgians and Germans whose design teams consistently lost the internal wing supply competitions against HS ( later British Aerospace ).
Somehow Airbus can rely on suppliers in the USA and Canada, and run assembly lines in China, but not post-Brexit UK? No, it's just internal corporate geopolitics. Finally Germany has a chance to cut the UK out of Airbus.