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The consequences of Brexit

by Frank Schnittger Mon Jun 13th, 2016 at 09:30:42 PM EST

The Pollster average of polls has just put the Brexit side ahead for the first time, which given the trend those polls have been taking, means we now have to talk about the probability of the Brexit process starting in 10 days time. In To Brexit or not to Brexit: That is the question I examined the ramification of Brexit for the UK, and in A Tale of Two States I looked at the implications for Northern Ireland in particular.  In this piece I will embark on a speculative journey envisaging how a post Brexit Europe might evolve.

First of all, I am working off the assumption that the result will be tight, with Scotland and N. Ireland voting to remain in the EU but being swamped by the Brexit vote in England.  There is therefore a strong probability that Scottish nationalists will seek a new referendum on Scottish independence in order to remain within the EU, and Sinn Fein will call for a new referendum on a united Ireland to enable N. Ireland to remain within the EU.

Whether either referendum will be carried is open to conjecture, and much will depend on the timing and circumstances of the vote, but there is no doubt that the UK itself will be destabilized as a result. (The position of Wales is more ambiguous with many blaming the EU for the failure to support the Tata steel works in Port Talbot, as if any Tory led Government outside the EU would have done any different...)


Next comes the 2 year exit negotiations provided for by Article 50 of the Lisbon Treaty. If Wolfgang Schäuble has anything to do with it, it seems that the EU will take a hard line:  No preferential access to the single market without a significant financial contribution and the free movement of labour: both factors Brexit was supposed to avoid.  Therefore we can expect the re-erection of trade barriers between the UK and the EU..  Regardless of the outcome, the two year negotiation period could result in a lot of uncertainty, volatility and postponement of investment decisions resulting in reduced growth all round, but especially in the UK, even with a much devalued Pound.

The OECD expects Brexit to send shockwaves through the global economy and expects the UK economy to be some 5% smaller by 2030 than would otherwise have been the case:

The next most heavily impacted economy would be Ireland, with GDP growth expected to be 1.25% less by 2018. A detailed study (PDF) by the ESRI think tank puts the effect on bilateral trade flows at c.20% heavily concentrated on the food and pharmaceutical sectors and estimates that this will be only partially offset by Ireland's increased attractiveness as a location for FDI with a major competitor for FDI, the UK, no longer in the single market. Any disruption of the single all Ireland electricity market might also require the building of inter-connectors with France to lesson dependency on the UK in a crisis situation. The situation regarding 400,000 Irish born people in the UK and the 288,627 British born people resident in Ireland would also be the cause of some uncertainty and anxiety - but no more so than the estimated 2 million British Expats in France and Spain, many of whom will be voting for Brexit to stop immigration into Britain!

The lie that immigration has depressed workers wages by 10% and that it is immigrants rather than government cutbacks that are responsible for NHS overcrowding will soon be exposed if a significant proportion of these often elderly expats end up returning to Britain post Brexit. The Economist concludes that there are no good trading models for the UK to follow post Brexit, which is why the Brexit side have shifted the debate to the emotional low ground of barring immigrants and blaming them for the pressure on health services - a shift which has provoked a senior defection from the Brexit campaign.

But the EU as a whole would also suffer, with the OECD putting the impact on growth at c. -1% by 2018. So might this not provoke a more pragmatic attitude towards post Brexit negotiations with the UK?  My belief is no: Even at some cost to themselves, EU members will unite around the notion of making Brexit as painful for the Brits as possible, as otherwise they would only encourage other nationalist groups in other member states and risk the disintegration of the EU as a whole. It will be a fight for survival at that stage, and anyway, why would Frankfurt or other financial centres continue to allow The City in London easy access to the single market when they could pick up that business for themselves?

Almost alone in opposing this hard line will be Ireland, anxious to maintain previous bilateral deals underpinning deep trading and cultural ties with the UK, and concerned, above all, to prevent the re-erection of border posts on the North-south boarder.  Any setting up of border posts would simply be to invite a return of terrorism to the North by nationalists sensitive to any symbols of separation, North and south.  This is an issue on which Ireland may and should be willing to use its veto. Maybe some compromise will be found, allowing a tacit back-door trading of UK goods provided they are routed through Ireland, but it is hard to see how there will not be some escalation of trade and migration controls, bureaucracy, delays and costs.

Northern Ireland agriculture will also be hugely disadvantaged relative to the south which will lead to all sorts of smuggling, fraudulent paperwork, and ultimately, a need for even greater subventions from England. But will England wear it, especially if Scotland leaves and the much closer Scots-Irish ties become manifest? I can see a shrinking English Treasury simply dumping Northern Ireland at the first opportunity, leaving it with no ultimate destination or transition plan. A recipe for disaster.

Perhaps the rest of the EU will be galvanised into some kind of concerted action to offset the deflationary impact of Brexit, anxious to head off nationalist movements, and a slide into quasi fascism. A very great change of mentality and leadership would be required.  In many ways the UK will be withdrawing just as it has vanquished Europe, having gotten English accepted as the de facto lingua franca, and Anglo American neo-liberal economics and neoconservative politics as the dominant ruling ideologies.

It is difficult to foretell how the absence of the UK will shape EU policy, but a greater willingness to consider state intervention (at an EU level) may be one consequence. We may therefore see re-energised EU regional, structural, and cohesion policies and budgets together with a greater willingness to consider major inter-state infrastructural development projects part funded by the European Investment Bank. We can but hope.

Meanwhile, in England and Wales we will see competitive devaluations of the Pound, rising inflation, a sharpening of the class war to prevent wages following inflation, a deepening of regional and social inequalities as a cash strapped exchequer cuts spending, a lowering of environmental standards, and a reduction in the "red tape" which protects worker's rights: A right wing bonanza with key business interests much more influential in determining government policy.  

Labour may well decline into irrelevance as it loses its Scottish, Welsh and northern English industrial power bases. Attempts will be made to turn the Commonwealth into a "common market" and to gin up the "special relationship" with the USA. Great play will be made of the tiniest advances in foreign relations and England's role in World affairs "punching above its weight". No doubt the Queen will be used even more to provide a focus for nationalist sentiment and national unity. Tourists will flock in encouraged by the cheaper Pound.

A tacit competition will take place between the EU and the UK to establish which model of governance will be the more successful. England will flaunt the flexibility of a floating currency, the importance of local democracy, and the abandonment of red tape in promoting growth. But they also won't have the "Brussels Bureaucracy" to kick around any more in order to deflect attention from their own ruling class and the increasingly sharp divide between the comfortable middle class proud to have "re-taken control from Brussels" and the great unwashed, unemployed on minimal benefits, on zero hour contracts, and relatively declining wages. England will have to find a new war to fight in order to bleed off the young and deflect the masses from blaming their own masters for their plight. No doubt some future US President will create one for them.

The EU as a whole? Not so much. It's very inchoate size and diversity prevents it moving rapidly in any one direction. The EPP will gradually lose its grip beset by nationalist movement to its right and younger protest parties to its left. More comprehensive trade agreements (short of actual membership) will be negotiated with Turkey, Russia, the Balkan states and major trading partners world wide. Because of the size of the single market, these deals will be much more advantageous than anything the UK will be able to achieve on its own. Negotiations with the US and global corporates will be much more robust than those conducted by an obsequious UK retaining illusions of empire and anxious to play with the big boys on its own at almost any price.

Some writers even suggest Ireland would be better off re-joining the UK thus re-uniting Ireland and attaining greater representation in Westminster than it ever could in Brussels. This is delusional thinking. It's not going to happen, whatever the close and cordial relations which currently exist between the two states. Ireland is not going to turn its back on a hard won independence and much closer ties to the rest of the EU.

However the EU needs to be aware that in Ireland, as in the rest of the EU, there is increasing disillusion with the European project and the perceived centralisation of power for the sake of it in Brussels. Some new vision for the EU needs to be found, something more substantial that the elimination of roaming charges or the common availability of emergency healthcare. Unless the EU starts to deliver more concrete benefits, it's authority and prestige will continue to wane.

My suggestion would be that it needs to start developing common taxation systems, public healthcare, procurement, education, social welfare, pensions, energy, governmental computer systems architectures and consumer protection policies which individual member states can adopt or not at their own pace, but which provide a basis for better and more efficient administration, healthcare, inter-operability and transferability of educational standards, economies of scale and sharing of research. Perhaps one member state can become the lead developer for each area.

Yes this will involve an element of fiscal transfers, but on a basis that is transparent and fair to all. The EU has to start demonstrating that it can be more than the sum of its parts, and that every member state can, in one way or another, become a net beneficiary. It has got to stop being a case of "us and them", and the departure of the UK, which has consistently refracted its own class tensions onto a European plane will actually facilitate that process. There are actually times when smaller is more beautiful, and certainly a lot more workable..

Display:
One thing that I have wondered about is ... is this referendum actually binding?

I mean, we have it being positied by a government that is actively campaigning against it, and the UK has no constitution to speak of.  Regardless of the outcome, could not the Parliament just decide to nix the Brexit?  Sure, it would be political suicide for the Tories, but for conservative parties effectiveness tends to be less important than payday, and we all know who the conservative paymaster is here.

by Zwackus on Tue Jun 14th, 2016 at 05:58:05 AM EST
No, probably not.
by Colman (colman at eurotrib.com) on Tue Jun 14th, 2016 at 06:42:19 AM EST
[ Parent ]
No, it's not binding. But it would only be political suicide if there was some other party that could take over.
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Jun 14th, 2016 at 11:11:30 AM EST
[ Parent ]
It's not legally binding, but could be politically binding.  One theory doing the rounds some time ago was that the UK would not actually initiate the Article 50 procedure to start exit negotiations if the referendum was passed - particularly if by a small margin - but would seek to renegotiate the present terms of membership in some major way and the new proposals would then be put to a second referendum.

This worked in Ireland in the case of the Nice treaty but then Ireland is fundamentally pro-EU.  I don't think it would work in the case of the UK because:

  1. The EU has already given the UK a lot of opt-outs and rebates and is probably heartily sick of the "British Question" at this stage. Giving even more concessions might not just break the EU, but would set an awful precedent for any other country contemplating leaving or just trying to deal with an anti-EU minority.

  2. A lot of the opposition to the EU in the UK is pretty fundamental and wouldn't change because of some new concession.  The free movement of labour (immigration) is a pretty fundamental principle of the EU and it is about the only change that might cause a change of heart.

  3. A lot of people would be pissed off at having to vote on the same issue twice, and would just vote leave on principle.

There has only ever been two UK wide referendums in the UK and neither were required by law because of the British tradition of parliamentary Sovereignty. This one was promised by Cameron in an attempt to keep the two wings of the Conservative Party united under his leadership.  Instead, it looks like it could well be the end of him.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jun 14th, 2016 at 11:42:04 AM EST
[ Parent ]
Could such negotiations may stall the event sufficiently for there to be a new election which might return a Labour government which would have no interest in Brexit?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jun 14th, 2016 at 02:30:28 PM EST
[ Parent ]
Theoretically, yes, but the article 50 negotiations are only supposed to take 2 years, and the next general election isn't due for another 4 - that is unless the Tories implode.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jun 14th, 2016 at 02:40:12 PM EST
[ Parent ]
Well, Cameron has a minority government that survives by the sufferance of the Liberal Party. Is there any bridge too far for Clegg?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jun 14th, 2016 at 03:16:31 PM EST
[ Parent ]
That was the last coalition Government. In May 2015 the Conservatives won an overall majority and now govern alone.  Of course a split in the Tory ranks could change all that, and I wouldn't rule it out. But for the next few months, whilst negotiations with the EU are ongoing, I would expect them to stick together despite much mutual antipathy.

Perhaps a pro-EU rump of the party would split from a Boris Johnson led Government and precipitate a new general election, ultimately forming a coalition with labour and halting the Brexit process.  But I wouldn't put a bet on it.  Any party which flouts the "will of the people" can expect a rough ride...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jun 14th, 2016 at 03:35:20 PM EST
[ Parent ]
I had googled 'Stability of current UK Conservative government' but not notices that the search also brought up articles about the earlier government. :/)

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jun 14th, 2016 at 05:55:50 PM EST
[ Parent ]
For instance, would Clegg extend the same deal to a government headed by Boris Johnson?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jun 14th, 2016 at 03:19:15 PM EST
[ Parent ]
I think the key here is what happens within the Conservative Party: it's likely that there would be a coup against Cameron (or a resignation ahead of it), and then the Europhobe wing can go for the jugular.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Tue Jun 14th, 2016 at 02:05:46 PM EST
[ Parent ]
Puts Lizzie Windsor in a pickle, she'll lose all that wonderful CAP money.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Jun 14th, 2016 at 01:56:23 PM EST
Which is why I think Brexit won't happen. Too much money being lost by too many rich people.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jun 14th, 2016 at 08:08:43 PM EST
[ Parent ]
Not necessarily. The editor of the Mail apparently owns a large tract of land in Scotland which attract colossal EU grants, but he's campaigning to leave.

One of the more interesting aspects of this is that the elites have enough money and security to enable them to ride out any significant disruption short of a civil war. But any brexit related downturn in the economy will cripple those who have been poisoned against the EU by a generation of tabloid lies


keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 15th, 2016 at 04:37:15 PM EST
[ Parent ]
A little birdie told me the top-end real estate market in England has already taken a sharp turn down.  Money is moving to Ireland, Scotland, wherever.  Have you heard anything?
by rifek on Thu Jun 16th, 2016 at 09:18:38 PM EST
[ Parent ]
One consequence would be a lowering of US influence over EU policy as exercised through the UK.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Jun 14th, 2016 at 02:01:52 PM EST
Regarding consequences for the EU, let me be the devil's advocate: what if rest-EU corporations decide that the City, once outside the EU, is a useful tax haven and lobby successfully against strong reprisals against the UK?

Also, you say the EPP will gradually lose its grip, but what if the Brexit example will embolden the fascists and lead to election victories from Le Pen to Jobbik, and could quickly reduce the EU to less than the original six.

Meanwhile, what strikes me most about this Brexit campaign "debate" is that the average citizens supporting Leave show even stronger cognitive dissonance than British Europhobes usually do. Apparently the top concerns are immigration and the NHS, whereas Brexit would not stop immigration (in fact, the politicians who would benefit from a Leave vote would increase non-EU immigration!) and give a free hand to the Tories ad UKIP to wreck the NHS. Add to that that Northerners blame the EU for the decline of their regions, which is actually due to the undue economic weight of the City (Jérôme's "English Disease") and Tory and Bliarite policies.

*Lunatic*, n.
One whose delusions are out of fashion.

by DoDo on Tue Jun 14th, 2016 at 02:25:05 PM EST
EU corporations looking for a tax haven need look no further than the Dublin Financial services centre, and many have already done so...

Regarding the EPP, you are merely saying it's decline will be much more rapid and dramatic than I suggest.  That may be the case, but it will take more than Brexit to achieve that outcome.

UK citizens have been successfully brainwashed by their elite to the effect that the EU is the cause of all their travails, be it NHS waiting lists, immigration, wage stagnation, housing shortfalls, you name it.

As Trump is demonstrating, you don't need a shred of evidence to sustain those claims, merely endless repetition in popular media.

However the renegade sections of the elite promoting Brexit are going to cause the elite to come in for a road shock: They won't be able to blame to EU for everything quite so convincingly - although they will still try - "foreigners taxing superior British exports" etc.

That is why I predict a primary outcome will be the destabilisation of the UK itself - although that may be a slow process.

Most of the consequences of Brexit will be a slow burn - in the next couple of years all we may seen is a further stagnation of the UK and EU economies...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jun 14th, 2016 at 02:52:28 PM EST
[ Parent ]
For some speculation as to what the immediate consequence of a Brexit might be, read this.  Personally I think trying to predict market reactions is a bit of a mugs game.  Interestingly, however, the author speculates that the Franco-German response will be to push for a deeper integration of the Eurozone - something I have fleshed out in more specific detail above.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Jun 14th, 2016 at 03:40:40 PM EST
[ Parent ]
My brokerage sent me a letter: "there may be some market turbulence ahead because of the vote."

There is the idea that this will finally deliver the shock that EU leaders need to get back on track and fulfill the dreams of the United States of Europe. That is delusional. It will not be a tonic but a serious blow that will politically 'prove' that the EU has overstretched itself. There is no real narrative left to drive such a project forward. The Exiters have a positive narrative about taking back control. The Remainers sometimes look like the people who wanted to prevent Jeremy Corbyn and people are very much tired of being told what to do.

Schäuble said in a recent interview that even if the UK votes to remain with a slim majority it wouldn't be cause for pushing for deeper integration - because then the political class would have to stop and think about how things could have come so far. But another cabinet member (von der Leyen) said something like "if the goal is not the United States of Europe then the EU doesnt make sense". IMO the EU does make a lot of sense without grandiose dreams. An ever closer union would only be possible with a small core constituency but that's impossible now with 28 (27) members. Where's the realism? Instead, we keep on hearing people whine about how this was not what they dreamt of, how they want more than just a free trade zone, how they want a united Europe with universal European values as a positive world power. Forget it! The current crises have shown that values that were once deemed universal arent so universal. They were not even accepted or known to some people. It's almost a category error to envision the USoE as manifest destiny.

Another side to this rant: You can partially blaim Merkel for this mess, not just for making a hash out of the Euro crisis but also for unilaterally blowing up Dublin/Schengen. That really consolidated an anti-EU atmosphere. Last year I predicted her actions would make a Brexit more probable. Unfortunately, I was right. The EU will limp on, fray at the edges. Same old m.o. in Merkel's 'deflate the earthquakes' world.

Schengen is toast!

by epochepoque on Wed Jun 15th, 2016 at 09:51:04 PM EST
[ Parent ]
When they're done blaming Europeans, they'll probably switch to blaming Muslims and the new tide of non-Euro immigrants - because even if immigration really was the cause of all our woes, the Tories have no intention of slowing it down.

The real tragedy is the realisation that many British voters are simply gullible fools, with the political sophistication of medieval peasants.

On the up side, the fall out from the referendum will - sooner or later, one way or another - do huge political damage to the Tory party.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Jun 14th, 2016 at 08:15:23 PM EST
[ Parent ]
Medieval peasants sometimes revolted...
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Jun 14th, 2016 at 09:25:56 PM EST
[ Parent ]
Yes, but generally with the objective of replacing one overlord with another...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jun 15th, 2016 at 06:24:04 AM EST
[ Parent ]
And this one's all about replacing Cameron/Osbourne/May with Boris/Gove/Farage

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Wed Jun 15th, 2016 at 10:57:57 AM EST
[ Parent ]
I look upon this development with great interest.

Ireland appears indeed quite a good place to pursue one's career these days.

by John Redmond (Ladybeaterz@NolesAD.com) on Fri Jun 17th, 2016 at 05:50:35 AM EST
[ Parent ]
I fear for this country. A lot of Americans worried what their country would become if Trump were to win the Presidency, but are breathing a sigh of relief at the moment as he seems to be tanking in the polls.

However, I rather think the UK is going to find out what that America would be like

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 15th, 2016 at 04:40:16 PM EST
Boris has better hair than Trump, to be fair.

(It's a low bar, I know.)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 15th, 2016 at 07:44:14 PM EST
[ Parent ]
He supports bike lanes! Yoohooo!

Schengen is toast!
by epochepoque on Wed Jun 15th, 2016 at 08:30:13 PM EST
[ Parent ]
Yeah, but Trump supports that, too,  every other day.

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Wed Jun 15th, 2016 at 09:40:28 PM EST
[ Parent ]
This is a bad time for more trade agreements. They are rapidly falling out of fashion (TTIP, CETA ...). Imagine what would happen if more negotiations were to be held in the eastern direction.

Free Trade Is Dead - How did Washington get trade policy so wrong? And what comes next? - Washington Monthly

How did the trade experts get their forecasts so wrong? The main error was not realizing that recent trade agreements were less about opening trade than enabling offshoring. Nothing in the orthodox trade model ever anticipated this.

... Whether free trade has resulted in a net loss of jobs and incomes is a matter of long and continuing debate. However, there does seem to be a growing consensus that it has definitely contributed to the widening gap between the incomes of the rich and everyone else.



Schengen is toast!
by epochepoque on Wed Jun 15th, 2016 at 10:01:59 PM EST
At a global level, trade may have been very good for the relatively poor.  It has enabled billions of people in India, China and the far east to rise up out of absolute poverty.  It has enabled them to compete effectively against relatively much wealthier workers in "the West".

That was ok when the only effect was to depress the wages and prospects of factory workers in rust belt industries.  But when that competition started to hit middle class workers in good jobs in "knowledge" industries and high tech sectors, that was a different thing entirely from a political point of view.  It undermined not just socialist trade unions but the bedrock support of right wing parties as well.

The other thing was that trade deals became less and less about free trade, and more about the enforcement of often dubious patents and intellectual property (human genome, anyone?) and very lob-sided contracts. TTIP even envisaged companies being able to sue governments for loss of profits if a government decision disadvantaged them, and to do so in non-governmental commercial courts - effectively making corporations sovereign over rather than subject to governments.

The corporate takeover of democracy and the commodification of everything had to stop somewhere...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2016 at 07:15:46 AM EST
[ Parent ]
The corporate takeover of democracy and the commodification of everything had to stop somewhere...
Wrong tense. HAS to die! Neo-liberal vampires are very hard to stake. They can even go about in daylight.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 16th, 2016 at 09:13:04 AM EST
[ Parent ]
I consider TTIP (at v. least in its current form) to be dead in the water, but then I am an optimist, and YMMV.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2016 at 09:21:12 AM EST
[ Parent ]
Competition isn't exactly the problem: the problem is that the productivity increases haven't been passed down to the workers in the West - and that's more down to the concentration of power in the hands of capital than labour price competition.
by Colman (colman at eurotrib.com) on Thu Jun 16th, 2016 at 09:16:37 AM EST
[ Parent ]
Both.  Even after productivity improvements, western workers will struggle to compete with Indian & Chinese workers given current wage disparities.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2016 at 09:23:30 AM EST
[ Parent ]
They've made productivity improvements. They haven't got the money for them, the companies have.
by Colman (colman at eurotrib.com) on Thu Jun 16th, 2016 at 09:30:12 AM EST
[ Parent ]
I did say both... globalization has also led to a massive increase in profitability worldwide, partly by tapping into massive pools of low wage labour in developing countries, partly be increasing their bargaining power vis a vis governments and unions - capital can always threaten to go elsewhere - and partly through new reduced corporate taxation, technology, automation, economies of scale, and opening up new markets.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2016 at 10:10:56 AM EST
[ Parent ]
And the environmental, safety, and health regulation disparities.
by rifek on Thu Jun 16th, 2016 at 09:15:32 PM EST
[ Parent ]
It is the bipartisan allegiance of the ruling class, the 10%, that is the problem. That is what cements in place the capture of government by finance. Thomas Frank deals explicitely with this in 'Listen Liberal'. I was amazed to see him interviewed by Judy Woodward on the PBS News Hour. Judy seemed uncomfortable to incredulous.

Link: http://www.pbs.org/newshour/bb/new-book-listen-liberal-looks-at-democratic-party-schism/

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 16th, 2016 at 09:30:24 AM EST
[ Parent ]
European Tribune - The consequences of Brexit
 If Wolfgang Schäuble has anything to do with it, it seems that the EU will take a hard line:  No preferential access to the single market without a significant financial contribution and the free movement of labour: both factors Brexit was supposed to avoid.  Therefore we can expect the re-erection of trade barriers between the UK and the EU.

I think, if it comes down to it, trade negotiations will be swift. There is already the remains of EFTA around to provide examples. And most importantly, both sides lose if negotiations are stretched out. If Britain had been smaller, like say Greece, I think an example would have been made of it (like Greece). But Britains economy is to large and the elites to connected for that to be likely other then as a threat to make the population vote remain.

by fjallstrom on Thu Jun 16th, 2016 at 03:28:24 AM EST
It will indeed be interesting to see how those trade negotiations pan out.  Schauble et al cannot afford to allow British business to gain a competitive advantage by not having to make a financial contribution and being less tied up by regulations.  That would be to destroy the rationale for the EU altogether.  

In addition, a dramatic devaluation of the £ would already give British business a major advantage, and possible a short term growth spurt.  So I have to disagree with you.  The elites may be connected ideologically (and in some cases financially), but specifi elites, tied to specific enterprises, are in competition against each other and would be very sensitive to the other side gaining an advantage.

So I see the negotiations as very fraught:  Conducted against the background of £ devaluation and a lot of nationalistic crowing on both sides, and above all determined by commercial interests. German exporters will still want access to the UK market, but do have other markets to look to.  British exporters, not so much. NZ, Australia, Brics, USA etc. are a poor substitute for the single market.

It comes down to relative power, and despite Brexiter dreams, the Brits don't have it any more.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2016 at 06:43:49 AM EST
[ Parent ]
Britains economy is to large and the elites to connected for (Brexit) to be likely other then as a threat to make the population vote remain.

That will provide a stark illustration of just how unprincipaled IS the treatment of Greece - not that it is possible to shame the German government.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 16th, 2016 at 09:21:14 AM EST
[ Parent ]
Relative power IS the principle most international and commercial negotiations operate on, particularly the US, and increasingly, the EU.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jun 16th, 2016 at 10:31:37 AM EST
[ Parent ]
The EU is probably done for even if the UK stays. While it is fair to put most of the blame on the EU leadership that invented a crisis of state debt to muddy the waters over the most spectacular failure of capitalism since the great depression the train wreck was visible earlier.
Take the Maastricht rules. The purpose was to discipline budget demands. It was rethoric. And everything sorta worked as long as no one took them too seriously.
Same with Dublin. As written those rules are highly immoral and drop all responsibility on the poorer border states. So why did they even sign up? Because they had no intention of honouring them.
The EU has been held together by hypocrisy and selectively ignoring its increasingly misanthropic rules. As if it was set up to explode in national resentment.
And at least here in Austria the idea that the European Union is a "project of peace" is dying of old age. Highly educated young people like the free travel/Erasmus aspect. The part our leaders are most ready to give up. Young people without higher education don't like it at all.

To come to the actual topic: Charming that the leave campaign now puts "immigration" front and center. And on my  most pessimistic days (weekdays) I tend to think they might get quite a lot concessions here. Harrassing poor people is quite popular I hear. Still the shock of Leave winning might pop the property bubble and since the Tories have no plan b...
One final side note: In the old days before it was racism all day everyday complaints about EU bureaucracy were pretty big. And in a way I agree, the EU does lead to a lot of tedious paperwork.
However the people making this complaint are completely delusional. Because what produces all the overcomplicated rules is the single market they like not the political Union/power grab. The Council doesn't even keep notes. What does the Telegraph think a market is? Spoiler alert: Companies with law sections trying to outbribe each other are a major component. Every time you create a new market you put people into adversarial relationships. Now you need exhaustive rules and external controls.
That was my rant of the day.

by generic on Fri Jun 17th, 2016 at 04:09:55 AM EST
Yes, I agree. The EU is being eaten alive by the euro. As Larry Elliot said in the Guardian,;

`The single currency was dreamt up by a committee of central bankers, is managed by a powerful and unaccountable central bank, is designed to give top priority to establishing low or no inflation, is strongly supported by corporate Europe and is the centre piece of a European settlement that militates against currency controls, trade restrictions and government intervention in the economy." It is essentially a sound-money, free market scheme.

It requires wage stagnation at the centre, crippling loans to the periphery leading to austerity in both. The EU is losing momentum because the majority of the people within it see this central project as leading to their lives being made much worse.

Democracy government cannot survive the deliberate ruining of the life chances of the majority of its people.

If te UK leave the EU, it'll be dead within a decade, if we stay, it'll be dead within a decade. Either way...

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jun 20th, 2016 at 08:11:25 PM EST
[ Parent ]
If the EU is the horrible mess it has become, it is largely because of things Britain has pushed hard for. Hasty expansion of the EU into Comecon countries? Tony Blair's fingerprints all over it. There's a reason he was pushed for Von Rompuy's job - the EU carries his imprimatur pretty well, and it isn't a pretty one.

Of course there are other responsible parties, but Britain played a key part in creating the mess from which they now appear to want to extricate themselves.

More power to the English, they are finally wising up, though I am glad not to be in England, because I suspect the consequences of this will not necessarily be positive for England, by and large. Berlin's wrath can be hard, as the Greeks have experienced.

by John Redmond (Ladybeaterz@NolesAD.com) on Fri Jun 17th, 2016 at 05:47:10 AM EST
Wasn't that a Thatcher Idea rather than Blair? seem to remember it was her that made "Wider rather than Deeper" speeches to assuage her own frothing lunatics,  and paperwork only worked its way through so Blair ended up putting his signature on it

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Sat Jun 18th, 2016 at 07:28:53 AM EST
[ Parent ]
by the time Slick Tony and his band of gliberals pushed for EU expansion.
by John Redmond (Ladybeaterz@NolesAD.com) on Sun Jun 19th, 2016 at 07:15:41 AM EST
[ Parent ]
You've said this before, but it's simply not true. The rapid and de-stabilising expansion eastward was a US project to peel ex-Soviet bloc countries away from Russian influence.

This project finally ground to a bloody halt in Kiev.

If you think it came from the UK, you genuinely weren't paying attention. Those phone calls didn't go to London, John Major barely featured on Clinton's phone list, they were going to Berlin and France.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Jun 20th, 2016 at 07:50:14 PM EST
[ Parent ]
Thank you for sharing these thoughts. The UK entered an escape trajectory in 2011 when it opted out of the ESM; this referendum is only a consequence of that. And it will be certainly made an example of, to whomever else thinks of leaving.

You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Fri Jun 17th, 2016 at 08:19:06 AM EST
Now that's a twist: Orban wants to put in newspaper adverts imploring Brits to vote 'remain'.

Schengen is toast!
by epochepoque on Sat Jun 18th, 2016 at 10:51:26 AM EST
Brexit dominates fears for the global economy - FT.com
The sentiment guiding international investors and policymakers over the last week could perhaps best be expressed by a sharp indrawn breath. As one opinion poll after another suggested that a majority would vote for Britain to leave the EU, Brexit has emerged as the biggest short-term risk bar none for the global economy.

The result has been a flight to safety in markets, a display of caution from central banks, and frenetic activity behind the scenes to prepare for the turbulence that could follow next Thursday's referendum.

Added to existing questions over US and global growth, Brexit worries have fuelled a rally in the safest sovereign debt, pushing yields on German, Swiss and Japanese debt further into negative territory and sending the yield on 10-year US Treasuries to a four-year low. A sell-off in Europe's periphery suggests investors are having renewed doubts over the EU's institutional stability. Polish bonds are suffering from calculations that poorer members would receive less from Brussels if the UK's departure cut the funds available.

This is nothing compared with the volatility that is likely in the immediate aftermath of the vote. Sterling -- already the weakest of any major currency against the dollar this year -- would be the first casualty of a decision to leave. A stampede into havens such as the Swiss franc and yen could cause problems for countries already struggling with uncomfortably strong exchange rates.

by Bernard on Sun Jun 19th, 2016 at 03:29:54 PM EST
Brexit Poses Multiple Risks to Europe's Stability - WSJ

Central and Eastern Europe may be particularly vulnerable to political contagion. The Brexit campaign is already having an impact on politics in the region, with right-wing nationalist parties capitalizing on fears of an increasingly German-dominated EU, stripped of its most pro-free market member and the most powerful champion of non-euro countries. At this month's Prague Economic Summit, the prime ministers of Poland and Hungary warned they would seek big changes in the way the EU operated if the U.K. left, raising the prospect of further clashes with Brussels over differing interpretations of what constitutes the rule of law and European values.

Brexit could unleash hard-to-control economic forces across Europe, too. Some downgrading of eurozone growth forecasts seems inevitable, given the likely disruption to British trade and the prospect of financial-market volatility leading to higher real interest rates. A stronger euro, which would hurt European exports, would also be likely if, as expected, sterling depreciated and the U.S. Federal Reserve decided Brexit was a reason to delay its next interest rate increase. Some eurozone central bankers fear that uncertainty over the future direction of the EU would lead to an even sharper shock as companies and households put planned investment and spending on hold.


Maybe?
by Bernard on Sun Jun 19th, 2016 at 03:39:39 PM EST
[ Parent ]
And John Oliver explains it all



keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Jun 21st, 2016 at 11:41:41 AM EST
Another consequence
British Prime Minister David Cameron said Monday night that Israel needs Britain to remain in the European Union to help it fight BDS. Cameron, who was addressing a Jewish community event, was speaking three days before the referendum on Britain's membership of the EU.
by gk (gk (gk quattro due due sette @gmail.com)) on Tue Jun 21st, 2016 at 08:30:40 PM EST
Nobody is saying that there are no downsides to remain.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 22nd, 2016 at 10:43:14 AM EST
[ Parent ]
Though I would very much like the Remain side to stop trumping out economic experts as if anyone should listen to them.
by generic on Wed Jun 22nd, 2016 at 12:44:15 PM EST
[ Parent ]
Not to mention that even if they do listen to them, they may draw different conclusions. If you're trying to find somewhere to live in London, the fact that Brexit may cause property values to fall would be a reason to vote Leave.
by gk (gk (gk quattro due due sette @gmail.com)) on Wed Jun 22nd, 2016 at 12:52:55 PM EST
[ Parent ]
I have long argued that the answers are very nuanced and that, lacking that, both sides arguments sound dishonest.

I think there are good arguments either way, but I've rarely heard them, drowned as they are in a tidal wave of contestable claim and counter claim.

And the perception of dishonesty is also underpinned by actual dishonesty and worse, particularly but not exclusively, from Leave.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 22nd, 2016 at 01:29:23 PM EST
[ Parent ]
That may make for a nice soundbite, but all in all, I'd rather listen to experts than to people that make things up as they go along.

Which is not to say that economics gets everything right, far from it. But actual experts (not mouthpieces) do recognise that.

What irks me is that we are supposed to listen to experts in that case, but to ignore them in their even stronger consensus that Osbornomics are a disaster...

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Wed Jun 22nd, 2016 at 01:57:26 PM EST
[ Parent ]
This is probably the essay that many of us would have liked to have seen at the start of all this kerfuffle

All that is Solid - Dear Undecided Voter

I'm a socialist who will be voting Remain this Thursday. But don't let that put you off. I'm not going to patronise you with a bucketload of stats, or insult your intelligence by saying this is right and that's wrong. Nor am I about to spring a persuasive piece on you to nudge you in Remain's direction. I'm interested in helping you make up your own mind by giving you things that, I think, are worth considering and thinking through.

In response to understandable confusion about the costs and benefits of Remaining vs Leaving (and vice versa) a lot of people have expressed a desire for "unbiased facts" provided by someone who hasn't got an agenda. I'm sorry to disappoint, but you'll be searching for that someone in vain. When it comes to political questions, invariably those "expert" on the issue will have an opinion on it and use their knowledge and standing to push that position. Yes, it's frustrating, but you're going to have to think about who you trust the most. And if there isn't anyone, think about why leading advocates for each side push the arguments they favour.

Consider the two key figures in the campaign, David Cameron and Boris Johnson. It's down to you to judge the merits of their respective positions, but also ask why. For the Prime Minister, the decision to include an EU referendum in his party's manifesto was to try and stem the electoral bleed to UKIP. For Boris Johnson, well, it's all about Boris Johnson. How about other leading politicians? Jeremy Corbyn's platform combines criticisms of the EU with a support for Remain. Why? Some has to do with party management (Labour is overwhelmingly pro-Remain while Jeremy is EU-critical), but there is also the view that the EU guarantees certain minimum protections the labour movement have fought for since its inception. Ditto Nicola Sturgeon. As First Minister, she believes Scotland is best served by the UK remaining in the EU. The "agenda"? Years of stability and quiet economic growth under the SNP's stewardship enhances their reputation as a responsible government, which down the road makes the jump to independence less of a risky proposition. And Nigel Farage? He has built his political career around leaving the EU. That, of course, is a perfectly principled position to take. But, again, why? It isn't because of an eccentricity on his part: it's the central component of a project to remake Britain in which the market is king, the welfare state is residual, the NHS is governed by an insurance system, and that certain values predominate over others. Whether you find that vision compelling is down to you.



keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 22nd, 2016 at 02:12:41 PM EST
but it's all a bit too late now.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Wed Jun 22nd, 2016 at 02:13:24 PM EST
[ Parent ]


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