Sunday, 20 November 2016

The Brexiteers Need To Get Over Themselves, Wake Up and Smell The Coffee

There is a basic problem with the Brexiteers. It is that they have a ridiculously exaggerated notion of the importance of Britain. They seem to be living in that 19th century world in which Britain was the workshop of the world, and ruled the waves. They need to get over themselves, stop deluding themselves with those fantasies, and realise that Britain is of little global significance, and its significance is diminishing by the day, and all the faster as a result of Brexit. The world just is not that into Britain, whatever the Brexiteers might wish.

The fantasy of the Brexiteers was illustrated throughout the referendum campaign when they put forward a number of such delusions such as the idea that Britain was significant because it was the fifth largest economy. But, the fragility of that claim was exposed when within a couple of weeks of the Brexit vote, the fall in the value of the pound reduced Britain to being only the sixth largest national economy. As other countries are growing at a faster pace, within a decade, Britain is likely to be only the 12th or 15th largest national economy. But, the fact of presenting things in terms of the size of a national economy itself shows how desperate the Brexiteers are to delude themselves and anyone else foolish enough to be taken in by them. 

The modern world is characterised by large economic areas, like the EU, not by national economies. The EU is larger than the US economy, for example, and the US has itself linked up with Canada and Mexico within NAFTA. Compared to the EU or US, the British economy is miniscule, whether it be the fifth, sixth or sixteenth largest national economy!

On that basis and the continued delusion of Britain's importance, the Brexiteers have argued that outside the EU the rest of the world will beat a path to Britain's door. The US under Trump is likely to be more protectionist, and his policy of “America First”, and the idea that countries, like Britain, that have a trade surplus with the US are somehow cheating it, is likely to see Britain suffer, rather than benefit with his Presidency. Countries that gave Britain, as a member of the EU access to their markets, are more likely to restrict that access than to extend it, when in return those countries only get access to the UK's 60 million consumers, rather than the EU's 500 million. Moreover, the UK simply will not have the firepower that the EU has in such negotiations, it will be like a small firm trying to do deals with a large multinational, and that always ends up with the former getting screwed by the latter.

The Brexiteers then tried to kid themselves and everyone else that because the other EU states sell more to the UK than the UK sells to the EU, they would have an interest on having zero tariffs. But, the fact is that the EU has already shown that its more interested in sending a message to any other nationalists that life outside the EU would be tough. The EU can put tariffs on British imports, in the safe knowledge that if Britain responds, UK consumers will still buy German cars, French wines and so on, just paying more for them. Moreover, that will even more be the case, when BMW relocates its production back to Europe, and so on, so that those things currently produced in Britain by EU companies, providing jobs for UK workers, become things produced by EU companies, employing EU workers!

The latest delusion in this respect takes the form that after the election of Trump, and his threat not to defend Europe, the EU will be increasingly dependent on the British military power, which is the largest in Europe. The argument here is that not wanting to alienate Britain, and its military power, the EU will give the UK a good deal on Brexit. Complete, Alice in Wonderland stuff.

Most of the EU sees Britain as a disruptive element in Europe, as it has been for centuries. Over the last 60 years it has been seen as the US's representative in Europe. Why would the EU want to tie itself to a dependence on the British military (which is tiny compared to the US military), if the EU could not count on the US, when the UK military itself is seen as simply an extension of the US military?

That is even more the case, given that many in the EU have been arguing the need for an EU Defence Force separate from NATO. In the past, France kept its military forces separate from NATO, including its nuclear deterrent. Trump's implied threat to Europe, and his close ties to Putin, give every incentive for the EU, to push ahead with an EU army, EU border forces and so on. In fact, it provides a fairly obvious basis for the EU to push ahead with closer integration, and to implement fairly immediate measures of EU wide economic stimulus.

The EU has large-scale integrated aerospace industries that could quickly be ramped up to provide additional military aircraft – obviously cutting British Aerospace and other British engineering firms out of that process when the UK is outside the EU. It can quickly ramp up production of tanks, military vehicles, and ships, as part of building this EU Defence Force. Not only would that provide tens of thousands of industrial jobs for EU workers directly, but it would also mean that EU steel production would need to be ramped up to meet the needs of building all these ships and planes etc. It would mean that demand for a whole series of other EU industries would be ramped up to meet this additional requirement. The advantage of that at a time when the need to shift from monetary stimulus to fiscal stimulus has been recognised across the globe, is obvious.

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