Wednesday, 8 August 2018

No Deal Brexit - Bring It On

There are various types of No Deal Brexit Tories.  There are those, ideologically driven Tories like Rees-Mogg, who really do want a no deal Brexit, because their Libertarian ideology makes them seek a return to some kind of 18th century, free market capitalism, based upon a myriad of small producers; there are those like Boris Johnson who have always believed that by arguing for a No Deal Brexit, the EU would be panicked into offering them some kind of wonderful deal, whereby they get to eat as much cake as they can stuff in their face, as well as have it; and then there is those like Theresa May, who have argued that "No deal is better than a bad deal", in the ridiculous hope that the EU might be bluffed into the thought that Britain has better cards up its sleeve than it actually has, and who also utilise this threat against the Remain members of her own party, to corral them in behind whatever deal she might actually be forced to agree to.

Of these different strands within the Tory party, it's only the Moggies that, at least, have the benefit of honesty.  The trouble is that as with Libertarian ideology in general, it bears no resemblance to the reality of the world in the 21st century, and their hopes of returning it to some kind of 18th century nirvanha, such as that described by Rousseau in The Social Contract, of the Swiss village, made up of self-sufficient peasant producers, free from state interference, is not coming back.

The larger constituency in the Tory Party revolves around those like Bojo.  Back in the days prior to the EU referendum, Bojo made clear his thought that what was required was a vote for Brexit, or something close to it, so that on the back of it, Cameron could be sent back to negotiate with a chastened EU, who would then volunteer another set of concessions to Britain, as had been offered up previously to Thatcher.  Back at that time, Bojo had no problem with the idea that there would then be a second referendum, whereby having been offered up all of these concessions, Britain could then happily vote to stay in the EU, and thereby both have cake and eat it.

That remains the strategy of Bojo, and those who think like him.  They think that the EU is somehow beholden to the UK, because they still, like the Moggies, have a view of Britain as being some significant global power, as it was in the days of Empire.  The manifestation of that is their repeated view that what is most important to the EU, is the budget contributions of the UK.  They seem to forget that Britain has already long ago, been given a rebate on those contributions, and more importantly, they seem to forget that the UK is a $2 trillion economy, whereas the EU is an $18 trillion economy, so that in the end, although they would miss the UK budget contribution, they are easily able to replace it.

As a result of their view, they think, and continually repeat the idea that all EU negotiations are only ever resolved at the last minute.  They think that by arguing for a No Deal Brexit, at the last minute, the EU, desperate to avoid the chaos that would ensue, will buckle, and offer Britain all of the concessions they desire.  But, that will not happen.

May also believes that by raising once more the prospect of a No Deal Brexit, the EU will make last minute concessions, more or less accepting her Chequers proposals, desperate to avoid chaos, desperate to avoid Bojo or Mogg taking over as PM, and at the same time, for similar reasons getting enough Tories, and Blair-rights to vote for such a deal.  That is why in recent days, both Bojo and his supporters, and May and her supporters have been raising the prospect of a No Deal Brexit now being more likely.

This is really desperate stuff from people who have run out of road, who have committed themselves to a course of action that they know will be disastrous to Britain, to the Tory Party that will be seen as having inflicted that disaster on the country, and to them personally in terms of their political careers.  The strategy of give us a good deal or I'll blow my brains out was never a good negotiating strategy, put forward by people who have no experience of  real negotiation, let alone negotiation from a position of weakness.  It was always the case, that the EU knew that a No Deal Brexit would lead to chaos in Britain, to economic disaster, political crisis, and destruction of those political forces in Britain that brought it about.  They still know that, and there is no reason, indeed much less reason now, for the EU to adopt any different stance in response to it than they have taken all along.  Indeed, the EU made its position clear from the beginning.  They said right at the start that the real choice was hard Brexit, i.e. effectively a no deal Brexit, or no Brexit.

Once outside the EU following a hard Brexit, the UK would be in the same position as any other country to try to negotiate some kind of trade deal.  That is all, but the time to negotiate such a deal is measured in years not months.  The only other option for Britain is what the EU has said all along, stay in the Customs Union, stay in the Single Market, accept the jurisdiction of the ECJ, just leave the political institutions.  But why would any sane government do that?  As Rees-Mogg, and Barry Gardiner have pointed out, if you are going to be bound by all of the rules and regulations, subject to all of the taxes and so on, but have no political representation in forming those rules and regulations etc., it is indeed to make you into a vassal state.  So, the obvious conclusion is to stay in the EU itself.

A no deal Brexit, will cause chaos in Britain, and as a large economy off the coast of the EU, it would necessarily have some effect on the EU too.  But, the effect on the EU, would be merely inconvenient compared to the actual disaster that would befall Britain and its population.  That is becoming clearer by the day as the various studies conducted by government departments, by local authorities and so on is illustrating.  Many of those problems in terms of access to medicines, the requirement to stockpile food, the grounding of aircraft and so on, have actually been known for some time.  But, just like Tory Ministers before the referendum claimed that negotiating a deal would be the easiest thing in the world, just as they claimed that there was absolutely no problem with the question of the Irish border, so too they have been trying to hide form the public the disaster that is heading towards them if a no deal Brexit occurs.

It seems that the public themselves are awakening to the real consequences of Brexit, and are turning against it.  Even Leave voters now say by 2:1 that they think that Brexit will be bad for the country!  There now seems a clear majority who, if another referendum was held would vote to scrap Brexit.  We keep hearing that a majority just want the government to "get on with it", but no one can say exactly what it is that they should get on with.  The government itself is split several ways as to what the "it" is they should get on with, let alone the Tory Party as a whole, parliament as a whole or the country as a whole.  The just get on with it meme, is the same kind of vacuous sentiment that was behind the referendum in the first place, and led into the current morass.

And, of course, if Labour were to come out clearly and say that Brexit always was ,and continues to be a reactionary policy that will seriously damage the working-class, and that Labour will campaign against it, the situation would completely change.  The "it" that could then be got on with, is scrapping Brexit altogether, and beginning to work with socialists across Europe to bring about a real change in workers conditions, and make a start on workers across the EU, collectively taking back control, in the only real sense possible.

The EU will not give Britain further concessions.  They will not accept May's Chequer's proposals, which do not even have support of her own MP's, and they will not back down at the last minute.  The Tories renewed proposals for a No Deal Brexit, lead to one place only, and that is to an actual No Deal Brexit, and all of the chaos and catastrophe for Britain, which that brings.  We should begin to prepare for that now.  The EU is already preparing for that, and it will be able to cope fairly easily with it.  It will have every reason to allow Britain to fall into a self-imposed catastrophe, because it will act as a powerful example to others not to follow Britain's disastrous example.  Moreover, with Trump now dashing the misguided hopes of Bojo and others that the US would somehow ride to their rescue, its clear that a No Deal Brexit, and the catastrophe for Britain that follows, would soon result in the UK, having to appeal to the EU to come to its rescue.  The EU, of course, would do so, but it would do so on its own strict terms, which would involve Britain losing all of its current opt-outs and concessions, having to adopt the Euro, and so on.

If there is any historical justice, it would mean the Tories having to negotiate a return into the EU, in a similar way to how the NUM had to negotiate a return to work in 1985, after having lost the strike.

Indeed, for those reasons, those in the UK who oppose Brexit ought to welcome a No Deal Brexit, because after such a short, sharp shock, the end result would be a step forward from the current situation.  If the Brextremists think that the threat of No Deal is one that can be used to frighten their opponents, they are mistaken.  It is no threat at all.  If they want to push ahead with No Deal, they should bring it on.  It will lead to their destruction, and the very opposite of the result they intend.  It would, however, be better to avoid all of the catastrophe that a No Deal Brexit would impose, even if just for a short period, before Britain collapsed back into the EU.  But, that requires Labour now, to grow a backbone, and to come out clearly to oppose Brexit, and to give a lead to that clear majority in the country who now want to overturn that decision.  Labour should say now, that it opposes Brexit,a and begin mobilising on that basis, for a General Election to remove the Tories, and to scrap Brexit.

It would have the advantage of also undermining the Blair-right wreckers in the party, and their plans to organise some fictitious centre party. 


George Carty said...

Don't some of the No Deal Brexiters (particularly the "Britannia Unchained" authors) dream of using Brexit as a way of forcing UK wages down to levels comparable with those of China and India? I often wonder if Priti Patel dreams of this as some kind of twisted revenge for British colonialism in India?

As for Rees-Mogg, would it be fair to say that (like Nigel Farage before him) he owes his prominence entirely to a fawning media?

If the EU insists that a rejoining UK must join the Euro (which would be overwhelmingly unpopular in Britain even among Remain voters, many of whom see it as the EU's worst mistake) would it not be likely that many Remainers would at that point give up on EU membership and instead just try to get as close a relationship with the EU as possible for a non-member (most likely EEA/EFTA, accepting freedom of movement and if necessary Schengen)?

Boffy said...

The Libertarian element within the Tories such as Rees-Mogg want a return to 18th century capitalism, based upon a myriad of small producers, where the collective power of corporations and of trades unions does not exist. That was the ambition of Hayek, Mises and co. who saw the development of socialised capital, as evidence of the development of a new bureaucratic-collectivist ruling class. In actual fact China and India and other emerging economies are necessarily moving in the other direction. India is set to be growing at around 7% p.a. and within a decade, the wages in those economies will have more or less caught up with wages in Britain.

The Libertarian/Austrians who are the clearest representative of that mindset of a mythical free market capitalism based upon the interests of those small capitalists - and usually highly represented amongst stock market traders, and financial analysts - need deregulation and all that follows in relation to weak or non-existent trades unions, low wages and poor conditions, because that is the only way such small capital can ever turn a profit.

Rees-Mogg actually has more lineage than that, and flows back to his father, who was also Editor of the Fleet Street Letter, at one time, a journal for Libertarian/Austrian minded speculators, as well, obviously as having been Editor of The Times. Rees-Mogg represents the necessary trend within the Tory Party of congregation around its core support amongst those small capitalists.

The Euro was not the EU's worst mistake. As with most things EU, it has simply been maligned and presented that way by a Eurosceptic Tory media. As a new currency, the Euro has been remarkably successful, as witnessed by its strength against the Dollar and Pound. Perhaps within weeks the Euro will rise above parity with the Pound, though it might weaken as the ECB stops backstopping Eurozone bonds, in the Autumn, when it stops QE, and starts raising rates. But, as with that process in the US, after a certain point, when Eurozone official interest rates rise, probably above 2%, it will start to strengthen again.

The main deficiency as far as the Euro is concerned was the failure to establish Eurozone Bonds, in place of the continuation of national sovereign bonds, and the failure to create the kind of state backing for the ECB, along with a single fiscal regime required by that. But, that is coming.

The disaster that is likely in the immediate aftermath of Brexit will mean that all the questions about some more arms length relation to the EU, will be too little too late. What will be required is emergency action. The EU will provide it, but on its terms.

George Carty said...

The Euro was not the EU's worst mistake. As with most things EU, it has simply been maligned and presented that way by a Eurosceptic Tory media. As a new currency, the Euro has been remarkably successful, as witnessed by its strength against the Dollar and Pound.

The strength of the Euro is scant consolation to the countries of Southern Europe (and of the Baltic states which have lost about 1 in 10 of their entire population to emigration), struggling with mass unemployment and unable to devalue to regain competitiveness. And even in Northern Europe it is notable how the economy of Eurozone Finland has struggled over the past decade, in a way that non-Eurozone Sweden has not.

Of course, if the European monetary union had been matched with fiscal union it would work a lot better, and I believe the Euro-federalist types (like Juncker and Verhofstadt) wanted this all along – only to be overruled by the Germans, who sought to exploit the Euro for their own mercantilist purposes.

Boffy said...

The emigration from Southern Europe etc. is not the consequence of the Euro, but of the weak economies in those countries. A country's economy cannot be made stronger or weaker simply on the basis of the currency it uses, apart from an economy such as Britain in the 19th century, or the US in this century, where its role as reserve currency gives it advantages. The problems faced by the economies in the periphery cannot be attributed to the Euro, but to the already existing weakness of those economies, and to the conservative economic policies pursued by politicians within those economies, and within the EU itself. Some of that weakness was actually remedied by becoming part of the EU as a much bigger economy/market, but a) part of that benefit derives from the use of a single currency, because it reduces transaction costs, b) it is ludicrous to believe that you can have a single market without a single currency, every nation state that arose, as such a single market adopted a single currency, and necessarily so.

The solution for the countries of the periphery is not the illusion of a separate currency, which is merely the first step to leaving the EU. It would a) impose additional transaction costs, and uncertainties for companies operating with that separate currency b) simply disguise economic weakness, by continual depreciation of the currency, which thereby leads to higher levels of inflation, and increased falls in livings standards for workers, whose labour is also thereby devalued along with the currency.

The solution for workers in those countries is not the nationalist delusion of a separate currency, but the reversal of the conservative economic policies that imposed austerity, together with the conservative monetary policy of the ECB which inflated asset prices at the expense of real capital accumulation, and the need to press ahead with the construction of an EU state, with a single fiscal regime, and EU Debt Management Office, so that investment could be directed across the EU as required.