Sunday, 29 May 2016

Brexit backers: careful what you wish for

This week’s Observer publishes the results of a survey of economists, 88% of whom agreed that leaving the EU would damage the UK economy. 

The newspaper rightly points to the surprising degree of consensus among experts who usually thrive on tearing each other apart. Their agreement is encouraging, though I wish I could free myself of the suspicion that getting things right is as uncommon among economists as is agreement.

What I found more interesting was the views of the small minority of economists who believe Brexit would benefit Britain. One of the leading members of this band is Professor Patrick Minford of Cardiff University, a solid supporter of the kind of economics favoured by the most fervid of free market ideologues. Here’s what he has to say about the damage being done to the UK economy by the EU, and I make no apology for quoting him at some length:

Manufacturing is a declining industry in the West: it is uncompetitive for obvious reasons, because we have emerging markets like China that undercut it so massively. What is left is in specialised, high-tech and niche areas. In our economy we have largely let market forces take effect, with generally favourable results for employment and growth; as a result we have let manufacturing go where it was essentially uneconomic. That has not happened to the same extent on the continent. As a result we find there a great deal of protectionist pressure. The EU is accordingly a customs union: for raising tariffs externally on manufactured imports, so that prices are kept up inside the European Union for manufactures. In addition to tariffs the European Union protects manufacturing through quotas in certain areas like textiles, but mainly through informal agreements (as in cars) and anti-dumping measures. Anti-dumping operates both through explicit duties and more generally through the threat of levying them, which results in importers raising their prices instead.

Let’s be absolutely clear. What he’s saying is that the EU holds Britain back because it takes action to protect people, specifically wage earners, against the effect of an unbridled free market. The EU tries to take action against, for instance, dumping of cheap products in Europe by nations such as China.

Chinese steel production: crucifying European competitors
You might think, for instance, of steel. Chinese steel is produced to lower quality standards than European. Chinese workers’ incomes are held even lower than our own. Many feel that the EU ought to protect our workers against the dumping of a sub-standard product, made cheap by brutally restraint on wages. 

Not it seems David Cameron and George Osborne, who blocked such moves. 

Nor, clearly, Patrick Minford who feels that this is a matter of letting “market forces takes effect, with generally favourable results for employment and growth.” That’s a view that will be received with interest by the steel workers in Wales and England who recently learned that their jobs were going. “Favourable results for employment”? Meanwhile, growth in Britain remains anaemic. When are we likely to see the “favourable results … on growth” from preventing the EU taking action against unfair competition?

We need to get this right. Going with the views of Patrick Minford and voting for Brexit means ensuring that the dreams of Conservatives are realised: the free market is allowed to trample unhampered over the rights of workers. Or rather, a market that isn’t even truly free: it’s being blithely manipulated by economies like the Chinese who don’t have the slightest concern for British or other European workers.

The EU tries to prevent that; the Minfords, the Camerons and the Osbornes work to block it. Pulling us out leaves us completely at the mercy of these characters. As it leaves us at the mercy of powerful trading blocs utterly uninterested in protecting British rights.

Is that really what we want?

Above all, is that what Brexiteers in the British Labour Party, aligned with the Minfords of this world, really want? They claim to speak for workers’ rights. Minford shows they’re acting to undermine them.


Mark said...

You're perfectly right, but will arguments alter the course of popular credo.
After all, three years ago Cameron offered the oppportunity of a blebiscite, if and reason for reelected, now remains only a few days for the doxa to decide...

David Beeson said...

My fear is that the decision will be taken on a wholly inadequate basis, with an argument that sets the bar far too low (immediate financial benefit or loss) and guided by a great many lies...