I promise; I tried. I went for a drink with a long time friend who is dedicated to Brexit yesterday. He had read my blog on what I think to be the gargantuan risks arising from Brexit, and I think it fair to say he believes I have massively overstated my case. To cut to the chase, we tried to find common ground, and failed.
He thinks I am blinded by expertise (which he does not trust, because he thinks it destroys the entrepreneurial spirit that he believes underpins Brexit) plus a devotion to the EU, which he cannot understand since he believes anyone left of centre must mistrust it. And in that sense he is right: of course I have massive reservations about the EU, which needs reform, but just not in the way he proposes. which is through a shock delivered by hard Brexit.
In turn I think he, like many Brexiteers, is blinded; in his case by a belief in three things. The first is that the economy largely functions apart from politics and regulation and that the changes arising from Brexit will have little real impact on day-to-day life or well being.
Secondly, he believes that markets will clear any disruption arising from Brexit almost instantly. So, for example, he is quite sure that the supposed labour shortages in East Anglian agriculture, where hundreds of thousands East Europeans work at present, will be solved overnight by an increase in wages that will send replacement local employees into the fields in their droves, which wage rises will however have little impact on inflation whilst reflating long suffering rural communities.
And third, he thinks that even if this does not happen there is no risk because a flood of new Russian, Chinese and other capital will pour into the UK after Brexit to replace lost capital.
We played out these scenarios. Looking at the agricultural sector that dominates my home region I suggested that many local businesses are intensely fragile, and operate (like a great many households) on the basis of tiny capital bases. What this means is that even a few weeks of disruption created by labour shortages and so a lack of goods to pack, ship and process, will be enough to tip many of those local enterprises into failure. And I cannot see how that disruption will not happen if a rapid ban on migration (or a marked reluctance on the part of EU citizens to travel here) as a consequence of hard Brexit results in labour shortages.
He did not dispute the fragility of these enterprises, where a lack of cash flow will be crippling. But he simply believes that markets will adapt. He says labour rates are already rising. I pointed out that this is because of a change in the minimum wage. He says new labour is being attracted in. I pointed to new data showing that at present inward EU migration is growing. And as a result I argued that the market is not, then, adapting as he suggests. Its current behaviour is instead being reinforced. And in that case I simply cannot see how the hard Brexit he openly desires, without transition of any sort, cannot but be disastrous.
To offer an analogy, I think such a Brexit will be like the banking crisis in October 2008. Just as there was then, hard Brexit will deliver the most massive liquidity crisis in the UK. Goods will not move. Crops will not be picked. Planes may quite genuinely not fly (a scenario dismissed as impossible by my friend, and yet wholly anticipatable). Regulatory agencies may collapse under the weight of incremental work growth of a staggering scale. And as a result cash flows will fail for businesses, and so for households.
I stress, that in saying this I am not saying that it is impossible to leave the EU. I doubt its wisdom. But I do not doubt the possibility. But as I explicitly explained over a beer, the crisis we will face is in the rate of change Brexit will create. In mathematical terms (my friend has a maths degree), the first differential here is leaving the EU. The second is the rate at which we do so. So long as the rate of change is manageable we can leave. If it is too fast the result is catastrophic (I use the word with care).
Our problem is that a great many people in the UK think we can leave the EU without consequence: they share my friend's desire for hard Brexit now. They cannot see the problem. They think, as did the market fundamentalists on finance prior to October 2008, that if there is an issue to solve markets will resolve it. Or to put this in a local context: there will be a suitable supply of British labour waiting to work in East Anglian farms on the day the Bulgarians leave at pay rates that can be set instantly and appropriately which can be fully recovered from supermarkets who will instantly pass the consequential price rises on without concern or delay to consumers, whose demand will not alter as a result, and everything will continue to function without delay or cost as a result of the change that hard Brexit and the expulsion of a pile of people from the UK, which is what is expected and demanded, creates.
This, in my opinion, naive belief did not deliver in financial markets. And I am certain it will not do so in post-Brexit markets either. The reality is that there aren't people lined up to work. Pay rates for post-Brexit labour are not agreed. Supermarkets will resist all price increases at a time of uncertainty. And in the middle farmers and all the related activities that feed the agricultural economy with work will be squeezed of their working capital and many will go bust. In my opinion Brexit could induce the biggest liquidity crisis in this country's history, and not just in agriculture. The delays in the flow of goods in other sectors will have the same impact: working capital will disappear overnight in longer supply chains.
And of course this will have knock on effects until we get to a banking crisis. It would not take long. That's because, as we now know, once liquidity begins to evaporate it disappears remarkably quickly.
My friend thought my analysis was wrong. But in case it was not, and he conceded the possibility, he was sanguine. As he had noted me saying in this blog, there is a mountain of money in the world at present looking for a home and accepting negative interest rates whilst seeking to find one. He thought the moment after Brexit and at the first hint of economic collapse Chinese, and most especially Russian money would pour into the UK to buy up distressed assets, bolster the pound, and revive the economy.
I expressed my distaste at the idea of a Putin-controlled Britain. I was firmly put in my place about all the merits Putin has and his enormous achievements in Russia.
Our evening did not last as long as I had expected. My friend doubted we would be seeing each other again socially. He would be sticking to his many other friends who share his views. They were right, and were clearly going to win.
I was saddened. My friend seems to think his friends must all share his views and none must be Remainers. But I was also troubled. My ex-friend and I met half a mile from Oliver Cromwell's house last night. He was an Ely resident from another era when people of differing opinions could not meet socially. It felt disturbingly close.
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It seems many Brexiteers (maybe your friend too) believe that Britain is still a great nation with great influence in the world. Brexiteers will constantly remind you of Britain’s ‘great and glorious’ past and how we are still the 5th or 6th biggest economy in the world.
In reality we represent between 3-4% of global trade, if the UK disappeared from engaging in world trade, most of the world would barely notice.
To paraphrase from Anthony Barnett excellent new book ‘The Lure of Greatness’ – The notion that Britain still has the ability to shape the world is nonsense. Britain maybe able to help to shape the EU – but only as an active member.
I heard all of that first para…..
The British uniquely believe that they can be what they essentially are, and always have been – pirates (we have conjured up so many euphemisms to cover it – buccaneer, privateer …. it is all piracy), and pretend to be something more; somehow orchestrate a continuing position for themselves in world finance, or international law, or diplomacy, or world trade, or whatever you care to imagine, in which they are entitled to assert a special British privilege; to function as the world approved arbiter of standards, or function as a kind of informal, overarching court of final appeal: or both. It is, of course absurd. At the same time the British are (I can only think) so self-absorbed that they seem to think that nobody will notice the lacuna, the flaw in the proposition.
I confess I always took the view that we principally joined the EU in order to undermine it. For the British, the European Union has always been seen as simply a dubious modern version of Universal Monarchy. We cannot accept a united Europe. We disguised our abject delusion-cum-hypocrisy by claiming that we understood we were just joining a ‘common market’; when quite clearly, from the very outset its principal purpose was nothing of the kind.
It is the deepest irony that our objections to immigration are so closely related to the rapid expansion of the EU over the last twenty years; when Britain was the most powerful advocate of rapid expansion (and the furthest from the ‘frontline’; Britain is, of course the Chateau General of the EU). Of course the real reason for the British pursuing the EU’s rapid expansion was much less concern for the new members; but in order to fragment and dissipate the capacity of the EU to operate functionally as a cohesive single entity.
If you wish to characterise the whole British approach to Europe in one word, the one word is “insincerity”.
I have to say that I concur with John S Warren’s analysis and my past contributions here will bear this out.
I too face this sort of intransigence at work. What I think has happened is that these days with social media, the most silly ideas and notions get air time and such proponents find others with similar views. This creates an impression that the individual concerned must be right. Finding others validates your views. Coming here to this blog works the same way for many of us progressives if we are honest.
However the departure from the BREXIT mob is that there is little from what I can see of a firm factual basis for the BREXITERs feelings – whether is it extra money for the NHS or stupid ideas about EU sovereignty. And the EU itself does not help.
I would agree however with your friend Richard: the economy will bounce back because people/society endure. They/It are resilient. But the problem will just like we see after every financial crash in that each time this happens not everyone gets back on the wagon. And the ‘wagon’ is smaller and in worst shape than before. We lost one (two?) of the wheels in 2008. I think that rest will fall off in 2019 or thereabouts – if not before.
And no doubt, the wagon carcass will continue being dragged along the landscape without its wheels as other scapegoats are found by the media to blame for our woes. That UK will look almost like a third world country in my view. The rich will do well of course since it is they who will benefit because they also raised a lot of money for this to happen.
But the deeper question – ‘How did we end up like this’ reveals an unpleasant truth that our democracy has ben captured by vested interests and as such is no longer functioning properly as intended. Parliament seems to be a rich mans playground. That to me is even more frightening than BREXIT itself. We must fight some how to reclaim it.
You are right, of course: there will still be an economy
In all these discussions the issues are relative. My fear is Brexit will be a substantial disruption and we will, as you note, then be relatively worse off even when some recovery from the shock happens
Good grief! The Brexiteers really DO sound like a religious cult, if your (ex ?) friend is anything to go by!
What text-book tosh, almost identical to my post about the equilibrium economist (head in the oven, feet in the freezer, on balance comfortable) that led to some misunderstanding of what I was saying, which is that crucially, such textbook economics relies on ideal constructs, not effects.
If I could sum up your view on economics, Richard, that would be it – effects, not ideal constructs.
And your invocation of a period in our history when extreme “religious” views led to bloody consequences is sobering indeed, reminding of perhaps the most devastating example of the results of cultic behaviour anywhere – way worse than Pol Pot, and that is the Taiping Heavenly Kingdom of Peace Rebellion in 1851 China,
This is said to have cost, in some estimates, 100 million deaths, and was led by a leader who claimed to be the younger brother of Jesus Christ!!
See https://en.m.wikipedia.org/wiki/Taiping_Rebellion
And
https://en.m.wikipedia.org/wiki/Taiping_Heavenly_Kingdom
Thanks Andrew
That’s a very sad story, Richard. You are right, of course. The benefits of leaving will take a long time to come through – perhaps never. A hard Brexit is going to be hell.
Strange that someone who has done a maths degree is so incapable of logical, rational thought when dealing with the real world of organisations, politics and human psychology. Having obtained such a degree myself I can only assume he specialised in some of the more arcane areas of pure maths which, whilst often fascinating in and of themselves, don’t necessarily tell you much about the real world on a day to day basis.
He strikes me as a typical Brexit fanatic; an absurd belief in the operation of ‘the market’, believing that if only it is left to itself, it can sort out all of life’s problems, combined with a pathological hatred of the EU which means even if a ‘hard’ Brexit does cause huge problems, it will still be worth it, and anyway, we’ll be rescued by those wonderful benign Chinese and Russians. So much for ‘taking back control’
That would be the China still rigidly controlled by a bunch of Communists, and a Russia run by an ex KGB ex communist party official who is actively trying to destabilise Western democracies. Funny how so many of the EU haters admire Communism isn’t it?
Sorry to say this Richard, but your friend has become yet another member of the Brexit cult, completely immune to rhyme or reason. These people are dangerous,and have to be opposed with everything the rest of us can throw at them.
My brother told me about my 83 y.o.Mum’s Brexit-rant when she was up there a few weeks ago. She objects to ‘all these foreigners’, i.e. Asians from outside the EU, but doesn’t mind the Poles, because they were on our side in WWII (and are also white). When my sister-in-law (Austrian, but has been here for 25 years) tried to object, my Mum said that, as a foreigner, her view didn’t count!
Your mum needs to read http://www.theneweuropean.co.uk/top-stories/the-problem-with-the-english-england-doesn-t-want-to-be-just-another-member-of-a-team-1-4851882 . But she may become very angry as a result.
Nevertheless, I recommend the link to all.
Hi Richard thanks
I have a post on Progressive Pulse today and have looked a few scenarios. Can I shamelessly put in a plug? http://www.progressivepulse.org/brexit/public-and-power-broker-brexit-tribes-and-the-mirror-of-erised/
It is deeply sad the belief the Brexiteers have that they are right. I have also had discussions both in person and via various blogs with them and find their invincible optimism extraordinary. The know with 100% certainty that Brexit will be a tremendous success. I still like Seaan O’Neill’s response to a Brexiteer who knew with 100% certainty that it would be Utopia
“ the hummin’ Of the bees in the cigarette trees, by the soda water fountain, near the lemonade springs where the bluebird sings….”
I’m confused, my own crystal ball is showing fire flood and famine following a petulant exit reverting to WTO terms. I’d negotiate what your own little voices are telling you more closely before stating all this as if it has already unquestionably happened. We are actually on uncharted sea……
Sean
I agree with all that
Thanks
Richard
Something of a hard read, Richard. Not because of the style, but the content should be an eye opener to anyone who can regard this Brexit process with at least an open mind.
I agree with you about the likelihood of this being a disaster. Nothing I have heard from politicians or in the media from those who should know these things, gives me any confidence that there will be a happy conclusion. The UK has written itself a suicide note which all but the top 1-2% will have to endure.
Our massively useless media (almost entirely owned off-shore by foreigners, others who will not be touched by this) has abandoned any attempt at neutrality, honesty, or principle. The British people have been sold a pup and we will suffer badly. (I really hope I’m wrong, but …)
Agreed
It was tough to write
Heh, remind me not to go to the pub with you or our conversation will be a blog next morning!
“He thinks I am blinded by expertise” – I guess we’ll see who’s right soon! The question is will you be willing to share any of your stockpiled tins with him when he comes a-knocking!
I suspect he’ll have more
I know him well enough to be confident of that
First, I am sorry about the final result of your friendship.
With regards to your arguments. I see nothing wrong with your analysis. All of those things “could” happen. If they do happen, then you can either interpret it as.
1. Brexit was stupid
2. What an astounding mess our political classes have created.
If there is one factory in town (due to economic policy) then I have every right to work for that company, or accept poverty. Is that good policy?
Much of the Remainer arguments is that there will be economic destruction if we don’t choose option A. Under what circumstances would that be ethical when it is a purposefully manufactured choice (unlike say, Climate change).
I am not sure I follow your logic
I suspect you and your friend are both right within your own terms of reference. More and more these debates will divide us based on our own shared sense of values as either :
Neo-Liberal Capitalists – who believe concentration of wealth and power are desirable and create a fitter leaner society more ready for Global competition
Social Capitalists – who believe that the purpose of an economy should be to enrich the lives of all citizens by building connected and sustainable communities that provide economic opportunities for all
Most Brexiteers are too politically sensitive to get trapped admitting it, but they do expect to go through a severe economic squeeze as a result of a hard Brexit. We can expect further dramatic falls in the pound which will drive inflation higher, additional sqeezing of household spending and welfare budgets, and driving of many small businesses into bankruptcy. The difference between us is that they simply dont care. The neo-liberals still see this as the inevitable “creative destruction” that squeezes out inefficient businesses and creates a fertile field for new investment. Large companies can indeed automate much farming with emerging technology, particularly if they shift into types of produce that lend themselves more easily to automation. Of course only the big companies with access to capital and expertise will be able to do this, very likely backed by foreign investors who will snap up cheap land and assets once the weak pound and bankruptcy makes them vulnerable. The impact on people and communities is simply seen as collateral damage.
Only new grass roots political movements and voter action can convince these people that this is not an acceptable future for the UK. We need an alternative to the neo-liberal narrative which shows that investing in our people and communities can produce better outcomes for both rich and poor, than perpetuating an existing economic model that simply transfers more and more wealth to the top of society, and leads ultimately to economic stagnation as households are left without the income to support further economic growth.
Winning this battle of narratives is now more important than ever, but it must be based on new economic thinking. Simply returning to the Keynesian model of pre-1970s socialism based on state ownership of assets and public spending to create full employment will no longer work. In an automated and Globalised economic system, achieving full employment as a means of driving up average wages will increasingly be impossible. We need a basic income that provides guaranteed sharing of wealth and prosperity regardless of employment, combined with government interventions targeted in those areas where we know free markets cannot deliver : affordable housing, universal healthcare, public funded education, and pioneering investments in new technology. These investments must be co-ordinated to encourage entrepreneurial success of small businesses, and schools in particular must prepare our children less to be job seekers, and more to become job creators in their own local communities. In short our post-Brexit future must be neither left, nor right, but forward.
Just don’t say third way!
Agreed. I think the word we need is ‘ holistic ‘
I was very careful to avoid it, but even in their wildest imaginations I don’t think Blair or Brown would ever have considered Basic Income.
But that’s because all ideas have a time when they become relevant
And UBI has its now
John Hope: No, definitely not “holistic”, which has connotations of mysticism and religion even when supported by conservation laws (I see no mention of such laws in this discussion).
The correct term is “integrated”. We’re discussing an economy, an artefact rather than an evolved living system.
here is hard Brexit and the ideology that under pins it
http://www.ifreetrade.org/why_free_trade
i personally abstained from the vote as i thought it was a bad idea, the debate was both dissonant and dangerous, it was lose lose from the outset. to sit outside the argument was to witness the bankrupting of democracy via a binary vote that polarized opinions to zealot proportions.
A very poignant piece.
Your friend moves off into a more comfortable orbit. But don’t we all prefer an echo chamber to a bullpit? Looking at his arguments, which reflect much of what the leading Brexiteers have told us and projected by most of the press and the mantra of the timid doubters “make the best of Brexit”, they seem to rely on an extraordinary conjunction of good luck and faith in “the market”. While no one can plan on the basis of expecting good luck, surely people have seen through the dogma of “the market” as being the solution to every crisis?
But how do we who foresee looming catastrophe avoid also being locked in an echo chamber?
I doubt if the grotesque, lop-sided, one-sided public ‘debate’ on Brexit (what debate?) could be described as an ‘echo chamber’. All I ever hear is a snorting, foaming-at-the-mouth, intolerant assertion that Britain is to “get on with it” (but what?): that the British people have “spoken” (!) and nothing is now to be done but for the Government to execute the detailed instructions given them by the British people (what instructions?).
Actually people change their mind – at 48%/52% the majority is fragile and in normal politics could quickly and decisively be turned over. I suspect the British public is already changing its mind. In my opinion the orthodox media and Brexit politicians are attempting to hustle and bully the opposition into silence before the whole rotten argument collapses under the prevailing ineptitude at the very top. If the best Brexiteers can do in this one-eyed media world, is to have 48% (probably the high-point) against Brexit, then they possess very little at all; almost nothing. They are hanging on to the window cill (sill) by their fingers. Brexit and Brexiteers almost universally generate no public confidence in their talents, competence, wisdom or capacity to forecast; that is simply a fact, and an obvious one. The Brtitish Government is a public embarrassment. A slight push and the whole house of cards of Brexit will fall. Do you mean that echo chamber?
I should add that the reason for the unseemly haste to have the whole thing done by 2019 (with Parliament excised from the critical decision if that can be finessed), is because a reasonable and practical (say 5 year) transintion period would reveal so much about what Britain is leaving, and how difficult, high-risk and dangerous the alternative, that the British people will not accept it.
The government keeps saying it wishes to keep its negotiating strategy secret for negotiating purposes within the EU. This is risible (I can only assume they have limited real knowledge of negotiating). The real reason the Government keeps eveything secret is quite simple; they wish to keep the Britiah people in the dark for as long as possible – perhaps even until it is effectively too late to do anything about it. That is what we are up against.
I don’t think I would argue with any of your points. Iain Macwhirter foresees an extremely dystopian future arising from the stupidity of Brexit in which many of the gains of recent decades such as feminism, green energy, pensions, welfare and most troubling from a Scottish perspective, the possibility that “secession may be deemed illegal”. Perhaps he exaggerates. https://iainmacwhirter.wordpress.com/2017/11/17/punk-brexit-means-anarchy-in-the-uk/
Well, we know power devolved is power retained, and the recent ruling of the UK Supreme Court gives paramount sovereignty to Westminster, who can, if they wish, and some do, dissolve the Scottish Parliament at a stroke.
Good link
Any chance the Brits might run Europe disappeared with Brexit.
Many think EU economic migration was the primary reason for Leave voting it wasn’t. Vote analysis shows Leave votes having strong area correlation with “globalisation shock without compensation” caused by unfairly traded Chinese import penetration. Such penetration was a direct consequence of the EU (of which the UK is still a member) failing to put in place an adequate tariff protection barrier with the exception of Chinese steel dumping. How the current Tory government proposes to resolve the continuing problem of UK manufacturing job losses and stagnant wages as a consequence of unfairly traded Chinese imports with its no tariff free trade policy stretches the imagination!
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2870313
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2904105
http://www.industryweek.com/trade/it-time-stand-china
Schofield
The business with the vote leave analysis you speak of is only intermediate in my view. It does not tell the whole story.
Why did the Chinese dump cheap steel on the market?
Because the global credit crunch / financial crash in 2008 stalled the economy EVERYWHERE. Up to this point China was growing and the USA was one of its biggest customers. The crash left plenty of unsold inventory that had to be got rid of in the only way that you can when an economy collapses – cheaply.
And where did the 2008 crash originate from? The USA – where it was formed through corruption in its mortgage market fueled by the deregulation and emasculation of its financial system and spread worldwide by its aggressive banks and trade institutions.
The USA really is some sort of financial rogue state. It’s government should be made to compensate the world economy for its stupidity and criminality.
It also shows how much the Leave mentally is based on anger (rightfully so in many cases). They are angry however at something that they do not understand – they cannot see the problem but finding others to blame will do.
The USA has got away with murder as far as I am concerned. We/other states should really all be angry at them and banging on their door every day for recompense. We should be asking for reasonable reparations.
Meanwhile BREXITERS are committing a slow form of suicide which the more savvy of us are going to be dragged down by. This whole business is nothing but the triumph of ignorance and intellectual blindness.
Schofield,
You may have a case about the Chinese imports, and it might I suppose have been enough to create a percentage point or two of difference that could be said to have swung the referendum.
But it could easily have gone to ‘Remain’ if only George Osborne and David Cameron had not been so obnoxious. If Cameron had ‘brought back’ some sort of concession from his euro-meeting rather than pretend that the nothing he had negotiated amounted to a small something which didn’t even fool my cat.
If the Remain case had contained some (any) description of some advantages of European membership instead of a purely negative campaign which the media dubbed an unconvincing ‘Project Fear’.
Had governments of both stripe actually addressed the question of immigration rather than leave it to a rabid press to exaggerate and misrepresent.
Any one of those factors would have swung that fragile majority; and a complacent Westminster ‘village’ was, and is, so out of touch with so much of the population it purports to serve that it couldn’t read the runes. ‘Leave’ didn’t win the referendum ‘remain’ threw it away for want of making a case.
Richard
I think the comment I found most unsettling was “I was firmly put in my place about all the merits Putin has and his enormous achievements in Russia.”
Your friend (I don’t believe there are ex-friends or ex-enemies, people’s people) needs to read some more about the horrors Vladimir has been inflicting on what should be one of the biggest economies in the world. Ask the Chess Grandmaster.
Putin has turned the country which defeated Hitler & put a man into space into a cold Saudi Arabia: a thick, ignorant, kleptocracy which relies on fossil fuels to survive.
We should in no way be inviting or accepting Russian money, any more than, say, Nigerian money, not because we’re anti-Russian or anti-Nigerian but because the terms on which we do it at present does enormous harm to ourselves & to the people of those countries.
I find it slightly suspect that you seem to be more concerned about farmers’ lost profits than celebrating the possibility of UK agricultural workers’ increased income!
A well-intentioned post-Brexit government could use farming subsidies and a Job Guarantee to address the problem you identify, though I was unaware that any Bulgarians would be forcibly repatriated, especially if their labour was in an a vital sector of the economy such as agriculture.
Of course, whether we get that sort of government is another matter!
I’m sorry you have seemingly lost a friend – in my experience of pre- and post- Brexit debates with Remainer friends, those who prided themselves on tolerance have shown themselves to be anything but – demonstrating surprising hostility, and a complete inability to appreciate and navigate a nuanced position on the matter.
None of the Remainers I have debated can name their MEP, the President of the European Council, President of the Commission, President of the ECB, or have any idea what Article 123 of the Stability and Growth Pact entails, nor the Fourth Track of the European Rail Directive, and so on…. yet they are, all of a sudden, fanatically passionate about the EU!
Like one of the posters above, I was against the Referendum taking place at all, seeing it as a cynical move by Cameron to steal UKIP votes, but I took the opportunity to cast my vote after much anguishing on which way to go. I would not change my mind in a re-run.
There may well be trouble ahead, but the silver lining of Brexit, for me, was the banishment of Cameron and Osborne, the dissipation (hopefully forever) of the self-declared Tory reputation for being the natural and competent party of government, the materialisation of a proper left-wing leader of the Labour Party, the gradual disintegration of the austerity imperative, and, looking to the future in a post-Brexit Britain, the possibility for the State to intervene in the economy in a far more activist way than European regulations allow.
I’m prepared to face the music, and dance.
If I thought real wages would grow as a result if Brexit I would be delighted
I think it is absurd to think they will
First there will be disruption from hard Brexit
Second there will be distressed asset sales
Third those investing will be seeking to recover their money in an environment where regulatory capacity may be impaired
You really think that’s going to increase wages? I wish that were true. I can’t see it. But you define a reason why, if I am wrong, I will need to accept that I made a mistake
In the meantime though many will suffer
Mr Shigemitsu has spotted the market solution and nailed it in one.
The new agricultural landowners will have their profit base guaranteed by government. Simples.
Their new investment will produce handsome returns at the expense of the taxpayer, though what these taxpayers may be doing to generate an income to tax is somewhat mysterious.
“A well-intentioned post-Brexit government could use farming subsidies and a Job Guarantee to address the problem” Huge subsidies for the landowners and a slave wage rate and further reduction in benefits to encourage the peasants to relocate After all, we we all want to relocate and ‘Escape to the Country’.
Those who would return to the Golden days of Britain’s greatness see themselves above rather than below stairs when they watch Downton Abbey.
As a postscript I wonder with restrictions on immigration where a ‘well intentioned government’ might come from. We haven’t grown one of our own for a very long time I suspect the seed corn of that fantasy was milled and eaten long ago.
@AndyCrow
“Their new investment will produce handsome returns at the expense of the taxpayer, though what these taxpayers may be doing to generate an income to tax is somewhat mysterious.”
The Government does not require taxes to be paid in order to spend. Gov spends first and taxes later, hoovering up excess currency in order to prevent the inflation that would occur were gov spending left untaxed.
There is no numerical limit to how many pounds the Gov can spend; the limits are those of the real economy (labour, materials, energy and land).
There is no such thing as “taxpayer’s money”.
You know that Mr Shigemitsu……….
……and I know that because we’ve been paying attention in class, but does Phillip Hammond know that?
And if he does , does it suit his political agenda . I think not.
So what could be done won’t be done and what will be done will be justified by fairy stories.
Plus ce change….
I live in Perthshire, Scotland, an area famed for its soft fruit industry.
30 odd years ago it was a 6 WEEK season, weather permitting and the berries were picked by school children, travellers and Factory workers from Dundee and Glasgow – on working holidays. At that time there was no minimum wages and they were paid pennies, absolute pennies. Each farmer considered it a badge of honour as to who could pay the meanest of wages.
In addition, many of the berry pickers were on the dole, and did not ‘sign off’ for a few weeks at the berries. When forced to do so by the tax man, each farmer put down a list of the ‘names’ of each worker – and it was common to have pages with hundreds of names listed on each day – only the name was just one – ‘Joe Smith’ repeated over and over. Farmers have never been shy at claiming subsidies – even remotely. The tax payer was subsidising their workforce.
With the advent of polytunnels the farmers have created a 5 MONTH industry, even if they wanted to, they cannot go back to that old workforce, not for 5 Months of the year.
As the polytunnels went up, the need for workers increased and the Eastern Europeans came. Unlike the locals, they clearly needed somewhere to stay and the farmers put up static caravans. 100 to a field, easily, 4 to a caravan, £40 a week rent – 16,000 x (4 x 5 for the 5 months) = 320,000.
And each of these workers buys all their food and clothes, etc from the local shops over this 5 month period.
There are about 25,000 eastern agri workers in the Tayside and Angus area each year.
Lets just assume they shop wisely and home cook economically and for the sake of argument say they pay £20 a week on food – to local shops = £500,000
So 25,000 divided by 100 = 250 x 320,000 = £80,000,000 + £500,000 = 80.5 million
So our local farmers make 80 million as landlords and the local shops make a minimum 1/2 million (but likely to be much more).
In addition the workers are paid minimum wage at least, because of EU Workers rights – a habit they had no history of implementing on the indigenous population, and are unlikely to implement once we are out of EU.
Then the fruit is picked and large quantities sold locally and exported (‘specially now the pound has plummeted), generating the core business profit and increasing exports nationally.
No wonder the Farmers are bricking it now, but my god it serves the tory bams right. Incidentally the tories have suggested prisoners pick the crops – we have a large prison in Perth – medium to high security – its max capacity is between 800 – 900. Do you really want them out and about picking the food you eat. Big difference between 800 and 25,000.
An excellent reply; particularly informative as an object lesson in practical economics for those theorists who do not understand the critical concept of “seasonality” in the European labour market.
Daisy pointed out: – “Incidentally the tories have suggested prisoners pick the crops — we have a large prison in Perth — medium to high security — its max capacity is between 800 — 900. Do you really want them out and about picking the food you eat. Big difference between 800 and 25,000.”
They’ll no doubt take the American route and criminalise as whole new host of activities to “further reduce unemployment” and generate a supply of new prisoners to stop those”pesky” fruits from spoiling in the fields!
If they start giving work to prisoners people will be queuing up to get into prison. 🙂
There’s no jobs at the ‘Job’centre. Going to the jobcentre is like going into a shop with empty shelves.
And they call it ‘Jobcentre Plus’. Plus what ?
Of course the ‘Market’ will solve the problem.
Like it solved the problem of the GFC. East Anglian (and the many other areas of) agricultural production will rapidly adapt to the Brexit scenario.
All the small farmers will see their crops rot in the fields (or the land lie bare and empty) dependent on the way the seasons fall and the land will swiftly plummet in value creating massive opportunities for another major asset grab.
The market clearing wage rate for a home grown workforce will see the City of London experience a labour shortage as young turks rush to this new new eldorado to pick cauliflowers.
There will be no shortage of work for pilots. They will be in great demand. How else will we shoot down the pigs to bring pork to table?
Brexit is already happening in agriculture: speak to your bucolic neighbours.
The pattern is the same, for farmers in Norfolk and Honda in Swindon: labour shortages in Mrs May’s ‘Hostile Environment’, rising input costs as Sterling weakens, reluctantance amidst all the uncertainty from long-established business partners in our EU markets; the are already in play.
I know
It’s why I find my friend’s attitude even harder to understand
I am aware he knows farming
You are not alone in finding Leavers’ attitudes difficult to understand.
The best that I can offer is that we are dealing with a belief system, and that a pervasive process of skilful deceit and pandering to prejudices built it; and the believers are now in the zealots’ spiral wherein all attempts to contradict them by fact and by reason serve to ‘prove’ that their opponents are deluded, and strengthen the believers in their faith.
My best tactic to persuade them is John Redwood, a Brexiteer who seeks to profit from Brexit by talking-down and ‘shorting’ Britain to an audience of our investors.
The thought that others profit at our own expense in times of adversity – or profit at all – is an effective attack on the Leaver’s apparent immunity to doubt.
But that’s not much to offer, and it calls for a deftly manipulated conversation: you won’t get many opportunities for that. Also: they have been manipulated by the most skilful liars living in the World today; and the campaign is still running, and backed up by unimaginable media resources.
Which all just goes to prove my point that the English can only learn the hard way – and even then it will all be someone else’s fault – the Irish, the Europeans, the Catholics, the Remainers, the Moslems.
The Brexiteers are masters at that
Oh dear I’m Irish, Catholic, European and remained
Not sure if I can be both Catholic and an honouary Muslim but I certainly have a lot of Muslim friends
Possibly I should “shut my gob” as the Sun advised my PM Leo?
Actually Sean you aren’t any of those ‘things’.
You are just another person trying to make sense of what you find yourself embroiled in.
Good luck, pal. You’ll need it. We all do.
Bless you for keeping on trying.