Larry Elliott has written in the Guardian this afternoon that:
The history of EU negotiations is that victory is snatched from the jaws of defeat with an agreement made at the very last minute. With the eurozone economy not in especially good health, there is no real appetite in any European capital for a no-deal outcome. Clearly, it makes sense to be prepared for all Brexit outcomes, but the public has yet to take seriously the more lurid warnings of apocalypse to come.
He adds:
Expert forecasting is discredited. Life is a bit better than it was a year ago. There is still an expectation that London and Brussels will orchestrate a political fix. For all these reasons, people don't really believe that at the end of March 2019 there will be no food in the shops, hospitals will be running short of medicines and that planes will be prevented from flying. A no-deal Brexit is seen as another millennium bug.
This is a view that sharply contrasts with the concern of the young person I referred to this morning. But I am not disputing Larry's opinion: maybe an informed young person is not typical of the population at large. I am wholly open to persuasion on that point.
But let's look at this another way. Economists assume that the rational person manages their expectation of the future by applying risk factor appraisal as appropriate and an interest discount to allow for the passage of time before the event might happen.
Let's consider three possibilities.
The first is that we are not dealing with rational people.
The second is that those people have a poor capacity to appraise risk, even when presented with what appears to be quite strong evidence.
And third, let's presume that the discount factor that they apply to the future is very high indeed: events seven months away are so remote that they have almost no significant value attached to them as a consequence.
What is the chance that all three assumptions are right? I'd suggest the first is nigh on certain. The second appears extremely likely. That's not a criticism. It's just that the tools people are taught to use by supposed experts are so bad that this is the inevitable outcome. Dire economic theory has translated into a population unable to appropriately appraise economic risk.
And the third? Time and again we see the evidence all around us that people have almost no understanding of time preference and instead almost entirely dismiss the predictable future consequences of their own actions. It may be entirely appropriate in that case to presume that their discount rate for the actions of others is even higher still: they assume tomorrow just will not happen and live for the day. Economic mindfulness is a reality for many.
If that's true then it has serious things to say about the way we live.
But it also means that if there is a Brexit disaster of the scale that is imaginable by those who devote time to the issue then the scale of the shock could actually be even bigger than expected, precisely because so few will gave realised it will be coming, and their present (at that time) will be much more severely disrupted then most might possibly expect right now.
To put it another way, their rate of change in expectation when Brexit arrives may be very high indeed. And that means their anger will be greater than we might rationally forecast at present. Which also means the risk of backlash is greater than we might forecast at present. All of which says that the incentive to pull a much better deal out of the bag than many who do think about these things currently expect is very high indeed - even if there were won't be massive thanks for doing so. The political payback for disasters averted is not that great. But it remains an imperative nonetheless because that's what politicians should be in that game to deliver, come what may.
But will they deliver? Let's hope Larry is right. Let's just hope that at the last minute sense might be seen.
I just wish I did not need to make such an assumption. But I have to because I am, maybe, too rational; maybe too able to appraise risk, and maybe don't discount the future. But who's to say I'm right because I do such things?
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I don’t believe there’s any hope of our lot coming up with anything but the EU might think of something. Also one hopes Big Pharma would be concerned about the potential loss of much of its repeat custom, this for no good reason, so they’d be bringing weight to bear on preserving the flow of trade too. It further occurs maybe we’d get invaded by some foreign power, perhaps under the pretext of preserving order, this for our own good. That might be our best bet.
I think that idea has not a shred of credibility
Now, maybe, but let’s see how things look after a couple of months of rioting.
As Niels Bohr famously said: “Prediction is very difficult, especially about the future.” The trouble is these endless debates & discussions about possible permutations of as yet unknown outcomes should’ve taken place BEFORE the wretched referendum. Now it’s a mad last-minute panic to double-guess what game each side is playing (if any) and the likely impacts on both personal & commercial life. It all beggars belief. If nothing else, in years to come ‘Brexit’ will have become a chapter in any Management 101 handbook: “Classic Clusterfucks”.
Whatever the outcome, half the adult population will be angry and dissatisfied, appropriating blame on anything that can be conjured out of a hat because all logic & critical analysis will have been squeezed out by emotion and political expediency. The tragedy for the country is that it was all so unnecessary. Neither ‘side’ is blameless. The thing is also that so much time will be expended over the forthcoming decade trying to optimise / rectify the resulting repercussions, when there are so many really pressing, major domestic issues to be attended to.
One can only hope that the principle perpetrators of this débâcle will eventually be judged for their ego-driven incompetence but, if Larry Elliot is even half-way right, one of them could end up as Prime Minister. Then it really would be time to emigrate.
Some time ago I promised myself I’d cease commenting on the topic but it just won’t go away, will it? And probably won’t for generations to come. Our very own Pandora’s Box.
Indeed….
“…maybe an informed young person is not typical of the population at large….”
An informed person of any age is not typical of the population at large. 🙁
Sadly true
Toxoplasma gondii seems to have a role in business behaviour and is found 1.4 times more often in business majors than the general population. We may as well be asking if this parasite is “rational” as humans – https://phys.org/news/2018-07-toxoplasma-gondii-parasite-linked-risky.html
There is no assumption of the rational human. In deep, the best we get to is bridled irrationality. Humans are assimilated collectives. Even in bacterial films (like on your teeth) the inner ones maintain quite threatening control over the outer ones in touch with rich resources to ensure their share. Biology doesn’t even treat micro-structures as as similar as economics does the rational human individual agent. Homo economicus is a farce, but it is often presented in strawman form to knock down neo-classical edifices not as reliant on it as claimed. It’s pretty obvious, for instance, that if we were rational we wouldn’t have such irrational advertising. It’s similarly obvious that the groaf-oaf outcomes of policy are also stupid in terms of a safe planet and rational actors have to be made into a self-interested nerk mentality (narcissism) – an aggregate of idiocy maintained by the most typical economic trick – exclusion to make the sums work. Demystifying is to be resisted at every turn. It might allow in the layperson striving to be rational.
I think you are wrong
Homo economicus has to exist for the maths of microeconomics (and so macro) to work
You can dismiss it
They can say it’s just a working assumption
But the reality it is right there at the core of it, always
“….Economists assume that the rational person manages their expectation of the future by applying risk factor appraisal ……”
That tells you a great deal about why economists spout utter shite much of the time.
Assume rational person….!! manages expectation !!…. of the future…..!!! risk factro appraisal. !!!!
Which bloody planet do these ‘economists’ come from and currently inhabit ?
jeeeez…..uss. !
And within weeks of beginning to study economics most young people have lost the capacity to question any of this
They begin to think it is what people do
I fell out with my A level economics teacher on week one when he said the basis was that people behaved rationally. I pointed out that there are numerous examples when they don’t and that was the end of my formal economics lessons!
It was why I argued with my economics teaching from term 1 onwards
“It was why I argued with my economics teaching from term 1 onwards”
It’s why I have serious reservations about going to university at all, though I am seriously considering it as an option.
I don’t believe for one moment that slavish observance of established ‘thinking’ is confined to economics. In fact I can cite a couple of examples in the ‘hard’ sciences; and have little doubt they are the norm rather than the exception. Particularly in the first couple of years of a course.
Apparently Newton’s epithet has been corrupted to, ‘standing on the shoulders of midgets’.
What’s the statistical evidence for “very last minute”. Seems to me the EU is very rarely up against international deadlines. Maybe the council sometimes pulled all night sessions. Brexit needs to be passed by the parliament. Any examples for last minute there?
Almost every EU deal is last minute
Example?
Google is readily available to you
I am 76 and very fearful for my grandchildren. In Northern Rhodesia I had uncles who fought in WW1, some of whom ended up fighting German friends in Tanganyika. We are repeating the conditions that led to WW1, i.e. a tragedy that began with a cock-up which politicians did not not have the nous or courage to deal. A tragedy that was exacerbated by the imaginationless and out of date generals who conducted the war effort.
Today we have politicians behaving like these generals (including Corbyn) who think “it will all be over by Christmas”. It is a gigantic, stupefying error to believe that we transition from being part of the most efficient global (capitalist) economic area in the world to an island economy that expects to resume the successful trading conditions within ten years, let alone two.
We are planning for a no deal. Can you believe that? We are planning for a catastrophe that is utterly avoidable. Who in God’s name does that? Its like the Cold War. Building bunkers, when all we have to do renegotiate our relationship with the EU – just like Kennedy and Krushchev did.
THIS HAS TO STOP!
As a leaver I assume that Larry Elliott is praying and hoping that history repeats itself.
“The history of EU negotiations is that victory is snatched from the jaws of defeat with an agreement made at the very last minute.”
I was rather hoping that some educated Leavers , such as Larry Elliot would at last start to have the grace to say they had not fully understood the complexities of withdrawal and the disaster that it would be and are now backing remain with the need to reform the EU from inside. But no, it seems he is still dreaming of some sunny upland.
He should use Google. He could learn that we already had two years of jockeying for position. The “last minute” trope is part of the anti-EU position. Makes it look undemocratic. Same as the smoke filled backroom was used against Labour and the unions.
From what I see the factors are that:
1). People are too busy to think about the future whether it is juggling jobs and childcare or shopping for new rates for mortgages, internet access, utility bills or just keeping up with content (useful and non-useful) on the internet. These activities soak up people’s rationality – do they not?
2). People are turned off about politics. Traditionally we have looked to politicians for direction. Now there are so many directions it is perhaps wiser to disengage because it is all about shouting and slagging each other off not to mention that the political rhetoric does not match what people are experiencing. The lost art of politics was about getting a broad agreement through leadership. I do not see that anymore even within parties.
3). People are resilient. They take the unknown as it comes and adapt. Adaptation also takes and needs rationality. Yes it does! It is maybe that our understanding of what constitutes rationality is flawed and too narrow in context. My Father bless him always said to me that sometimes you just had to get by. And people do.
I am not advocating this ‘getting by’ by the way. We can do better than that. But I think that it is worrying that people are prepared to accept less but not expect more. That is the biggest challenge I think to any progressive movement in our society at the moment. This sort of tacit acceptance that life is shit and short seems to have percolated into our society. It is about surviving which means that people will even fuck each other over and say and do bad things in order to survive.
I thought it was only soviet style communism that was meant to create an outcome like that. Evidently not. North American style extreme capitalism does exactly the same it seems.