Brexit Negotiations and 2017

EU FlagA chorus of commentators are telling us that it’ll be impossible for the UK to negotiate a free trade agreement with the EU in two years (once we’ve triggered Article 50), which means we’ll have to revert to WTO rules, and the subsequent tariffs will plunge us into an immediate, long-term recession. Not just a recession, but an out-right depression.

Are these commentators on to something? Is this likely? Before getting in to that, it might be worth noting that these are often the same people who told us that voting leave on June 23rd would result in an immediate recession. Remember that? Even if you do, they’ve forgotten.

The goalposts have moved. It’s now “economic Armageddon is still coming because of Brexit. But it hasn’t happened yet because Article 50 hasn’t been triggered.” Once Article 50 is triggered? It’ll be: “Okay, well, economic meltdown hasn’t taken place yet because we haven’t left.” Once we leave? Well, there will be more excuses.

At some point, given the ridiculous monetary policy of most western governments right now, there will also certainly be a global financial contraction. Maybe a big one. Maybe bigger than 2008. And when it happens – though Brexit is unlikely to be the culprit – you’ll be sure those same commentators will blame our decision on June 23rd this year.

Because of all of this, when I hear warnings of economic disaster due to us trading with the EU on WTO terms, I get sceptical. It’s the more of those same unqualified pronouncements that for some reason must be respected by virtue of the fact that they’ve been made. That makes no sense to me.

Right now, the chances of us getting a free trade deal sorted between March 31st 2017 and April 1st 2019 is about 50/50. If we had to do a deal from a standing start, I’d say we only have a 5% chance, given the EU’s awful history of this. But our terms are already active and in place. That should make it 99% certain that we’d secure a deal. But, the dead hand of the EU Commission and the other EU high-ups make it much harder than it should be. Though to be honest, don’t their petty hostilities right now justify our decision to leave?

And even if we do revert to WTO rules, will it really result in instant economic collapse? We pay £9.7 billion net into the EU a year. The tariffs (at current trading levels) are likely to be less than £3 billion a year for us. Much higher for the EU (we do have a massive trade deficit with the other 27 member states after all), but that’s just a good incentive for the 27 to strike a free trade deal with us.

But let’s end on a good note. The reason I think we’ve got at least a 50% chance of getting a deal in two years is the disconnect between the directly democratically-elected governments of the nation-states and the high-command in charge of the EU executives.

The EU guys talk tough because they don’t have to face a ballot box. But even the most sycophantically pro-EU governments in the 27 member-states are accountable. And if they push for rulings that make it harder and more expensive for, say, BMWs or French wine to be sold in the UK, their chances of re-election are, at least slightly more difficult.

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Trump Didn’t Win. Clinton Lost

US FlagTrump “isn’t my president”, as so many people say these days. And that’s right. Trump isn’t my president. He’s no one’s president. But neither was Obama. Or Clinton. Or either of the two Bush’s. No one who has presided in the oval office since my birth has been “my president.” Not just because I’m not an American citizen. It’s because that’s not how it works.

The president is the head of the executive branch of the US federal government. He or she isn’t the king of the country. They don’t ‘lead’ the people. The people are free. The president is a clerk, a civil servant. That’s all.

If there’s anything good that might come out of Trump’s presidency, it’s that people will once again find a more constitutional attitude to how American government works. Those on the right who turned a blind eye to presidential overreach under Bush II, and those on the left who stuck their fingers in their ears and shouted “la la la, not listening” when Obama was in office can now unite. They helped create the situation we find ourselves in. But now, it might not just be the libertarians calling the president’s overreach to account. Libertarians have been lonely for some time. Maybe now that will change?

Like most, I utterly failed to call this presidential race. Early on, I dismissed Trump as a ‘cartoon character’, thinking he’d never get anywhere. How wrong I was. How much did I overlook the mood of one of the world’s greatest people, in one of the world’s greatest countries? A great deal.

In the way that the world didn’t suddenly get better because Obama became president, and that Hillary Clinton wouldn’t have made the world magically better by being president, Trump won’t suddenly make the world horrifically worse. Will be violate the constitution? Yes. More than the others before him? More than HRC would have done? I’m not sure. But probably not.

I can’t help see the irony in the aftermath of the Trump victory. We were told – and I believed – that if Trump, say, won the popular vote but lost the electoral college, his supporters would take the the streets. They would riot. Police cars would be set on fire. There would be hatred. People calling the result ‘invalid’.

Look what happened when the opposite took place. I won’t say any more than that.

Delving into the stats, one thing is clear. Democratic supporters disliked Hillary Clinton more that Republicans disliked Trump. It was close either way, but she was the one that put most people off. Not because she was a woman. Around a million of them who would have voted for the Democrat went for Jill Stein this time around. About the same for Gary Johnson, who broke all Libertarian Party records with over three million votes, and breaking through the 5% barrier in several states. He wasn’t the spoiler though, a’la Ralph Nader in 2000. For every traditional Democrat vote he took, he got two Republican votes. And a large bulk of his were independents who wouldn’t have voted for either candidate any way.

Here’s the best illustration of how disliked Clinton was: of the 700+ counties that voted for Obama both times, over 200 of them voted for Trump. That’s what he needed, but it wasn’t a great result for him. Typically, to win he’d need to have gotten around 350 of those counties. But what helped him: Of the 2,000+ counties that didn’t vote for Obama either time, just three of them voted for Clinton. Three.

So if you’re not a fan of Trump, and you’re unhappy about what has happened this time around, maybe it’s worth thinking of it this way: Trump didn’t win. Clinton lost.

And be of good cheer. The world will carry on turning and getting better, whichever constitutionally-overstepping person sits in the oval office.

UK 2015 Election: Proof I Don’t Know What I’m Talking About

In the blog-post I wrote right before this one, a few days before the UK general election, I decided to predict the outcome, and guess which of the major parties would form a government, and how long it would last.

I’m currently resting up (or at least, I’m supposed to be) after a 24-hour marathon stint on the Heart and Capital radio stations, breaking all the overnight stories of the election. As the ballot-booths are flat-packed away for now, and the black-and-white “Polling Station” signs are taken down off the walls of community centres and school halls across the country, I think it’s only fair that I look at what I wrote a few days ago, and see how it tallies with the reality.

And it’s pretty clear. I couldn’t have been more wrong about the outcome if I tried. I didn’t even entertain the idea that there might be a majority government, given the consistent message from the polls that suggested otherwise.

So I’m W. H. Wrongy McWrongstein, of Wrongsville, Carolina. Population: Wrong.

Proof, if any proof were really needed, that I don’t know what I’m talking about.

But how did all the polls get it all so wrong? We had months of the polls, from a host of different pollsters, day in and day out, all showing that no party would have enough MPs to form a majority. But when the big day came, we had one clear winner.

David Cameron and the Conservative Party wiped the floor with virtually everyone (except in Scotland, of course. There, the pollsters were spot on about the Scottish Nationalist Party and their dominance). UKIP were decimated. The Greens; right back where they started. The Liberal Democrats exiled to obscurity. And Plaid who?

And as I write, David Cameron is live-tweeting announcements about his new cabinet, fully Liberal Democrat-free following his 331 seats in parliament.

An outright Conservative majority. How did we get here?

The only explanation I can think of (and given how wrong I was in my election prediction – did I mention that? Way, way wrong – my explanation may not carry much weight), is that we’ve seen a repeat of the 1992 election.

Then, a beleaguered Tory government – Lead by John Major – was sleepwalking into a comprehensive defeat.

Their opponents – Labour – were all but guaranteed to form the next government. Labour’s leader Neil Kinnock even went as far as to host a victory rally before polling day.

Then the election day came. And the Tories won. Comprehensively.

I believe that yesterday – as in 1992 – the public maybe didn’t quite form an opinion of how to vote until they got into the polling booth. Major’s government were as far removed from ‘cool’ as you could get. Voting for them was almost an embarrassment to some. Why would you tell a pollster that’s what you were going to do? Even if it was what you were going to do?

But even if it was only in the back of their mind, there was a genuine concern about where the country was headed under a Kinnock government. Back to the old days of economic illiteracy and ‘managed decline’. The people blinked, and Major stayed in Number 10. A few years on, and our deficits turned to very impressive surpluses.

The unique way in which the global market crash in 2008 hurt Britain was – for a big part – down to our unaffordable public spending. We had the deficit of a basket-case economy. But we just kept on spending, kept on trying to live off that ‘hair of the dog’ each morning.

Though it wasn’t totally popular to some, modest steps were taken by the Conservative/Lib Dem coalition from 2010 to introduce austerity. It’s a dirty word these days, but all it really means is “living within your means”. Income has to be equal to, or lower than expenditure. That’s not evil free market dogma, or cruel Tory “ideological” cuts. It’s called maths. If you get £5 a week pocket money, and spend £6 a week on stuff, you’ll have to borrow £1. If you do that every week for ten weeks, you’ll owe £10. One day, that has to be paid back. See: maths?

Now I’m not a big fan of the coalition for a variety of reasons. The debt that’s been piled on over the past five years is inexcusable, and they’re no way near classically liberal enough for my tastes. But, the Tories wanted to eliminate the deficit in five years. They were in coalition, so couldn’t be as radical as they’d like to be. Let’s say, they could only be half as radical. So by 2015, they’ve cut the deficit in half.

It’s a fairly clear demonstration that, generally speaking, they were right. The (now unemployed after losing his seat) Shadow Chancellor Ed Balls went on every TV and radio show in the country describing the austerity (living in your means, i.e. maths) measures as being “to far and too fast” for the first two years of coalition. Turns out, if do want to criticise the coalition’s austerity measures, it’d be better to say they didn’t go far enough and weren’t implemented quickly enough.

The coalition decided to lean in the direction of maths/austerity. Labour leader Ed Milliband – who resigned this afternoon – said for every public sector job cut, a private sector job would also go, creating greater levels of unemployment.

The coalition cut half a million public sector jobs. Two million private sector jobs (more than in the 13 years of Labour) emerged. Most of them better paying, contracted jobs.

So one group called it right, one group called it wrong. It was actually so simple we missed it. And in the back of many people’s minds, they understood. Even if it took them until they had the HB pencil in their hands in the ballot booth to really see it.

But don’t listen to me. I’m W. H. Wrongy McWrongstein, of Wrongsville, Carolina, remember?

The Spending Cuts (that aren’t spending cuts)

Just a quick reality check: The UK government has postured and made a loud noises about their so-called “spending cuts”, and, indeed, the opposition in the UK have also waxed lyrical about “savage cuts”.

Well, here, courtesy of the office for budget responsibility, are those “cuts”, and the projected “cuts”, in full:

Total Managed expenditure

2012-13: £701.9bn

2013-14: £717.8bn

2014-15: £730.5bn

2015-16: £744bn (OBR figures Autumn 2013)

Who the Minimum Wage Hurts

Young People Minimum Wage UK

There's some things that just don't work, but everybody loves them. I've posted before about the NHS, and other such almost religiously-supported institutions and ideas. Those who support them are – to my mind at least – kind-hearted, decent and good people. But good intentions don't make for good policy.

A case in point on this day – budget day: The UK is set to increase its minimum wage. Minimum wage laws hurt those who cannot provide a service as valuable as the minimum-wage. If, due to your circumstances, education, ability, etc. can only provide £5 an hour of value, at say, a resurant or warehouse, then you can't get a job if an employer is forced to pay you a minimum of £6.50 an hour.

The last Labour government were very proud about dispelling the naysayers of the minimum wage: “They said it would cost jobs”, they gleefully retort, “but unemployment went down in the first decade of the minimum wage!”

Yes, unemployment went down. Quite easy to do, if you're into making a massive government, centered around a client-state, where you create a lot of 'fake' government-jobs. But the growth in private-sector jobs at the same time was practically anaemic.

Those who said that the minimum wage costs jobs weren't talking about any old jobs though. We were specifically talking about those sort of jobs that younger, poorer, underskilled people typically take.

So how have, say, younger people done under the minimum wage? Well, you can see the graph above and see for yourself. Before the minimum wage, younger people were finding more and more (real) jobs, and opportunities to get on the ladder, often of their chosen career-path. But it turned almost 180 degrees after that.

I believe that the forthcoming increase in the minimum wage will, sadly, continue this tragic trend.

 

A Look at the Past, a Peek at the Future

Nick Gillespie from Reason TV sits down with the smart, engaging and inspiring Louis Rossetto – founder of the brilliant Wired Magazine – to look at what changed in the twenty years since the publication started, and where things will go next.

As always with anything made by the boys and girls at Reason, this video is well worth 15 minutes of your time.

In 1971 Rossetto co-authored a piece in the New York Times Magazine describing libertarianism as the next great social/political movement for young people, tired of the centralised zero-sum game currently played.

It’s great to see he’s still unrepentant in his outlook. And the evidence is on his side.

The NHS: Britain’s State Religion

Stethoscope“The NHS is Britain’s national religion” stated then Prime Ministerial hopeful David Cameron before the last election. The phrase was meant to show he understood how preciously we hold the NHS to our collective heart, and that he wasn’t going to “tamper” with it too much.

He’s right that we hold it dear, and he’s right that we in the UK treat it as a religion, but he’s way off if he thinks this is a good thing.

A religion is a belief that operates on faith – without any evidence. Indeed, often the absence of evidence is a requirement. Even if there is evidence to the contrary, it merely serves to boost the congregations faith and proclaim their beliefs in a louder more vocal way.

The overwhelming evidence is that Britain, with it’s nation health service, has one of the worst healthcare outcomes in the western world. Everyone (almost) can provide some anecdotal story about how their Aunty Mabel received great treatment and that the nurses were very kind, but it’s just that – an anecdote. The fact is, even lucky old Aunty Mabel would have better treatment if she’d have been treated in Singapore, or Germany, or many other countries.

I have big problems with the healthcare system in the US. But those problems are the SAME as the ones facing Britain. The narrative in the UK is you either have our post-war NHS system, or you have an “evil” “private” system like the US. But what about the other systems, many of which, unlike both the UK and US models, are fairly free-market solutions?

The thing is though, pretty much all the ills with the American system are to do with the fact that it’s not a free-market system when compared to say, the cellphone market, or the grocery business. If the grocery industry was run like the US healthcare system, millions and millions of Americans would go to bed hungry every night. And more than a million every year would starve to death. But luckily, the comparatively free market grocery “system” in America means that the problems with diet over there are down to over-consumption (type 2 diabetes, heart decease and obesity), not starvation. I appreciate there are hungry people in the US, but I think we’re all smart enough to understand the problem in context. Tens of millions in the US will not go hungry tonight.

The US government contributes about 75 cents of every dollar spent on healthcare. There are anti free-market rules about not buying coverage in a different state to the one you live in, and if you do buy insurance, (or what they laughably call insurance but is really a system to pay for everything in advance, not just to insure yourself against unforeseen problems) you’re forced to pay for coverage for things irrelevant to you. But all that is for another post.

Basically healthcare the the UK and the US is faced with the same problem: the distance between the customer and the seller. If the majority of us had to directly buy your own health services and goods, the prices would fall and the quality would rise, at levels we can’t imagine now. That’s what happens in every other comparatively “free market” capital-intensive, zero marginal cost business/service. The problem in both systems, is the state stands in between consumer and service.

But you can’t make that argument in the UK. Because our Aunty Mabel said those nurses were so nice to her. Even when she went in for a chesty cough and contracted the norovirus on the ward. They were lovely. And the only alternative is the evil private American system where people die on the street because they can’t afford healthcare, right?

Amen.