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When I started writing this posting, the invaluable Guido Fawkes had, at the top of his invaluable ongoing list of “seen elsewhere” items, a link to a Conservative Home piece by David Davis MP, with a long title on top of it which includes the words A Brexit economic strategy for Britain.
It deserves to be quoted at length, so I will now do that:
… [L]eaving the EU gives us back control of our trade policy, and gives us the opportunity to maximise returns from free trade.
Because any deals currently settled are obtained by finding a 28 nation compromise, the EU is clumsy at negotiating free trade deals. That is why we currently only have trade deals with two of our top ten non-EU trading partners. This is incredibly important to us, as about 60 per cent of our trade is with the non-EU world. In fact, we sell as much to non-EU countries with which we have no trade agreements as we do to the EU.
The first order of business is to put that right. As the amicable statements coming from the US, Australia, China and India show, these countries are as keen to knock down trade barriers as we are.
Single countries, with the ability to be flexible and focussed, negotiate trade deals far more quickly than large trade blocs. For example, South Korea negotiated a deal with the US in a single year, and with India, which is notoriously difficult, within three years. Chile was even faster, negotiating trade deals with China, Australia and Canada in under a year.
The EU, by comparison, takes more than six years to negotiate trade deals; the deals which would most benefit us, such as those with Canada or the US, take even longer. And without the often conflicting requirements of 28 different countries to consider, deals negotiated by single countries tend to be broader and have more favourable terms on matters that are important to us, such as services.
So be under no doubt: we can do deals with our trading partners, and we can do them quickly. I would expect the new Prime Minister on September 9th to immediately trigger a large round of global trade deals with all our most favoured trade partners. I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months.
So within two years, before the negotiation with the EU is likely to be complete, and therefore before anything material has changed, we can negotiate a free trade area massively larger than the EU. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.
So much for the “jump-start” bit. Now for my own additional argument that this could well happen very quickly.
→ Continue reading: How Brexit could jump-start the British economy – and do it very quickly
Bloomberg reports:
EU Banks Need $166 Billion, Deutsche Bank Economist Tells Welt
Europe urgently needs a 150 billion-euro ($166 billion) bailout fund to recapitalize its beleaguered banks, particularly those in Italy, Deutsche Bank AG’s chief economist said in an interview with Welt am Sonntag.
“Europe is extremely sick and must start dealing with its problems extremely quickly, or else there may be an accident,” Deutsche Bank’s David Folkerts-Landau said, according to the newspaper.
Tax haven route won’t work for post-Brexit UK, OECD says.
Ok then, making the UK a tax haven is clearly an excellent idea, enhancing competitiveness vs. the rest of the OECD. Of course that could not possibly be why a mouthpiece of the OECD thinks it would be a bad idea, right? Right?
With the Brexit vote of last week continuing to send shockwaves through the corridors of power (does that mean those corridors are vibrating, door handles jiggling and lights flickering?), one argument I have seen break out is of how the UK will, without being in the mighty, efficient and effective mechanism of the EU, be able to work out a deal. (If you are detecting a touch of sarcasm, you are correct.) For example, on a social media exchange, a person earnestly exclaimed that the UK can’t possibly arrange a free trade agreement (FTA) with India because the Indians just won’t, just won’t agree on one with us, because, well, they won’t. A stock argument goes that if the UK leaves the EU, then depending on whether it does or does not retain Single Market access, like Switzerland, other countries will be reluctant to trade with the UK. Why? Because the only reason, it is said, that people want to engage with the UK is because it gives access to the rest of the EU. The UK is, on this argument, nothing more than a conduit, an entrepôt, for Europe. The fact that another country might want to deal with the world’s fifth-largest economy on its own right is scarcely entertained.
Funnily enough, last year I recall reporting on how Australia, which for some crazy nationalist reason isn’t in the EU, signed a trade deal with China, which much to its shame, isn’t in the EU either. China is the world’s second-largest economy; Australia is some way down the order but still relatively significant. These two nations signed a deal. It was done without all the structures of a transnational organisation. This is an event that, for quite a lot of people, is unthinkable, like a decent summer in England.
Another option for the UK is to simply declare unilateral free trade, rather than wait for some grand negotiation with the EU over access. There is a consideration of this approach at Econlog here:
But if the new British prime minister want to puzzle and indeed shock its European counterparts, this may well be the best option. Go ahead and zero tariffs on imports coming from the EU. It might well be one of those very few choices that could prove to be economically beneficially in the long run, not least because it will minimize the problem of capture by special interest groups when it comes to trade policy. But it may prove to be expedient from a political perspective too. As the government should run through the Houses its proposed “interpretation” of the vote (which was, after all, a consultative referendum), open support for free trade may help, in the short run, to restore peace and harmony among the Tories. On top of this, it might give the UK a strong card in negotiations with the EU, making retaliatory attempts hard to “sell” to the public.
And here is Tim Worstall on the same subject:
The entire point of trade is that we can get our hands on what they make: so why would we ever want to have anything other than unilateral free trade? Why would we impose tariffs on the very things we want and make them more expensive for ourselves?
Sure, other people might impose tariffs on our exports. But that means that they are making themselves poorer by not having tax free access to the lovely things that we can make cheaper or better than they can. As Joan Robinson was fond of pointing out, tariffs are like throwing rocks in the harbour to make imports more difficult. And just because you are throwing rocks in your harbour there’s no reason I should throw rocks in my own. To do so just makes me worse off and why should I do that?
As I have said recently, one of the excellent consequences of Brexit is that it rends apart many of the lazy assumptions that give rise to transnational organisations, as well as the assumptions of the sort of people who prosper in working for them. It makes us think again about what sort of rules and regulations, if any, are needed so that human beings can trade. And those of a classical liberal disposition need to take the lead in pointing out that ultimately, countries don’t trade, individuals do. Any attempt to interfere with such transactions is ultimately about Person A being prevented from transacting with Person B on terms to their liking.
Maybe it is also time to dust of the speeches and writings of Richard Cobden.
My friend Preston pointed me at what the Adam Smith Institute calls the “EEA Option”, which would apparently provide many of the free trade and movement benefits of EU membership without being in the EU or beholden to most of its rules.
Certainly worth a read as people start contemplating what one would want the negotiated exit from the EU to look like.
And they worry the pound might crash? Pay attention to the euro.
– Zero Hedge
In all the talk and words about the UK Brexit vote last Thursday, a regular line is that the Leave side has been “misled”, and doesn’t know what it is doing, and it is going to have buyer’s remorse, etc, etc. Who knows, maybe that criticism is apt. However, it is a bit rich for those who, for example, favoured the creation of the European single currency, as many pro-Remainers did (they might hope we’d forget) to claim that those who wish to leave an entity with pretensions to be a superstate are not thinking of the risks. That is a bit rich.
The launch of the single currency is arguably one of the riskiest, most hubristic transnational projects of recent decades, and I still see very little sign of contrition for rolling out a new form of fiat money without creating the economic and political architecture to deal with life inside a one-size-fits-all interest rate.
One reason why remaining EU states are scared of what has happened is the fear that a eurozone member state, envious of how the UK has just voted, might have similar ideas.
Brexit. How about that then. Well, well, well. Many other writers here have been thinking aloud about this, and so, now, will I.
The London weather was very wet yesterday, and violently so in the late afternoon. But, it then calmed down. Did the violent rain disrupt travel and permanently muck people up, so they didn’t vote? Or, did the abatement of the rain enable Londoners to get out and vote without too much discomfort? I have just got up and look forward to finding out. I took an umbrella to my (very) local polling station, around 7pm, but I didn’t use it. Someone said last night that it would be just typical if Britain left the EU because of the weather, but it looks like it wasn’t that close.
Re the Jo Cox murder. Many Remainers used this horror to imply that voting Leave was like voting in favour of MPs being murdered. (The Remainers who refrained from using this argument were not so audible.) I surmise that (a) some potential Leavers were persuaded, (b) some potential Leavers were angered and caused to vote Leave having only previously been thinking about it, and (c) quite a few continued to move towards Leave for reasons unrelated to the Jo Cox murder, but in silence. When the Cox murder happened, there was a shift towards Leave taking place. I surmise that this continued to flow, but underground, so to speak. Minds continued to move, but people stopped telling the pollsters. But, they’ve told them now.
The above two points were already made by me here last night, in comments on Natalie Solent postings. Here are a few more Brexit thoughts.
→ Continue reading: Some more Brexit thoughts
In order not to miss Record Review, essential Saturday morning listening for me, I have BBC Radio Three on as soon as I wake up on Saturday morning. BBC Radio Three interrupts itself from time to time with news bulletins, and on the most recent of these, at 8 am, I just heard a very strange argument from the Remainders.
Sir James Dyson, the vacuum cleaner maker, has just announced that he favours Brexit, the BBC news revealed. (The above link from another source confirms this announcement.) Brexit, Dyson says, would mean more jobs for Brits, or something along those lines. The “Remain Campaign”, I think that was the phrase, by which was meant the “Official” Remainder campaign, responded to Dyson’s announcement by saying that Dyson was wrong to back Brexit, and that he was wrong when, some years ago (I think the number was six but I don’t recall it exactly (LATER: sorry, SIXTEEN), he was … in favour of Britain joining the Euro. Which apparently Dyson was.
So, according to the logic of this particular Remainder argument, if you were once upon a time wrong in favouring Britain joining the Euro, you must now be wrong in your opinion about whether Britain should Leave or Remain in the EU as a whole, now.
But I am pretty sure that the overwhelming majority of those Brits who favoured the Euro in the past, are Remainders now. Dyson’s combination of positions is a very rare and anomalous one. He has changed his mind. He must have, because Britain can’t join the Euro and leave the EU. (Can it?) Much more common is the combination of views of having once upon a time favoured Britain joining the Euro (and perhaps still now favouring this), and of now favouring Britain remaining in the EU. The Euro is, after all, the core idea of the EU, around which all other EU policies circulate like mere planets around the sun.
So, if the Official Remainders now concede that Britain joining the Euro would have been a mistake, they must now concede that many of their now most prominent supporters were wrong about the Euro, and therefore wrong now, about Remaining.
LATER: Here is the BBC version of the story.
Britain Stronger in Europe said: “James Dyson wanted the UK to join the euro. He was wrong then and he is wrong now.”
This report goes into all the disappointments Dyson has had with EUro-law. See also some of the comments below.
How important are trade deals? As a former trade minister it pains me to admit – their importance is grossly exaggerated. Countries succeed, with or without trade deals, if they produce goods and services other countries want. Thanks to the Uruguay Round, tariffs between developed countries now average low single figures – small beer compared with recent movements in exchange rates. So the most worthwhile trade agreements are with fast growing developing countries which still have high tariffs.
– Peter Lilley
There needs to be a cull of Malthusians every five years or so. In the interests of preventing overpopulation. And a pretty memorial to these heroes.
– Antoine Clarke
Today, I am in my usual last Friday of the month tizz, because this evening I have an event in my home, and I am, as usual, behind in my preparations. This particular event is more than usually tizzual, on account of it being not a sit-down talk but a stand-up performance, by Dominic Frisby. Frisby is honouring my home with an early dry run of his forthcoming Edinburgh Festival show, Let’s Talk About Tax, which he will be performing in Edinburgh from Aug 3rd until August 28th.
I am not doing this blog posting because I need more people to come to my home this evening. I can fit in a few more, but I already have a decent number of acceptances. Nor am I doing this blog posting to tell you what a brilliant show this is. It is being done by the always entertaining and always thought-provoking Dominic Frisby, so I expect it to be entertaining and thought-provoking. But meanwhile, I haven’t yet seen it.
No, what I want to do here is simply to praise Frisby for the fact of this show. Even if – worst case – it flops in Edinburgh, which I don’t think it will, but even if it does, … well played sir! The fact that Frisby is sallying forth to the Edinburgh Fringe, one of the key facts of British showbiz life where would-be upwardly-mobile entertainers all vie with one another to make their mark as writers and performers, and that he will there proclaim the sort of pro-free-market notions and crack the sort of pro-free-market jokes that seldom get spread or cracked in this arena or similar arenas, is cause for praise in itself. The way to get anything started is to start, and this is a start. In the illustration above, Frisby is wearing a hat. Were I now wearing a hat, I would take it off to him.
I did an earlier posting here, praising Frisby’s excellent book Life After The State. Today is, see above, a busy day for me, so to save me the bother of making the same point in different words, please allow me to quote myself and make a point I made in that earlier posting, in the same words:
If we think that showbiz people typically proclaim bad political ideas, then our task is to persuade such people to think better and to proclaim better ideas, rather than us merely moaning that such people somehow have no right to be heard opining at all, about anything except showbiz. Maybe it is in some ways true that celebrity opinion-mongers shouldn’t be paid attention to, as much as they are. But they are, if only because being paid attention to by lots of people is the exact thing that these people specialise in being very good at. Maybe people are foolish to get their foolish political ideas from politically foolish showbiz people. But many do. Whether we like it or hate it, recruiting at least a decent trickle of showbiz people is a precondition for us achieving any widespread public acceptance of our ideas.
I rather think that this show marks a new moment in Frisby’s career. At his website, he describes himself as a Financial writer, comedian, actor of unrecognized genius and voice of many things. The “voice of many things” bit concerns his voice-over work, often to be heard on British TV. But note the “financial writer, comedian” bit. Hitherto, Frisby has tended to keep these two activities distinct from one another. As a speaker and writer on libertarian friendly matters he is always witty and entertaining, but he hasn’t, when doing that stuff, gone straight for laughs. He has basically been arguing and informing. Yes, with a smile on his face and plenty of reader and audience amusement as well as thought-provocation. But basically, he has done comedy for laughs and when being serious he has been serious. This Edinburgh show, on the other hand, looks like it may mark the moment in Frisby’s career when he seeks to combine his financial thinking and talking and writing with comedy.
I wish Dominic Frisby all possible success in this enterprise, and hope that others follow where he is leading.
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