Friday, May 13, 2016

Economists for Brexit critique of the treasury model

"Economists for Brexit" have produced an rival assessment, and critique of the Treasury calculations of the effects of leaving the EU, which you can read here.

This is vastly more intersesting and credible than most of the rubbish pumped out by the official Leave campaign and many other Leave supporters because it is written by people who know what they are doing (the lead author is Professor Patrick Minford) and because they have avoided several of the mistakes which tend to wreck most of the Leave arguments as often presented.

In particular

1) Most Brexit supporters suffer from the inconsistent beliefs that other EU members are determined to block any reforms suggested by Britain even when it is in their interests to support them, yet if we vote to leave the rest of the EU will suddenly start being guided by enlightened self-interest to fall over themselves to offer us good terms. The "Economists for Brexit" report is open about the fact that this is not a realistic assumption and allows for the strong possibility that we will not get everything we want out of the exit negotiations.

2) The report is reasonably clear and open in its' assumptions about the policies Britain would follow in the event of a "leave" vote, which unless I am totally misreading it are complete free trade and no tariff barriers.

So if you think that this is the destination policy Britain should and would move towards after leaving the EU (possibly via a FLEXCIT route) then you should read the "Economists for Brexit" paper and it will give you evidence to support your position - including the fact that there are some reputable economic experts who think that this particular economic strategy might work for a post-EU Britain.

HOWEVER

If you don't support a strongly free trade, no tariff barriers strategy - suppose you want to have "anti-dumping" tariffs against Chinese steel imports to protect the British Steel industry, for instance - then the assumptions behind the "Economists for Brexit" critique of the Treasury's anti-leave arguments do not hold for your preferred policies. The author of the "Economists for Brexit" paper wrote quite openly in The Sun newspaper that he was prepared to see Britain lose most of our remaining manufacturing capacity and replace it with service industries in which we have a comparative advantage.

If you do not support that strategy or don't believe a British government would follow it, then you cannot consistently expect to get the benefits which "Economists for Brexit" argue would follow if and only if a post EU Britain follows a free-trade, zero tariff policy.

That doesn't mean you have to vote Remain but it does mean you have to accept that there are no reputable economic voices at all who think Brexit would make Britain economically better off given the economic policies you support. In this circumstance a Brexit vote only makes sense if you are arguing that you are willing to pay money for greater sovereignty.

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