Wednesday, November 22, 2017

Michael Roberts — Budget and Brexit

Britain has been a rentier economy extraordinaire, with the highest dependence on the financial sector of all major economies. And the biggest fall in productivity growth has been in this sector since 2007.
Michael Roberts Blog
Budget and Brexit
Michael Roberts


Kaivey said...
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Kaivey said...

Paul Craig Roberts, Steve Keen, and Micheal Hudson all said Britain should leave the EU, but it doesn't sound such a good idea now.

I heard on Radio 4 the other day how pro Europe Conservative politicians have been accused by the press for slowing Brexit down and they have had death threats from members of the public.

GLH said...

Financial interest will make the people suffer for choosing to leave.

Andy Blatchford said...

Was it a good idea? Certainly.

Is it being handled badly? Absolutely as there is a complete misunderstanding of how the EU works as a regulatory body for trade.

Mostly what I see is people talking about tariffs which are so low to be almost irrelevant. The single market is (generally) an ex anti regulatory system (the US is mostly ex post and why stuff ends up in court and the judgements handed down become the regulations.

Article 50 should never have been delivered before we were ready (or at least had a plan) there wasn't any time limit on when it was delivered.
The list of what needs to be done is endless, from flying rights for UK aircraft to mutual recognition of professional qualifications.

All in all because of our Govt there are only 2 outcomes, a complete catastrophe or it is reversed.

No one is 'punishing' anyone and that is the confusion.

NeilW said...

"The list of what needs to be done is endless"

It really isn't. When you are de-coupling something things will break and you handle that on the fly. There's always going to be a reason why the bureaucrats need more time.

So what you do in system change is you go with it, and then the bureaucrats find they have people shouting at them and the rules start to make themselves.

Ultimately if we never export another thing to the EU, then they will either have to take Sterling or the currency will shift against the Euro to eliminate their trade to us. We just leave our borders open to reduce the friction of goods coming to us, and if necessary we use the UK's financial might to pay UK producers in Sterling, but escrow onward payments in Euro until the exports to the EU get cleared.

So if they gum up the physical path, we can gum up the financial path if that is to our advantage. As long as the Sterling continues to circulate we keep going.

Ultimately if the EU wants to impose sanctions on the UK for deciding to take a different path, they will do. We're just going to have to work around that blockade in the usual way that we work around German imposed blockades.

So it is all doable. The EU are just being inflexible rule-bound idiots, which is the reason we're leaving in the first place.

Andy Blatchford said...

"we just leave our borders open to reduce the friction of goods"

Then you are going to have to do that for everyone (them's the WTO discrimination rules) which means unlicensed Pharma, foodstuffs etc. Then of course there is the export processes ex EU to us, borders are 2 way (and where the issue is with Ireland, we can say we aren't putting anything up but the ROI will have to)so going from no friction at all to frictions at ports (Dover/Calais is the biggie)that basically have zero infrastructure to do that.

"The EU are just being inflexible rule-bound idiots"

That is exactly my point it is a rules-bound system but so is ours unless you want to go the US route of ex post regulation and then wonder why our courts are tied up with litigation.

Andy Blatchford said...
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Andy Blatchford said...

I should add those sanctions are being imposed on ourselves by ourselves. The EU isn't going to change it's rules based system.

Trade will still go on of course but there will be major disruptions across a whole swathe of industries and particularly in foodstuffs so multiply that iceberg lettuce shortage last year across a lot of the fruit and veg sector and you are going to have a lot of unhappy people running around headless chicken style when they can't get what they are used to because of our Govts shambolic lack of planning and misunderstanding what they are dealing with

NeilW said...

"Then you are going to have to do that for everyone (them's the WTO discrimination rules)"

Who says we have to do what the WTO says? Do they have tanks? As a large import economy the rest of the world needs to shift its stuff it's for us to set the rules as the net customer.

WE don't have to do anything we don't want to. One thing MMTers ought to be saying is we *don't want and don't need* WTO rules. That's just swapping one rules bound operation for another. If a country wants to put 60% excise on UK exports, then the currency shifts to move it to the import/export balance with that currency area and they damage their exports to the UK. We don't have to do anything. The costs are paid by those erecting the barriers.

"and where the issue is with Ireland, we can say we aren't putting anything up but the ROI will have to"

The friction would be on the EU side of the border, not ours. We'd just wave them through. And since that increases the distance between our nation and the EU, other nations would start to look cheaper - particularly when we strip out all the costs from them.

The main point is that the government has to set the direction and say that is what we are going to do. And they have to say that by early next year at the latest. Then supply chains can be altered, and the checking systems pushed out into the economy to avoid issues at the ports.

So the issue is with the EU and their rule bound inflexible attitude. Which is why we are leaving. To leave the prison you have to go outside the walls.

Tom Hickey said...

Rules are made for the benefit of those that make the rules.

Even in an actual democracy the rules are made by the majority, or even super-majority if that is required.

When rules are made by an elite, you can bet they are made to benefit the elite.

Andy Blatchford said...

The teeny problem Neil is we ain't in charge (assuming people will vote for us) . If we were then no problem. As is we are not so as is this is what happens. Fine let's change it but talking the economy down to do so isn't very appealing (and revolutions don't generally work out too well)

Some things can be taken off the border for regulation and pharma is good example of that (which already is regulated at at other points) but that isn't what the Libertarian loons want, they want 'red tape' gone, effectively going to the US model.
For foodstuffs and live animals then the regulations can't be taken away from the border, it must be done there due to disease control which is what most of that is about, see the foot & mouth outbreak a few years ago that spread to Ireland.

Sure sometimes, but most regulations here are due to public pressure (and ironically when things go wrong the hard right newspapers jump up and down for new regulations) see the horsemeat scandal, the (non as it turned out) scare of eggs 20 years back, BSE etc all had the public screaming for regulation.

You takes your choice where you want the regs ex post or ex anti but I prefer ex anti as I really couldn't care less about a lot of dosh if it kills my kid. The open borders which let's in unregulated pharma will last about 5 minutes until the first death.

Andy Blatchford said...

*not talking the economy down should have been *taking

Andy Blatchford said...

BTW talking to a Customs guy the other day yes likely we will wave them through (as they dont have staff to stop it, something similar happened in the early 00's with quota goods from China, ports got backed up so they just give up and let it through) but on the other side of the channel the gates will close and that's it. There is no way to 'depart' stuff from Calais so it just won't go, it will rot (I think I mentioned S8 messaging?) And you can't substitute driver accompanied loads into sea containers as that whole trade is there because of it.

Andy Blatchford said...

On the WTO they are called 'rules' but they aren't really, it's a framework. We have signed up for it but we can ignore them if we want. If we did throw up a barrier to something it would be up to the country who thinks they are affected to put in a complaint which goes to the dispute resolution committee which is more like an adjudicator. We don't have to accept that decision and there is nothing to make us except if we do there is nothing then to stop the complainant hitting us with punitive measures.