Brexit (1) Leaving the European Union is leaving the European economy (and that’s bad)

The European Union is basically a trade agreement, with a few foreign policy rules thrown in. And the trade agreement is a good one: is outlines the bare minimum requirements to partake of the benefits of EU trade. It stops a member state selling out its environment and its people to undercut the European market. Corn from anywhere in the EU should be held to the same environmental standard, and services (like banking) from anywhere in the EU will be offered by workers afforded the same rights under the EU Work Time Directive, and other directives.

And the United Kingdom (UK) is apparently considering leaving it, all because of a few foreign policy rules. The EU mandates restriction-free travel across its member states. As an Island, Great Britain (and the wider UK) have already subverted that rule; you need a passport to come here, even from within the EU. But, one is also entitled to the benefits of the member state: welfare, healthcare and unemployment allowances; child benefits and an education. That, the UK argues, is an overly burdensome budget concern. (Which takes us to Schrodinger’s Migrant: both stealing your job and on benefits.)

But, what would the UK actually do outside of the EU? This short series is going to argue that either no one knows what the UK will do if it leaves the EU, which is akin to leaving a good thing for no particular thing at all, else the UK will have to quickly re-establish a relationship with Europe that will look almost exactly like the relationship it already has. Import taxes and trade agreements are defined by the EU, so the import tax paid on goods from, say, China in the UK are set by the EU. If the UK were to leave, it would need to negotiate a trade agreement with China, as the UK would not longer be apart of the EU agreements. The UK would also have to make a similar agreement with the USA, India and everyone else. And this is not a skill set we have; most of the UK’s international agreements have been done through the EU, using EU lawyers.

When I say the UK would have to negotiate a new trade agreement with everyone, I mean everyone, including the EU. The EU trade rules that bind the member states are designed to stop one state from undercutting the rest of Europe in a race to the bottom, environmentally and with human rights. The EU will probably not allow us to undercut their market in a workable system; to get an import tax on British goods that doesn’t cripple our economy, we are likely to still need to abide by EU rules. We’d be putting all our efforts to re-joining the EU, but without the democratic position we currently have.

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34 thoughts on “Brexit (1) Leaving the European Union is leaving the European economy (and that’s bad)”

  1. So, there’ll be paperwork to do if we leave – so what? It doesn’t all need to be done within two years of the referendum, or even within two years of invoking Article 50, as I understand it.

    1. Yes, it does.
      And there’s only about 6 weeks difference between the end of the referendum and invoking article 50.

      More importantly, the paperwork we do complete will compel us to almost exactly to the EU. But we will lose a vote in how the EU progresses, so will be tied to an entity we can’t influence. No matter how democratic you think the EU is now, our relationship to it later will be worse, if we try to leave.

      Non-EU paperwork, which would be about our trade agreements with other countries, we could, of course, take 20 years to complete if we wanted. But that means no trade agreement — we’d still very much be in a rush to create that paperwork. Other trading blocks are a lot less likely to be in a rush to formalise an agreement with us, though: we’re simply not that big a market alone (that’s not a slight, it’s just that everyone else is in a club). Obama was just telling a hard truth when he said the UK would not be a top priority for new trade agreements.

      1. No it doesn’t:

        “The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.”

        – Article 50 of The Lisbon Treaty, item 3.

        1. I’m not resting a hat on anything, not making a case for or against, just pointing out what I consider a weakness in your argument as set out so far.

        2. I accept that the 2 year deadline can be extended. But it’s in rather unlikely circumstances. It takes unanimous agreement.
          And that’s still only the agreements with Europe.
          Agreements with ASEAN, China, the US etc are independent of that.

        3. Well, I don’t really know what that means. “Business” is not some monolith with simple interests.
          Which businesses do you think will have a say? They don’t all have the same interests.

          In fact, in terms of leaving, what most businesses will want is to maintain tariff free trade and free movement of people. So the very thing the media is spinning this as–an immigration issue–will be entirely neglected.

          In terms of the trade agreements we will make, all of Europe will want to tariff our goods to favour their own. That’s their interest. The last thing a company with an EU market wants is for the UK to be permitted to ‘externalise its costs’ (fancy speak for not looking after the environment or workers rights and pay) and still compete without tariffs in Europe.
          If business controls the negotiations, we’ll be really squeezed.

        4. I don’t see politics as being divorced from corporate interests. More than that, I see politics – or rather legislation – as often being sponsored by it; corporations are the paymasters of political parties and future providers for politicians themselves (jobs for the boys). I think there are something like 35,000 lobbyists in Washington, for example, most of whom are pushing corporate interests. We are talking primarily about markets here. You say that “business is not some monolith with simple interests”, but within the paradigm of Neoliberalism, with its sham ‘free markets’ and their infiltration into public services, it is indeed a monolithic culture. The EU isn’t there to protect workers rights; that’s naïve; it’s what they’d have us believe, sure, but it’s nonsense – it’s not some supra-national Trade Union.

        5. It certainly wasn’t corporate interests that improved worker’s rights, maternity leave, holiday pay or environmental protection. That was about protecting the workers. The EU is a barrier to ‘free markets’.
          It’s far from perfect, yes. But the EU dragged a reluctant UK into compliance with these laws. The UK’s history is one of tending towards the free market. It’s only the idea of remaining competitive within an EU trading block that risks maintaining the UK’s compliance. ‘A rising tide lifts all ship.’

        6. Workers rights didn’t begin with the EU – come on! Corporations necessarily must improve workers’ conditions over the decades – just enough to stave off revolt. I don’t believe in the existence of Free Markets in any case, and having worked for 40 years in the commercial world know damn well that many markets are rigged to some extent – be it by cartel arrangements, slush funds, or central government influencing. I think I’m a lot more sceptical than you, cynical even – not about human nature, but about the systems of governance we live under. I’ll leave you with this bleak vision, my friend:

        7. No one said workers rights started with the EU. I said they progressed quicker under the EU, and the UK tended to fight it.

        8. I got 19 minutes into the video and had to jump ship. There was no data and very 2-dimensional view. Plus, I just wasn’t a fan of the production.

  2. I think there’s only 1 more. I can’t remember. There’s not a lot more to be able to write as leaving the EU is essentially a “mystery box” and the “Out” campaign is its salesman. I’d love to see the data or the plans on what leaving would actually look like, but instead of offering that, we’re offered reasons to not like the EU. That’s not really the same thing.

  3. I’m not a resident of the UK, or anywhere in Europe, so I can’t comment on this intelligently.

    But if it is true that the EU can impose its will on member countries despite the wishes of the people of those countries, then it sounds like a bad idea to me. Particularly if the “EU” is effectively “ruled” by one country (Germany), which has been known to attempt to exert control outside of their own borders before.

    Agreeing on trade issues and mutual cooperation is one thing. Overriding member countries’ sovereignty is something else. A country is defined by its “borders, language and culture”. And sure, those can change over time, for better or for worse. But discard those factors entirely, particularly without the agreement of the populance, and that country ceases to exist.

    1. The EU is not ruled by Germany. It is a democratic community. It has a parliament that is made up of Members elected by citizens of the Member states (although, the citizens don’t seem to take the election seriously, and tend to vote in right-wing politicians that they don’t elect for their own country).
      The EU also doesn’t regulate for boarders, language or culture. It might regulate the “culture” of some businesses, but it doesn’t stop the Spanish siesta or the French 2-hour lunch or the Austrian whatever-it-is-the-Austrians-do. Brits still eat curry and insist fish and chip are the national staple. There’s nothing in British culture that I am proud of that is being attacked by the EU.

      The EU’s concerns tend to be larger than the parochial concerns of the individual member state. I don’t doubt that Big Business has a sway, but in general the EU is less influenced by Big Business than individual member states are. That’s why is gives employment rights and environmental protection.

      One of my biggest concerns regarding the EU is not its overstepping (that’s a rare occurrence) but its toothlessness when rules are flouted. Greece’s lies about its economy to join is an example of this. The Volkswagen scandal is another.

      The political structure is not completely alien (although the analogy is imperfect) to the US political system, where each State is a Member State. Every US state has some sovereignty and automony, but there is a minimum standard they have to achieve.
      The analogy falls apart a little when you consider the Senate to be like the European Parliament: but the basic structure of things having to pass through the senate/parliament is the same. I don’t think the Senate has proportional representatives from each state though, does it? Because the Parliament does.

      1. I interact with another UK citizen who has a different view. Perhaps yours is more accurate, perhaps his, or more likely, somewhere in the middle. In any case, what will happen will happen, and we’ll just have to see how it turns out.

        The Senator represents the state (allegedly), and there are 2 from each state, independent of size or population. The House of Representatives represents the people (allegedly), and there is 1 for each district in the state, so there are more from California then there are from Rhode Islands.

        1. I don’t see how anyone can think Germany is in control of the EU. I get that I may be inaccurate on a number of things, because politics now go through strong Brand Control, so it’s difficult to ever get at the complete detail confidently.

        2. I don’t imagine that it is officially the case, but for whatever reason, it does seem like what Angela Merkel says, goes (at least until member countries come to their senses).

        3. I’m not really finding much in the way of evidence for that. Do you/the person you talk to have an example or understanding of what that looks like?

        4. I think one thing he is concerned about is the invitation to the refugees. Not that Germany invited them in; that is Germany’s problem. His claim is that Germany is insisting or has “made” the EU insist, that all the other countries take in large numbers of the refugees. It is not clear whether Germany’s influence is due to their people in the EU leadership being “more effective” than those from the other countries, or that Germany “holds the purse strings”.

        5. It is true that there were certain pressures on other EU member states after Germany took in so many refugees. (And it is a legitimate concern that opening the boarders because of a crisis means we’re not really checking if only people with legitimate asylum are coming through.) But that wasn’t some sort of dictatorial power, that was moral pressure and national embarrassment: how can we be taking so few refugees when Germany can take so many.
          And immigration is nearly always the concern. But in the UK I don’t think immigration is the concern; I think our welfare state needs reform. I love welfare, I’m a bleeding heart bloody liberal (something you’ve probably noticed before). But, if you don’t have a job in this country we have a benefits program for you called ‘JobSeekers’. It shouldn’t really come as a surprise that JobSeekers allowances are for people who are seeking a job. And, to prove you are seeking a job, you have to meet with someone every week or two week or two weeks (I’ve never been on it; I’m not sure of the exact detail).
          The problem is that people who are not seeking a job still get the allowance. Unskilled workers send their CV and résumés off to corporate businesses for management positions and other positions they are never going to get; their expectations are too high; they are career seekers (or they’re just faking it to get the benefits for near 0-effort).
          In summary, JobSeekers allowance is given out too easily and is under-enforced. That’s the problem.
          And, under EU law we have to offer EU migrants the same benefits we offer our own citizens. So, some Brits are concerned that immigrants are coming over to exploit our overly-generous welfare system. The solution is fixing the welfare system.
          Also, Cameron has negotiated the right to make immigrants work for some length of time and pay into the system before they can blame benefits — as well as stop “JobSeekers” for immigrants who haven’t found a job in 6 months (I think that should apply to Brits too!)

          Of course, benefits-stealing immigrants are not the only immigrants Brits worry about. We also worry about those who come over willing to work taking our jobs. But, research suggests the average Brit’s self-image and evaluation stops them taking the kinds of job the immigrants do: if the immigrants didn’t do it, it basically wouldn’t be done. As for the skilled immigrants, a lot of our infrastructure depends on it: nurses, doctors etc. If you can be replaced by an immigrant who can’t speak the language and has no social contacts, consider that the problem is you…

          To summarise: immigrants can be grouped into 3 categories: benefit claimants, unskilled workers and skilled workers.
          Benefit claimant immigration is a problem that is solved by reforming our welfare system, for everyone (not just immigrants).
          Unskilled workers are not stealing jobs Brits are willing to do.
          Skilled workers are filling a genuine gap in the market, because we lack sufficient people with those skills.
          I disagree with people who think immigration is the problem.

        6. So few immigrants? Isn’t London at or near to a majority of Muslims? And what’s up with allowing said immigrants to rape local women (because they don’t meet the immigrant’s excessive standards of “decency”) and trash the facilities provided them because they are not “good enough” (although they are 20 times better than they had back home)? I don’t know if this is happening in the UK, but it is in the EU

          Immigration is good for a country IF AND ONLY IF the immigrants are willing and able to assimilate. Muslims often aren’t and can’t.

          As I understand it, there is this thing there called a “0 hour contract”, where a person is “employed”, thus ineligible for benefits, yet only works when they are needed, which may be, literally, 0 hours per week.

          I see the same “truth” is claimed over there, that “citizen” workers “won’t do” certain jobs. I can’t say about over there, but here, it is more accurately “Americans won’t do those jobs AT THE PLACES WHICH PAY THE LOW WAGES FOREIGN WORKERS WILL ACCEPT”. And that is also true of jobs Americans are EAGER to do. Immigrants will do them for less. It is very common here for companies to bring in immigrants, make Americans teach them their jobs, then lay off the Americans (skills shortage, my ass). So yes, it is the citizen’s fault that they can’t live on the same wages a person just in from a third world country can. It is entirely a self-image problem that someone making X per hour raises a fuss at being reduced to 0.75X per hour.

          Here’s a reform for you: Can’t find a person with the needed skills? Of course you can bring in a foreigner to do it. Just that for every one you bring in, you must also hire and train a citizen…

        7. I think you’ll find I said “so few refugees”.
          The most recent data on the number of Muslims in London places it at 12%
          The mayor of London is a Muslim.
          We did have a ‘foreigner-sex-scandal’ of sorts, but it wasn’t the same as the creepily organised sexual assaults that seems to happen in Germany at the New Year. The UK one was a case of ‘Regressive Left’ in the extreme, where a community of Pakistani men were kidnapping and keeping young British girls for sexual purposes. The most disgusting part of this was the the police knew this sex ring was happening and didn’t act for fear of being considered racist. (The horrifying irony is that non-assimilated 3rd or 4th generation Pakistanis are more socially conservative that Pakistanis tend to be…)
          There was a documentary in the UK where a journalist went to a Job Centre (a place you have to go to sign on to demonstrate you are Job-Seeking) and said they have work for the people attending. The white British men turned down fruit picking on farms and night work in factories, on the grounds that that is ‘a Pole’s job’.
          A friend on mine who I worked for for a short time has a similar experience: he owns a gardening company and it’s only really foreign people who are consistently hard-working, punctual and polite to the clients.
          Also, how is it, exactly, that a foreigner can live in lesser wages? They live in the same area. It’s not like they are renting and doing their shopping in a foreign country. They live right here. Their life is as expensive. But British people have a tendency to expect a higher standard of living: people my age have been lied to by the success of the generation before me, and the foreigners aren’t that stupid. Brits expect to not work hard unless they love the job. Eastern Europeans know they have to work hard for the money regardless. It’s a significant cultural difference.

          I don’t think industry should take on the responsibility of training their own staff, unless they are some esoteric and specific skill set. I’ve paid good money for my education and that’s where the training should happen, because I’ve paid for it.

          But, again, I don’t accept the basic claim that immigrants are stealing British jobs. They are harder to employ and have a language barrier and no social contacts. If they get the job and you don’t… why?

        8. Refugees or immigrants, in either case excessive numbers and/or no minimal standards can hurt a country more than it helps it.

          Again, I can’t say how it is in the UK, but here in the US it is VERY COMMON for a U.S. citizen to be laid off and replaced with a foreigner. And a disgusting percentage of those times, the U.S. citizen is required to teach their replacement the job. In many cases (at least with the high tech jobs I’m familiar with), the foreigners speak pretty good English; sometimes the accent is hard to decipher, but they grasp what we are saying pretty well.

          We have a “real” unemployment rate of nearly 20%, yet business is clamoring for more and more foreign workers. Because they will work cheaper, because they don’t have the consumer mentality which those same businesses bred into us to boost their sales. I’m not saying that businesses have to train all their workers; just that if the business claims there is a shortage of a particular skill which is “only available” from a foreign worker, they should be responsible for that foreign worker transferring that skill to an un/under employed American. In other words, make them validate they really can’t find an American citizen for the job. I suspect that if it was not cost effective to hire the foreigners (because suddenly it costs twice as much), suddenly suitable citizens “would be found”.

          I’m wondering how much of the not taking apple picking jobs is self image, and how much is “eh, I don’t really want to do that, and the govment will take care of me anyway, so nuts to it.” If a) you turn down a job which you could do, you get no more support and b) there was not a pool of cheap foreign workers competing for the job and pushing down the salary, than I’ll bet that a lot of the jobs xxxx citizens “won’t do” would suddenly start being done by xxxx citizens… And if we were not imbued with that entitlement mentality (that “someone else” is supposed to take care of me, and if I screw up, it is someone else’s fault), the American workers would tend to be as hard working, punctual and polite as the foreign workers.

        9. The fruit picking job is my favourite example because the farmers always paid on commission. Polish people doing the job can routinely make £15 ph (more than double minimum wage) doing the job, but British workers can’t earn minimum wage when operating on commission (i.e. a pure meritocracy). Employing a culture of hard work is profitable. It’s not Saudi immigrants or Italian immigrants taking these jobs, is it? It’s Eastern Europeans.
          And whatever the reason is the that Brits aren’t taking the job (and then being really bad at it if they do take the job) isn’t the business’ problem.

          I don’t mind, I do work hard: I’ve even been told by a warehouse floor manager ‘you work like a fucking Pole, mate. Good on ya.’

          We seem to have reached some sort of agreement in places: we seem to agree that we need to reform the benefits system (here, at least, I have no idea how it works in the USA).

          Lets take an example. Let’s say no one native to our countries can code. (Silly, I know, but take it for the example.) But Japanese people can code. So, tech industries employ people with the skills, happens to be Japanese immigrants.

          Right, now imagine you own that company and you’re being told that on top of the wages, pension, holiday and other contributions you have to make to that employee, you now also have to employ an unskilled worker and detract from the productivity of the skilled worker so that the skilled worker can teach alongside the job he’s been hired to do.
          Now, I can see the benefit of that. In fact, I’d love for that to be the case. But unless you are a bleeding heart socialist living in an openly socialist country, you’re going to find that difficult to defend.

          Yes, if the skilled workers didn’t exist, the companies would invest in training schemes; your first 2 weeks would be training, your next 2 weeks would be observed and supported… but that’s a damned expensive route. Why would any business invest in that while the skill is available? They wouldn’t, unless it was legislated for.

          And also, let’s not just add ‘teach’ to someone’s job description like teaching is an unskilled task that anyone could just do.

          Now, the UK does have minimum standards. It has a minimum wage. It has housing and JobSeeker’s benefits. It has free education and healthcare. It has disability allowance and holiday entitlements. We have maternity rights and paternity rights.

          But I think that minimum standard should be earned at some level. No one can be sincerely Job Seeking for 5 years. But that issue has nothing to do with immigration. It’s about work ethic. And if it happens that we have to import our work ethic, then that’s a problem.

        10. I’m not familiar with the benefits system here, I’ve been fortunate to not need it. When I was laid off, I didn’t even bother applying for unemployment; the amount they paid was so low it wasn’t worth dealing with a bureaucracy. A lifetime of being frugal (or a cheap b*******d, take your pick) worked better for me. But whatever the system is here, I guarantee it needs adjusting at least some. Any time people are “paid not to work”, most of them will work very hard at that… And why do governments always attempt to provide more and more benefits? Mostly because if you give people stuff, they tend to vote for you.

          Yes, it would be annoying to a business to have to hire two people for one job, and that would be quite onerous if, in fact, the skills were not available from citizens. As far as I can tell, that is essentially never the case. Obviously, the companies which import foreign workers and have the native workers teach them the job before they are fired don’t have any shortage of local skills. I suspect the companies which hire foreign workers who are already skilled very often are doing it for economic reasons rather than due to a shortage of the skills. I can’t prove it, but if 1 person in every 5 in this country is unemployed or underemployed, it seems likely that at least some of the skills are there. Especially as the last 5 years in my very competitive, very high-tech, fast growing field, my salary did not increase even 1 penny.

          Of course, my plan has problems. Greed (or enlightened self-interest, take your pick) usually triumphs. Basically, there needs to be incentive to produce the skills needed locally by have a significant disincentive to import skills.

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