June 21, 2016 by Paul Goldsmith
This blog is quite long but if you stick with it you may find it useful, particularly if you are not sure which way to vote on Thursday.
Last year I sat on the fence the day before the general election, feeling it was important I remain neutral given the aim of my blog at the time to present both sides of what was a very close election. This referendum though is something different. A General Election result is for five years. June 23rd’s result is for fifty. So I think I have a responsibility to explain why, after much thought, I will be voting to Remain in the European Union.
It has been a lot of thought because of, not despite, the level at which I understand the political and economic issues involved. I know when a forecast is on dodgy ground, I know when a claim is false, I know when a campaigner (on either side) doesn’t understand sovereignty properly. I know both sides of all the debates involved because it is my responsibility to do so in order to serve my students. This has actually been my problem, there are good and bad arguments on both sides, which is why it has been so difficult.
I am also aware of the disadvantage the ‘change’ campaign is at during a referendum campaign compared to the ‘status quo’ campaign. Quite simply, the burden of proof that the change should happen is on them. My MBA study in change management suggests that three things need to be achieved for someone to want to change:
1. They must be dissatisfied with the status quo.
2. There should be a desirable future mapped out.
3. A practical pathway to that future should be clear.
All of these multiplied together need to be greater than the perceived costs of change.
I put multiplied in bold as it is important to note that if any of those three are at zero then the case for change is zero. Even if they are significant, if the case for ‘status quo’ communicate strongly enough on the costs of change, the change won’t happen.
If you find yourself in my position, where you aren’t sure what to do, think hard about your perception of those three questions. Are you dissatisfied with the status quo? (I am). Can you see a possible desirable future? (I do) Is there a practical pathway to that future (there is, although it will be difficult). Are all these multiplied together greater than your perception of the costs of change (here is where I struggle…).
The Vote Leave campaign’s approach to this is to try to deny the costs of change, which has left them acting a bit like a man who wants to get divorced but assumes he will keep all the family wealth, have the children when he feels like it and still be able to have conjugal relations with his ex. Negotiation doesn’t work like that – so we need to get real.
The best way to explain how I got where I am is to look at the arguments for Leaving and assess them on their own merits. I will try to do so from weakest arguments to strongest. Then I will explain what I think of them.
If you wouldn’t vote to join the EU now, you should vote to leave – this is a completely irrelevant argument because we are NOT voting to join the EU now. We have our own special arrangements, which means we aren’t in the Euro, we are not in the Schengen Area (so we still have borders), and we are exempted from ‘ever closer union’. If we were voting to join now, we would have to sign up for everything. But we are not. So we don’t.
We want our country back – I assume the country that people who say this is the country that existed before we joined the EU in 1973? That would be the one in which there was no Equal Pay Act, no Gay marriage, no Disability Discrimination Act, no Minimum Wage? It was also the country that existed pre-globalization. I will keep coming back to globalization because it is important. The country that they want back doesn’t exist any more.
Turkey’s going to join – let’s put aside the suspicion that the colour of Turkish people’s skin is the real issue here and just assess this on its merits. The British embassy’s website in Ankara says it is working towards helping Turkey’s accession. David Cameron wants it to happen too. But it can’t happen unless Turkey turns into a proper democracy, with a free press and other human rights laws in addition to other economic criteria. There is nothing wrong with an ambition to bring Turkey into the 21st century but encouraging it to treat its people more democratically so it might join the EU. But it is so far away right now that there is no chance for at least the next thirty years. Should it ever be in a position where it would be allowed to join, many of the reasons for Vote Leave’s concerns about it joining would be dealt with. Apart, perhaps, from the colour of their skin? (Sorry, I can’t get that “Breaking Point” poster out of my head).
We are sending £350m a week to the EU which we should spend on our own priorities – I have already written about what I think about this argument. We are not sending £350m a week to the EU. It is about half of that. The rebate never leaves our shores plus we do get some funding from it. Yes, absolutely, this is a contribution to the EU budget that we might not have to make should we leave, and thus it frees up say £10bn a year to spend on our own priorities. BUT first of all it discounts the other benefits in terms of jobs and trade we get from being in the single market, secondly as part of a future EU trade deal we might have to continue with some budget contributions AND most importantly ignores the possibility that leaving the EU could reduce our tax revenue by much more than even the £350m a week IF it results in lost jobs and trade, so there would be LESS money to spend. This is a cost of change that I do believe is likely to happen, thus reducing the effectiveness of this argument to nothing. I actually think the Leave campaign missed a trick here anyway – they should have said the ‘£350m’ could be spent on education. Better education would enable British workers to compete more effectively with migrant workers and be paid higher wages. Might have killed two birds with one stone. Back to that later.
We free our businesses from damaging EU laws and regulations – These laws do add costs to firms, and they do make them less flexible. But consider what these laws and regulations are: They are ‘minimum’ protections for the disabled, maternity rights, working time rules etc. There are also environmental regulations. Now, I agree, and will come to this later in what I write on sovereignty, that we should vote for those who make our laws. But the arguments here assume that the laws that are made are all ‘bad’ laws, and they are not. But they also stop there being a ‘race to the bottom’, allowing firms to find a country in the EU to locate in where they could have lower working conditions or lax environmental rules. This actually protects the more vulnerable workers that the Leave campaign say they are protecting. Many of these laws and regulations protect them.
Some of the Economic impacts would be good for us – So, in the face of what is admittedly a quite ridiculously simplistic bombardment of economic forecasts disguised as facts from the Remain campaign, the Leave campaign have highlighted a fall in the pound and a fall in house prices as ‘good’ for our economy. On the face of it they are right. A fall in the pound should reduce the price of our exports, meaning more of them might be bought, increasing employment. But in return it would raise the price of our imports (‘imported inflation), raising prices of most foods in our shops and lowering living standards. As for house prices falling. Yes it ‘might’ help young people get on the housing ladder, but that ignores any negative impacts of a large fall in house prices. Put as simply as I can, when house prices fall, people feel less wealthier (the ‘negative wealth effect’), which means they tend to spend less, and this fall in consumption means firms get less money with which to hire people. So fewer jobs then results in lower consumption and so on – this is called the ‘negative multiplier’ and the impact of it would fall particularly on people who want to buy a house. So economics just gets in the way of these arguments.
We take back the power to make our own trade deals – This is true. We do take back this power. But how well we we use it? The last time we made our own trade deals were over forty years ago in a very different world, in which Britain was a much greater power compared to other countries. Our trade deal with the EU may come at a cost of having to still accept freedom of movement of workers, contribute to the EU budget and submit to rules and regulations we no longer have the chance to influence. A trade deal with China, India, USA and the like would be possible and I realise we are the world’s fifth largest economy, but the EU acting together is THE largest economy, so we surely have MORE power as part of the EU. Vote Leave keep saying “Iceland have a trade deal with China”, but we don’t know how advantageous it is for Iceland, and the trade deals we make might not be advantageous to us. Yes, it is also true that the constant assertion of national self-interest by members of the EU holds up these trade deals. My point is that this advantage could be a positive, but could also be a negative. We just don’t know.
We take back control of our borders and can kick out violent criminals (immigration) – here is a great example of an issue mattering more depending on how you are affected by it. I wrote an article about this a while ago in which I talked of how a points system for all immigration could wreck our economy, but I also admitted that I had never personally experienced any of the negatives of immigration. Coming from immigrant stock myself I like living in a melting pot of different cultures, and being affluent middle class I personally benefit from a hard-working, good value workforce in areas such as house-care and building work, and I am not really competing directly with immigrants for any jobs or housing or other services. I do accept that given this is the case I may simply lack empathy with those who perceive they are affected by immigration negatively (see here for an article about why vote leave could win because of this). So I need to have a certain amount of checking of privilege on this one. Where I do think Leave might be a bit outdated is their idea that leaving will make it easier for us to stop terrorists entering the country. I don’t buy the Remain argument that the sharing of information within the EU helps us stop terrorism because that simply will not stop if we leave as on this area the EU need us as much as we need them. But Globalization (yes, that again), means that ‘homegrown’ people can be radicalized and driven to terrorist acts in this country, so that is a weaker argument than it seems. I should also address the argument that wages would rise if we could reduce immigration of people prepared to work cheaply, which would force UK firms to hire British workers and possibly pay them more. UK firms, seeing wages rise, might simply hire FEWER people, or move somewhere they can get cheaper workers. It’s kind of how economics works in a globalised world. This is an area of this debate where facts (the higher % of immigrants in an area the LOWER the waiting lists as most immigrants are younger so don’t use hospitals) seem least important.
Sovereignty – we can kick out the people who make our laws – this is the starting point for many people voting leave on principle. Put simply, we have lost the ability to elect those who make our laws. When I went to vote for my MP in the 2015 election, I was voting for someone to have a seat in a Parliament which does not have full sovereignty, because there is a higher legislature, in Europe, which can make laws the UK has to follow and overrule laws made in the UK. The Remain campaign can try to negate this by saying a low percentage of this actually happens, but it IS a problem for democracy. My answer to this is detailed in this blog. As I have said previously, some of the Leave campaign want to say “stop the world, I want to get off”, but we live in a globalised world where even if we have sovereignty we CANNOT ‘take back control’. It is a myth that governments have real control anymore when there are multi-national firms who have revenues greater than most countries’ GDP. The UK, should it leave, will face a world in which there are countries like China, with very different ideas of how the world should operate, but are so big they can do what they want. This is where pooled sovereignty can have an advantage. The EU as a group, with the UK inside it, will be stronger with the UK in it. The UK as a country within the EU will be stronger in too. The world under globalisation is ruled by trading ‘blocs’ and we are thus better off in one, although I accept we do surrender some sovereignty as a trade-off. Put it another way: the Vote Leave campaign have identified a lot of problems. Like all populists, they are very good at that, but simply won’t be able to implement their solutions. The result of that – in terms of the reaction of those they say they are trying to help when they find out nothing has changed and in fact things might be worse – doesn’t bear thinking about.
Because let’s not forget, if Brexit goes wrong, it won’t be it’s campaign leaders who pay. It will be those for whom a troubled economy will help even less. Melanie Phillips says today in the Times that she would rather be poor and free than rich and enslaved. Well, it won’t be Melanie Phillips who is poor. The Leave campaign leaders really are like First World War Leaders sending their troops over the top to an uncertain outcome from the comfort of a bunker miles behind the line.
Finally, on a personal note – I want to say this: Europe was torn apart by two World Wars in the past century. The stronger and deeper the links are between these different countries with these different cultures, the less the chances of being torn apart by war again. This is why it was so important that when the Soviet Union broke up there was a modern democratic ideal the Eastern European countries were offered that made them look West and not fall apart. The EU is actually an incredible achievement. Should we leave, it will still be there – 30 minutes away from us. By being in it we have some chance to influence it, and I think in the end the costs of leaving are too high. I looked at my children, who are eight and six yesterday, and wondered in 20 years’ time would I rather tell them I kept them in the EU or took them out of it. That’s why I will be voting to Remain on Thursday.