The Last Post

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For me voting feels like making a contract with democracy, I’ve signed up for the team. I mean that whatever the outcome of the referendum we should all try our hardest to make the play work. I don’t mean you lose the right to complain but let’s undertake to give it our best shot anyway. If we can do that, surely we can make it work and make things better whichever way we go 🙂

Hoorah!

A wise person not a million miles away pointed out that in project success the biggest factor is often the quality of effort and team spirit.

Swingometer

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By now everyone has their own top issues. For me it’s not all about immigration or membership costs or trade or any number of smaller issues that I’ve looked at and hopefully shown are not in as imperilled as they might appear.

If you’ve read the rest of this blog you might already know that, for me, it comes down to these…

My reasons to stay are quite simple to explain:

Don’t rock the boat. Better the devil you know. I have a natural instinct to resist change, just ask my barber.

Keep with the herd and protect us (EU members) and our interests. I have a natural instinct for self-preservation too.

Despite it all I do put some weight on what David Cameron says he believes.

My reasons to Leave are more difficult to explain:

(You can see why I think the things I’m about to say by reading the various earlier posts)

It is unclear to me whether the EU is a force for good or bad in the world. I don’t mean to be all moralistic but I do really question it. I worry about the anti free trade and anti developing-world nature of the EU trading bloc. I worry about the inefficiency, waste and environmental damage that the EU has caused and may well go on causing.

I’m not happy with the notion of “ever closer union” even if we do, one day, manage to ratify our exemption from most of it. When the EU makes a cock up it cocks up all over Europe which often costs us and the planet. The EU seems unlikely to change its decision making structure to something more sensible. Nor will it change its direction; it is actually written on the walls in the visitor centre. The EU repeatedly ignores its own rules so even things that seem certain are not.

Outside the EU we could be more dynamic, in a changing world and do better for the world too. Future greater good for the world is a long term project so I’m trying to ignore any risk of short term impact to my own wealth which I don’t think would be all that bad anyway.

There are actually some rational voices for Brexit, it’s not all over compensation xenophobes. And there is a lot of unimaginative or deliberately obtuse scare mongering about post Brexit negotiations.

So I won’t just toss a tuppence because I do give a tuppenny toss 🙂

Big Onions

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With most of the issues I’ve looked I have been peeling layers of yeah-but-no-but onion. They appear to be yeah-but-no-buts all the way down.

All the questions relating to money, economies, jobs, trade and laws are impossible to answer because nobody really knows how the future will go if we stay in or if we leave. The statistics can be interpreted however you want. You can chose numbers to support either case. For instance (Nearly half our exports go to the EU. Yeah-but-no-but looking at it another way; Germany is our biggest trading partner in the EU yet we still do twice as much trade with the USA as we do with Germany) both those statements are roughly true but seem to support opposite sides of the argument.

It is a non-trivial exercise to find the right answer on most of the issues. Now I’m not giving up, I will vote, but perhaps I’ll have to resign myself to that fact democracy works by averaging the gut instincts of all the voters.

So I might as well pick an issue that most interests me or better still one I know about and just vote with my guts. I shall try and pick a big issue though, not just something fringe like bullfighting.

Small Onions

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You may be surprised by some of the issues I effectively dismiss here. These things will not help me decide because I think they fall in to one of these categories:

a) It has little to do with trade imports/exports tariffs and therefore should fall outside the bun fight that is predicted in the trade negotiations, and therefore are not at risk of being traded away for a tariff.

b) It relates to the monies sloshing to and fro to do with cost of membership and grants, subsidies etc. And because these amounts of money are piffling compared to the UK budget redirecting the money should be a perfectly reasonable expectation.

c) It will not be put at risk by a post Brexit government, because removing them would be too unpopular, even if they wanted to. What happens will be decided by the government not the Brexit campaigners.

d) It will not be put at risk by a the EU because I am dismissing the notion that the EU would act out of pure spite.

e) It is an area where our own laws already go further than the EU laws, where the EU is a floor or lowest common denominator. Since our existing and previous governments actually set the bar and have not lowered it; which they could have. There is no reason to think that they would start doing so post Brexit.

Security, EAW, Science, Farming, Holiday Travel, Business Travel, Bullfighting, Phone Charges, Travel Healthcare, Expatriates, Workers Rights, Human Rights, Environmental Rules, Animal welfare…. I’m sure there are others I’ve forgotten about.

Deals of Fortune

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Of course lots of people are arguing that there won’t necessarily be any post Brexit tariff barrier to trade with the EU for some goods. But assuming there will…

Some also argue in other cases that even if there were a tariff applied to, say, BMW cars exported to the UK that alone does not mean they would necessarily be more expensive for me to buy. It feels like cars already cost more in the UK because our market will bear it. So if BMW mark-up cars more for the UK than they do in other parts of the world then the tariff might be nullified simply by BMW pricing lower within its extra UK profit margin.

… These are just small points about specific goods. So to a bigger picture for some perspective; why would a 5% tariff be a high estimate of a plausible future trade deal with EU? Well, average tariffs between western countries are in low single figures.

These average tariffs are small compared to fluctuations in currency exchange rates. So the variation of the pound against the Euro will have a greater effect on tradability than any likely future tariff.

How important is are trade deals? Regardless of trade deals a country can thrive if it produces something other countries want.

If we left the EU and had no trade deal, an extreme worst case, all our exports might attract EU tariffs of around 2 or 3 per cent.

How to put that in perspective? To use a figure the Remain campaign are happy with, net EU membership fee costs 8.5 billion pounds a year. Right. How does that stack up against the bad deal described above? From the Office of national Statistics figures I’ve added up that in the 12 month period up to Nov 2015 (that was the latest period available) we sold about 135 billion pounds of exports to the EU. 8.5 is about 6 per cent of 135 so the existing EU membership fee could already be likened to paying a 6 per cent tariff on all our exports to the EU. Wow I never thought of it like that before.

Paying a 6% fee to save a hypothetical 3% tariff…. I know it’s more complicated than that but it puts it in perspective and leaving does not seem quite so bad to me with respect to trade.

The Caucasian Country Club

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(Members only) Lovely in here all posh and everything.

I don’t what to be in a private trade club of the elite and predominately Caucasian countries. I want to trade freely with the world of Asian, African, Latin American too.

Regarding trade what is the size of the consequences, good and bad, of leaving this protected environment?

Day one proposition. The world average trade deals seem to apply tariffs less than 5%. So offer the EU 5% on everything by which I mean they can charge 5% tariff on all goods we ship to them if they want to. I’ve chosen 5% as an over estimate (yup see other post). In return we put 0% tariff, nothing, nada on goods we import from them. What! They have got to be happy with that, haven’t they, you are giving them a great deal. Bear with me. Yup this is a scenario where we get a worse deal with the EU which will have some impact on some businesses, definitely. The percentages are small so I’d suggest that in many cases the consequential impact might be manageable. I don’t mean to under estimate the difficulties that might be created, I do mean to point out how able UK businesses and business people are at coping and adapting. And remember 5% is an over estimate to make things seem as bad as possible to make my point that the worst case is not necessarily as bad as you might believe.

But on the upside we would be free to do deals with the rest of the world. The current lack of decent trade deals with the rest of the world is crippling some business, in fact there are loads of businesses that simply don’t exist because of the EU. So in some cases the consequential benefit could be very very big.

So business gets a bit more difficult in some areas but on the up side whole new businesses become possible where they weren’t before. Smaller downside, bigger upside than you might guess from the news?

There is a balance here somewhere that I’m not hearing anyone talk about.

There was an example of each case on a recent program. A cheese maker who sold cheese to France, yes his business might be a bit more tricky if there was a small tariff on his exports to France. On the other side a hovercraft manufacturer who can’t sell to Brazil at all because there is what sounded like a 100% export tariff on her hovercraft exports to Brazil. So that whole business is just impossible because a 10 grand hovercraft costs a Brazilian 20 grand. If we did our own deal with Brazil she could sell loads of hovercraft.

Why is it so bad for trade to leave? Is it really as black and white as Remain are saying?

Working Conditions

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I used the word conditions because the word rights gets everyone hot under the collar (blue or white).

The UK living wage is higher than the EU average. The UK maternity leave is more than the EU stipulation. The UK annual paid holiday is more than the EU stipulates. The Working Time Directive is specifically implemented in UK law.

So I don’t really see why we need the EU to guarantee working conditions. Outside the EU I’m sure we can continue doing better and better for our workers.