The continued deceits of Brexiteers

Having lied and exaggerated their way to winning the EU referendum, advocates of Leave in the British daily press must find ways of evading responsibility for the ever-worsening problems created by the decision to leave. Here I enumerate various strategies of denial deployed by the pro-leave press. I focus on the Telegraph and the Express. The other two main tabloid Leave newspapers rarely aspire to even bad arguments so I leave them aside.

Massage the “facts” to pretend all is well with the world

The Daily Express has been leading with headlines over its early August issues citing economic statistics which show how well the UK economy is doing. However, the most recent hard statistics we have at present come from the second quarter of 2016, i.e., from before the referendum. At that time most business opinion thought Remain would win, a view reflected as late as the immediate closing of polls on 23 June when there was a brief surge on stock exchanges. Classic Leave argument: insist on the relevance of the irrelevant.

One figure the Express does give from after 23 June is foreign investment, citing a very healthy figure of around £26 billion for July. What it does not point out is that well over 90% of that is from one single transaction, namely the takeover by Japan’s Softbank of ARM holdings, one of the UK’s biggest technology companies. Many observers are worried that rather than this showing faith in “the UK economy”, increasing investment and profits, and contributing to UK employment and economic growth, this foreign takeover can have precisely the opposite effects. A rare British success story is now out of our control; we have no idea how long Softbank will commit to investment in Britain, especially as it acquires the valuable knowledge of this firm which can be transferred back to Japan.

One can also build castles in the air based on a few suppositions which are then presented as facts which in turn are unproblematically greeted as good news. So again the Express inform us that there are countries with a total GDP of well over £40 billion (far greater than that of the 27 other EU countries) which want to conclude free trade deals with us, including China and Brazil. What we do not learn is just what “want” means. Does it mean official statements by the governments of those countries or something rather more informal? What is meant by a “free trade” deal and how will it compare with the tems on which we take part in the internal free market of the EU? How can such a deal be negotiated before we actually have left the EU? And can we be sure that a free trade deal with, say, China will not make our economic problems worse? I will come back to this last question.

Finally one can make contradictory claims about the same facts, depending on what suits the Leave case. So we were told that there will be no great problem about being denied free access to EU markets because its external tariff is “only” an average of around 5% and in any case the pound has already devalued more than that. But we are now told that it will be a boon to leave the EU because its protectionist policies add well over 8% to our cost of living. In one case a higher figure deemed to be significant suits the argument, in the other case a lower one deemed to be insignificant.

Blame someone else

However, it is difficult to deny that the pound has devalued (as predicted by the Remain campaign but decried as part of ‘Project Fear’ by the Leave side) and that surveys of purchasing managers for the near future tell a grim story. Here two strategies are possible.

The first is word play. The Daily Telegraph points out that we may have voted for Brexit but that has not yet happened. So Brexit cannot be responsible for anything happening now. Of course that does not stop the same media for claiming any good news is due to Brexit. Of course the issue is not Brexit itself but the damage – likely to last the best part of a decade – caused by the Leave vote itself and what those making economic decisions think will be the eventual outcome of Brexit. No-one know what “actual Brexit” will mean because we neither know what form it will take nor what will be its consequences. We lack the capacity to do much more than guess that far into the future.

Insofar as the pro-leave media do concede that the Leave vote actually has had bad economic consequences, it turns out that the real culprits are Remain advocates! (See for example the Telegraph leader of 5 August: ‘Don’t blame Brexit for this rate cut’.) If only they had not engaged in “Project Fear” then gullible people (including leaders of big business and finance, hedge fund managers and currency dealers: all obviously very gullible) would think Brexit was good news and economic indicators would reflect such thinking. It’s rather a post-modern economics: discourse shapes reality. Whistle in the dark and the lights will come on.

 

Pretend bad news is good news

Starting with Nigel Farage, Leave advocates have pointed to the upside of sterling devaluation. Exports will become cheaper, imports more expensive: thus devaluation will contribute to eliminating our record high current account deficit. One particular industry is often cited: tourism. More foreigners will come and spend their money here while fewer Brits will go abroad and instead take a “staycation”. It is interesting that few other examples are given and the argument is dependent upon just general market assumptions rather than any detailed enumeration of just which sectors of the economy will be able to export more and just what imports will fall.

What is not mentioned is that the other side of the coin of devaluation is a rise in the cost of living and inflationary pressure which in turn will push the government to further austerity measures. If the record of the Cameron years is anything to go by, we will not be in this “all together” and once more the poorest and most vulnerable will be hardest hit.

 

Keep quiet about one’s own false claims

Except for Farage’s frank admission on 24 June that it was a “mistake” we don’t hear much about all the goodies on which we can spend the £350 million the EU was taking off us every week. The NHS will have to saved in some other way. Except for one Tory Leave MP, also on 24 June, we don’t hear a lot about drastically cutting EU immigration. (Mind you: he denied Leave advocates ever promised this!) As for Boris Johnson, he as good as admitted at a joint press conference with John Kerry (whose face betrayed shock that a foreign secretary could be directly accused of lying), that he has made so many false claims that it would be a life’s work to scroll through them making appropriate corrections and apologies.

Fantasise about the future

On 5 August the Daily Telegraph published an article by the economist Patrick Minford entitled ‘To save us all time and money, we should wak away from the EU now’. Its one merit is that the title makes it clear what is argued and could save many people the time it takes to read the whole article. Minford is to economics what climate-change denying scientists are to natural science.

Minford argues for the immediate withdrawal from the EU and the conclusion of free trade treaties with many non EU countries. (See above for what an alluring prospect that is.) Indeed, he goes even further and revives an idea originally advocated by the Anti-Corn Law League (ACLL) 170 years ago, that is of unilateral free trade policy whereby we reduce or abolish our tariffs without negotiating with other countries.

There are two observations to be made about this argument: it is mad and it will not happen. I think the key point is that it won’t happen (in part because it is mad).

Take the madness first.

It is interesting to go back to the first advocates of this policy. As its name makes clear, the ACLL was established to campaign for the abolition of the Corn Laws, a protectionist measure designed to ensure that home-grown corn would not be undercut in the domestic market by cheaper foreign corn. It had been introduced during the Napoleonic Wars when there was a deep anxiety about Britain being self-sufficient in food production. The ACLL argued that in peacetime there was no such rationale and that it now expressed the selfish interests of large landowners who, especially as peers in the House of Lords and through their control of many constituencies in the House of Commons, ran the country for their own benefit. (Sound familiar?)

However, the ACLL went way beyond that narrow argument and popularised a particular version of classical political economy which was starting to take hold amongst elites and how applying its lessons could transform Britain and the world for better. For Richard Cobden, one of the League’s leaders (and a hero of mine) free trade was more than just a doctrine about international trade. It meant freedom of thought, freedom of religion, political liberty, the end of restraint of trade. His journal of a tour of Europe he made shortly after the Corn Laws were repealed shows how he saw everything through this one lens. Catholic authority, superstition, protectionism, aristocratic privilege, occupational monopolies, parasitic officials, militarism, stagnant economies, even cruelty to animals: all were linked to the failure to enact free trade.

But Cobden’s case for unilateral free trade was not merely more noble than Minford’s; it was rooted in a specific economic realism. Britain was by some distance the richest economy in the world in the mid-19th century, the most urban, the most industrial. What she needed from the world were non-industrial goods (food, raw materials, goods which could only be grown in other climates, hand crafted luxury goods) and markets for her own manufactures. Unilateral free trade would achieve both by opening up Britain to the cheapest imports of what she wanted and enabling those abroad to earn the means to buy British. Given British industrial superiority there was no risk to its manufacturing base. (Any such threats, such as from Indian cotton, had already been brutally extinguished.) Also British power meant that it could in many cases impose its own self-interested version of free trade, most notably by compelling China to continue to import opium.

Yet even Cobden abandoned this policy because quite soon he realised that blinkered foreigners needed pushing into sensible policies and this could be better achieved through bilateral negotiations. Indeed, the first such agreement between Britain and France in 1860, one which presaged a series of other such treaties and ushered in an era of free trade, is named after Cobden and his French counterpart Michel Chevalier, so influential was Cobden’s role even though he held no ministerial position.

Compare that Britain to Britain today. We have an anaemic economy, mainly in the service sector, a record level current account deficit, and low productivity. There is already evidence that global trade with superior economies, both inside and outside the EU, undercuts the earnings of the lowest paid and forces them into increasingly insecure jobs. The service sector notoriously finds it difficult to succeed in many foreign markets. (How do legal or public relations services penetrate markets in which knowledge of Chinese or Japanese languages and customs is crucial?) Minford’s policy would be an insane risk.

Which brings us to the second point of Minford’s argument and others like it. Advocates of this and other such impossible policies are well aware they will not happen. We must remember that most advocates of Leave never expected to win the vote. Advocating Leave enabled them to criticise the government and try to push it towards more extreme policies but within the EU. However, the last thing they expected was to have to assume responsibility for a Brexit policy. Some of the politicians amongst them have not been able to avoid that. Indeed, that is probably the reason Theresa May has appointed Brexiteers to key positions for negotiations on Brexit. How ready for this they were is indicated by the report that as late as last May, David Davis, now the minister for Brexit, thought one could negotiate separately with the individual EU countries. As for Boris Johnson, our new Foreign Secretary, he has no settled views on anything other than his own career. Admittedly Liam Fox, minister for international trade, is a convinced free trader with (overly) close links to neo-liberal US think tanks and lobbies.

Newspapers can continue to exercise power without such responsibility: “the prerogative of the harlot throughout the ages” as Prime Minister Stanley Baldwin phrased it in his attack on press barons in 1931. What better way to do this than to argue for an impossible policy that no-one will ask you to try to implement?

Meanwhile those who live in the real world and try to figure out ways of living as best as one can with Brexit, like Mark Carney, the Governor of the Bank of England, get lambasted by those who make a career out of irresponsible criticism.

 

 

 

 

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