Politics

Brexit: it’s time to seize the day

philmullan Brexit, Politics, Trade

There was rather too much ‘shock-and-horror’ reaction to a recent interview with Sajid Javid, the UK chancellor, who merely said that Britain could diverge from European Union rules after Brexit. ‘There will not be alignment, we will not be a rule-taker, we will not be in the Single Market and we will not be in the Customs Union – and we will do this by the end of the year.’ Businesses, he suggested, should get on with adapting to these unfamiliar circumstances.

The ‘surprise’ shown by business organisations seemed a tad overdone. What did they, or anyone else following developments since the 2016 referendum, expect? That Britain would forever remain a rule-taker from the European Commission? The truculent reaction to what Javid said is not credible from those with even a rudimentary grasp of the meaning of sovereignty: a nation deciding its own laws and regulations.

Countries do not often adopt fully aligned, identical rules to others in order to trade with them. For instance, the Chinese and the Americans today export a lot to customers in the EU without aligning to Single Market rules. Indeed, the recognition of regulatory ‘equivalence’ – rather than exact congruence – has become a common practice in postwar economic relations. Countries accept the flow of products and services that accord with regulations established by others as long as regulatory goals are shared. This is what is meant by ‘outcome-based equivalence’.

Why should any future UK-EU deal be different in this respect to the hundreds of other trade agreements between sovereign nations? A reason for doubt could be the European Commission’s desire to ‘have its cake and eat it’. It appears that some EU politicians want to treat Britain as a ‘third country’ but also want to retain control over Britain’s rules and regulations, as if it were still a member state. Javid was simply reminding the world that the General Election mandate prevents the British government from going along with such a half-in, half-out position.

Read the full article here.

Labour won’t transform our economy

philmullan Economic policy, Politics, State intervention

‘Ambitious’ and ‘radical’ were two of the friendlier assessments of the Labour Party’s manifesto plans.

Ambitious? Labour is certainly ambitious electorally. Labour’s manifesto is published with the desperate hope that its green spending plans, an end to student tuition fees, providing student maintenance grants and the offer of free broadband for all can be so appealing to voters that it will camouflage the party’s rejection of the Brexit vote – the very issue that precipitated this election.

But ambitious in transforming society for the better? Definitely not. This is because it is not ‘radical’, either – not in the sense of getting to the roots of society’s or the economy’s troubles. Bashing billionaires might make the Labour team feel they are on the side of ‘the many’, but the plans are no substitute for a necessary programme of economic renewal that could genuinely aid the masses.

Read full article here.

This £1 trillion row leaves voters shortchanged

philmullan Brexit, Economic policy, Politics, State intervention

The squabble over the cost of the Labour Party’s policies, started by the Tories at the weekend, tells us next to nothing about the potential impact of either party’s economic programme. But it does reveal the decrepit state of the parties that were once the two big beasts of British politics.

Spending figures – large or small – do not tell us if either party is planning an economic transformation of the country. In themselves, the numbers even say very little about how profligate or prudent either party is being. When it comes to future economic performance, the impact of public spending has much more to do with what the money is being spent on, and the circumstances in which it is being spent, rather than simply how much.

The row over these figures suggests that both the Tories and Labour have yet to appreciate what this General Election is really about. It also alerts us to how little meaningful distance there is between the two parties’ economic proposals. The huffing and puffing about numbers provides camouflage rather than clarity. … Read the article here

The myth of Corbyn’s radicalism

philmullan Economic growth, Economic policy, Politics, State intervention, Zombie economy

Given the fears generated by the prospect of a Corbyn-led government, just how radical is it likely to be? Should we really expect Britain’s first anti-capitalist government? Certainly not on the basis of what Corbyn and McDonnell and their cheerleaders have been writing and saying about their future Labour government. Read the full essay here.

When the next crisis comes, don’t blame the central bankers

philmullan Debt, Economic policy, Politics, State intervention, Zombie economy

President Trump’s tweets criticising the Federal Reserve bank, and the European Central Bank, draw attention to how prominent central banking has become over recent years. Central banking’s high profile today marks a significant shift from earlier times. Central banking used to be regarded as a necessary activity that most people knew existed, but few could get that excited about.

Increasingly over the past three decades the central banks have attained a much more prominent role, not only in the US but across the mature industrial countries. This has had nothing to do with changes to the calibre of central bankers, or to the development of new banking techniques. Instead, it was primarily a response to the exhaustion of Western politics that became more evident from the second half of the 1980s.

There are three important features of central banking in modern mature economies. First, the misleading fallacy of central bank ‘independence’. Second, the associated sheltering of politicians from responsibility for the economy. And third, the waning efficacy of central banking.

Read the full article here.