An open response to LSE’s Nicholas Barr

To respond to the following open letter:

"There is also widespread agreement among economists that leaving would reduce economic growth over a longer time horizon, and that the loss could be large."

He claims that the loss could be large, but the loss could also be so small as to be a gain. Yes, it represents a risk to Leave, but the same degree of risks also apply in Remain. This is because the EU is not static, it is generating new laws all the time. So even if the EU is a net benefit NOW, it doesn’t mean it will remain a net benefit indefinitely.

"The argument that the UK will be able to negotiate good trade deals quickly is implausible."

Small economies can negotiate trade deals much quicker than larger economies. This is why Iceland and Switzerland, both smaller than the UK, were able to form international trade deals quicker than the US and the EU. Furthermore, to the EU, trade deals are less about trade and more about political “soft power” – the ability to project one’s interests over a foreign country using economic manipulation. This is a subversive approach that is detrimental to both trade and international relations.

"The EU is more important to the UK than vice versa, so our bargaining power is limited."

I hate the argument about ‘bargaining power’ – because trade negotiations depend very little on the size of the economy and far more to do with how the economies of the two countries can benefit each other. It also lies about the EU being more important to the UK than the other way around. If that was the case, the EU would be happily waving “bye bye” and not worrying about the UK’s loss.

Barr makes the assertion that the EU is more important to the UK than vice versa based on the statistics that 44% of UK’s exports are to the EU and only 8% of the EU’s exports are to the UK. But this statistic is irrelevant. Let me use an example to illustrate why this statistic is irrelevant: one could argue that because 100% of the UK’s exports are to the rest of the world, The World is more important to the UK than the UK is to The World, therefore The World has more bargaining power than the UK. Thankfully this is not how things work. The world is interested in trading with the UK regardless of the UK’s size, and without regard to the existence of FTAs.

The truth is, the EU sells more to the UK than the other way around, even if this difference is only marginal. And the truth also is that the UK is one of the biggest financial contributors to the EU, so there is no way anyone can legitimately argue that the UK needs the EU more than the other way around.

"Brexit risks a chain reaction, given rising nationalism across the EU"

Brexit risks a chain reaction indeed, but this is only a bad thing if you think the EU is a good project that needs protecting. Brexit is not going to generate nationalism – nationalism already exists, and the EU is only making it worse.

"Thus the EU’s rational response is to make a horrible example of the UK."

This is just arguing that the EU will behave like a bully. Hardly a good reason to stay in the EU.

"For non-EU countries (e.g. USA, China), negotiating with the EU offers access to a market of 500 million. The UK is much less of a magnet."

See above about ‘bargaining power’. All countries are perfectly capable of negotiating more than one trade deal at a time. If China doesn’t want to sell to the UK, it’s China’s loss.

Furthermore, both China and USA are a long way from forming a free trade agreement with the EU, and even when formed, there is no guarantee that it will be beneficial to the UK. Because an EU-wide trade deal is formed with the whole of the EU in mind and may neglect many details that are specifically relevant to the UK, it is far more likely that EU bureaucrats would have compromised on the specific details that affect the UK’s economy, thus forming a trade agreement that would be detrimental to the UK economy. If the UK forms its own trade deals, it will be directly relevant to the UK, and if it is a lousy trade deal, voters at least know which politicians or public servants to hold to account.

"The claim that membership costs £350 million per week, i.e. £18bn per year, is plain wrong."

The EU doesn’t cost the UK £350 million per week, but £350 million per week is how much money the UK gives control over to the EU. Less than half of it is spent on the UK, and all of it is spent with little regard for how it would harm the UK. For example, the EU has spent money in the UK to pay fishermen to scuttle their fishing boats, as well as subsidising UK factories being moved to Turkey (Ford) and Poland (Cadbury).

"In everyday terms, the cost of EU membership is less than 30p per person per day"

30p a day is quite a substantial amount of tax. It is equivalent to £9 a month, roughly the cost of a cheap mobile phone contract (mine’s actually even cheaper). That means, for the cost of the EU, one of your family could have use of a phone contract with mobile data – not an insignificant service.

"The reduction in the government’s tax revenues from even a small reduction in growth rates "

First of all, the reasons for leaving are far more significant than short-term economics. Nationalists care more than just about money. Secondly, the projections of reduction in growth assume that nothing can be done to ameliorate the costs of Brexit. If this were the case, there would be no point to having a government, Treasury, and Bank of England.

"A vote to leave risks destabilising the UK through the possibility of a second Scottish referendum."

There is nothing wrong with Scotland leaving the UK. The SNP wanted to break up the Union anyway, and many people are more than happy to say “good riddance” to the trouble-causing SNP. However, the Scots voted to stay a part of the UK, largely because they identified as both British as well as Scottish, not instead of. Additionally, since the fall of oil prices, Scotland would struggle far more on its own. The UK as a whole, being a very diverse and vast economy, is not so vulnerable.

"If the UK and EU are weaker, the US is weaker. "

The strength of the US is not dependent on the strength of the EU, and there is no justification for saying that the UK and the EU would both be weaker on Brexit. It is NATO, not the EU, that serves to counterbalance power with Russia, and NATO will remain in place even if the EU was completely dismantled.

"...globalisation has reduced the independence of all countries."

Indeed it has. The formation of the EU was to promote peace by increasing the economic interdependence of EU member states. This argument means the EU is no longer necessary because globalisation has already superseded it.

"...the UK shares sovereignty with the UN, NATO, the World Trade Organisation, etc."

Not correct: the UK collaborates with many others in these organisations, but it does not give up, or ‘share’, sovereignty. In these organisations, the UK still remains supreme in control over its own affairs, meaning you don’t have to do what you choose not to. But in the EU, you legally have to do everything the EU demands.

"...within the UK, central government has devolved significant powers to regions and cities."

And within the EU, government is getting more and more centralised, so that more and more UK laws are being created from the European Commission than from the UK’s own parliament, with little transparency or accountability . This is another own goal.

"International reach. Though there is room for disagreement about how strong the effect would be, it hard to see how the UK becomes a more powerful global actor by separating itself from its own continent."

Nobody is arguing for separation. The UK wants to continue to cooperate with all European countries whether or not they are members of the EU. The argument is against political union. International cooperation does not require political union.

"Migration. For many, this issue is the crux. The question is not whether the issue is real (it is) but the choice of policies to address it."

Immigration is a weak argument. But it is the only argument that the Leave side is winning comprehensively, so there is no point addressing it because the Remain side is putting up such a weak defense.

"Finally, the flip side of ‘gaining control of our borders’ is reducing the right of younger Brits to live and work in other EU countries and of older Brits to retire there."

So what? Fair is fair. If Brits want to live in EU countries, we would expect Brits to obtain the necessary visas, and vice versa for non-Brits wanting to live in the UK.

"But the UK has an opt-out on the border-free Schengen agreement and thus has passport control at its borders."

But if the EU and free movement is really so great as EU proponents put it, the opt-out clause for the Schengen agreement is not something to celebrate. This inconsistency scores another own goal.

"Failures of security are largely domestic, including self-inflicted cuts to Border Agency staff."

UK Border Agency is amazingly tough, but European border control is often non-existent. This does not help European security, much less the UK. So why should UK want to be a part of it?

"The argument about ‘unelected bureaucrats’ is spurious."

Another lie. This is key. In the UK, you vote for the party on whose the leader and manifesto you wish to support. If you don’t like David Cameron, his cabinet, or his manifesto, you vote for someone else, usually the opposition (if they are better). In the EU, You cannot vote out of power the very people who are writing continent-wide laws. You don’t even vote them into power, and there is no manifesto promise for them to fulfil. They just exist come into power via nepotistic bureaucracy.

"How likely is it that the problem will be addressed? There are grounds for optimism: the problem is recognised and other member states share UK concerns, so that pressure for change will comes from multiple sources."

Since the formation of the EU in 1992, the UK parliament has (1) abolished inherited peerages in the House of Lords, (2) held a referendum on the voting system to consider the Alternative Vote, (3) held a referendum on Scottish independence. In the same time, the only ‘reform’ of significance in the EU is that MEPs now have to be accountable with their finances, something the UK already addressed a long time ago. The EU has thus shown itself extremely resistant to reform or even acknowledge its problems.

"...there are 55,000 EU civil servants; the UK has 393,000"

What does it mean to have 393,000 civil servants? In the UK, the statistics used includes everyone directly employed in government offices, such as council workers and cleaners. In the EU, they are administrators and consultants. The Brexit campaign states that over 10,000 EU officials get paid more than £100,000. How many UK civil servants get paid that amount?

"OECD studies show that the UK has the second least-regulated product markets among industrial countries and the least-regulated labour markets in the EU."

That statistic is misleading because the UK manufacturing industry tends to specialise in bespoke markets, such as custom yachts, aircraft jets, warships, and other very high value manufactured products. High value bespoke products require far less regulation than the mass market. The mass market is generally dominated by cheaper economies such as India and China.

"Regulation has benefits. Co-ordination (for example, common safety standards for electrical products) is a necessary part of a single market, making it easier to trade."

Coordination of international standards has existed for a very long time outside the EU. See examples such as WTO, ISO, IEEE…

"It also provides consumer protection, e.g. cheaper air fares, lower roaming charges, cleaner beaches."

All of which can be achieved just the same in independent countries working in cooperation. Political union is spurious to these goals.

"The issue is not regulation as a whole, but removing or revising the bad regulations that undoubtedly exist. That is a highly worthwhile task, but not a reason for leaving."

Actually it is. In the EU, such regulations are determined by unaccountable bureaucrats and heavily influenced by wealthy industry lobbyists. Outside the EU, international standards and regulations are determined by industry experts. DVDs and USB, are both internationally recognised standards, and they work great. Vacuum cleaners limited to 850 Watts, don’t work so well.

"the UK remains a sovereign country in the sense that we can at any time decide to leave the EU."

Yes, but that is not what sovereignty means. Sovereignty means being able to self-govern without outside authority or interference.

"However, we cannot as easily decide to rejoin."

If Romania and Poland can join, why would it be so difficult for the UK, an existing member, to re-join?

"Peace should not be underestimated"

Agreed. But the EU’s flavour of political union does not cause or even guarantee peace. It is actually causing a rise in nationalism.

"The EU has also helped to consolidate democracy in Southern European countries formerly under military dictatorships and in former communist countries in Central and Eastern Europe."

This is putting the cart before the horse: Democracy was achieved before these countries joined the EU. If these countries had not achieved democracy independently, they would not have been able to join the EU. To prove this point, consider this counter-example – if membership of the EU increases democracy (and peace), why hasn’t Russia been invited to join the EU?

"Membership of the world’s largest economy creates considerable economic benefits."

This is disputable. It has caused imports from developing countries to be more expensive and caused domestic industries to be less competitive.

"Membership gives greater control of the international environment (climate change, control of multinationals, action on tax havens)."

Membership gives LESS control, because now the member states’ interests are represented by one small group of EU representatives, rather than by representatives of 28 separate nations.

"Free movement benefits the large numbers of Brits who live and work in other EU countries, something of particular relevance to younger people who live and work in other EU countries for part of their career and older people who retire to warmer climes."

I agree. But it neglects to mention that it has a far more detrimental effect on the poor and vulnerable, those who are not able to move for work and not wealthy enough to retire to warmer climes.

"Comparing costs and benefits is not as exciting as a rousing political speech, but is the right way to approach a hugely important decision."

Fully agree. But you also have to consider all the counter-arguments fairly.

"The issue is not about the older generation’s past but about our children’s and grandchildren’s future."

Agreed. My vote for Leave is for the sake of the UK’s current generation of children and future grandchildren.


Author: Hoong-Wai

I am a sinner. I care about people, and truth, and justice. I have an interest in dancing, economics, engineering, philosophy, and science.

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