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Britain should reject the Brexit ‘agreement’ but proceed with the exit

Summary:
It is Wednesday, and only a short blog post beckons today. I have restrained myself from commenting on Theresa May’s unbelievable Brexit deal, which has the dirty paws of the European Commission all over it. Regular readers will know that if I had have been a voter in Britain in June 2016, I would have resolutely and happily voted in favour of Brexit. And if I was a British Parliamentarian now I would vote to reject the ‘deal’ and force the Brexit on British terms. I will write a little more about that in a further post. But today, I just want to pass comment on the extraordinary UK Guardian article from Phillip Inman – A leftwing UK post-Brexit is as likely as a socialist Rees-Mogg (November 24 2018) – which summarises the problem quite well. I say ‘well’ because it illustrates the

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It is Wednesday, and only a short blog post beckons today. I have restrained myself from commenting on Theresa May’s unbelievable Brexit deal, which has the dirty paws of the European Commission all over it. Regular readers will know that if I had have been a voter in Britain in June 2016, I would have resolutely and happily voted in favour of Brexit. And if I was a British Parliamentarian now I would vote to reject the ‘deal’ and force the Brexit on British terms. I will write a little more about that in a further post. But today, I just want to pass comment on the extraordinary UK Guardian article from Phillip Inman – A leftwing UK post-Brexit is as likely as a socialist Rees-Mogg (November 24 2018) – which summarises the problem quite well. I say ‘well’ because it illustrates the progressive surrender that has allowed the neoliberal era and monstrosities like the European Union to persist. You can see it all over the place – surrender that is. The Democratic obsession with Paygo in the US. The British Labour fiscal rule in Britain. The ‘we will have a bigger surplus’ boast from the Australian Labor Party, when there is around 15 per cent underutilised productive labour. Inman’s article is encouraging the Left in Britain to lie down and surrender to the dictates of the neoliberal, corporatist machine that is the EU. It presents an impoverished vision of the future and a disgustingly vapid depiction of the possibilities that a truly progressive British Labor government could achieve once it jettisons the neoliberal frames.

Past posts on the topic

My blog posts on Brexit from 2016 and beyond include:

1. Britain should exit the European Union (June 22, 2016).

2. Why the Leave victory is a great outcome (June 27, 2016).

3. Brexit signals that a new policy paradigm is required including renationalisation (July 13, 2016).

4. Mayday! Mayday! The skies were meant to fall in … what happened? (August 24, 2016).

5. Austerity is the problem for Britain not Brexit (January 9, 2017).

6. The Left lacks courage and is riddled with inferiority complexes (January 11, 2017).

7. Why Britain should not worry about Brexit-motivated bank relocations (May 16, 2017).

8. Britain’s labour market showing no Brexit anxiety yet (May 30, 2017).

9. Britain doesn’t appear to be collapsing as a result of Brexit (December 13, 2017).

10. British Labour remainers – the reality seekers bogged down in myth (January 31, 2018).

11. The facts suggest Britain is not as reliant on EU as the Remain camp claim (April 16, 2018).

12. The Europhile Left use Jacobin response to strengthen our Brexit case (May 22, 2018).

13. The ‘if it is bad it must be Brexit’ deception in Britain (May 31, 2018).

14. How to distort the Brexit debate – exclude significant factors! (June 25, 2018).

15. Brexit doom predictions – the Y2K of today (August 26, 2018).

The UK Guardian channels surrender narrative

The state of Victoria (Australia) held its State Election last Saturday and the Labor Party was returned to office in a landslide, with voters categorically rejecting the campaign of fear and surpluses that the conservative parties relied on to get into office.

Victoria is the “most progressive” state in Australia and ran a campaign that included ‘doubling the state’s debt’ to further build new infrastructure in health, education and transport.

There are massive public transport projects underway, which people are seeing benefit their daily lives.

The lesson is fairly clear – governments are elected to advance well-being not ‘balance’ the books.

People want governments to do things that improve their lives not attack their living standards in the name of running surpluses.

As it happens, Victoria is the fastest growing state in Australia and the tax revenue that has come with that growth has generate state surpluses for the last four years.

The housing boom that has driven a lot of that revenue, however, has reduced the housing affordability and more state housing is required.

The point is that a progressive agenda in a nation that is firmly locked into neoliberalism shines through and when confronted with the progressive alternative, voters grab it with both hands. The Victorian electorate resoundingly rejected the austerity-biased conservatives again.

And that serves as background to Phillip Inman’s Guardian surrender article.

His thesis is simple:

1. “France and Germany were moving towards the right to become the main pillars of a neoliberal elite, based in Brussels, that dictated, and still dictates, an adherence to free-market dogma.”

2. “The introduction of the euro cemented this view. Lexiters argue that it is a recipe for permanent austerity as policymakers seek to maintain the integrity of an internal currency bloc that is dominated by France and Germany.”

3. “A move leftwards in these dominant countries is as likely as Jacob Rees-Mogg singing the Internationale.”

4. “Lexiter efforts to cast Britain in a different light from France and Germany is to deny that they all face broadly the same economic problems. It also denies that voters in all three nations have shifted to the right.”

5. “Osborne, Cameron and Johnson back, via Blair and Brown, to Major and Thatcher … all these politicians understood that voters were unwilling to pay more income tax or share their wealth.”

6. “Today, most countries in the developed world have ageing populations and are rapidly running out of money to cope. The funds do exist; it’s just that those self-same ageing voters refuse to address the difficulties posed by their longevity by handing over any of their income or wealth.”

7. “Inside or out of the EU … even if voters hand him …[Jeremy Corbyn] … the keys to No 10, they are not going to give him any money. That is what Macron found, and Corbyn will find the same.”

8. “So Europe remains the best option for any Labour member.”

Surrender.

First, once you frame the narrative in a neoliberal way and use the language commensurate with that frame then, of course, you privilege that way of thinking and it makes it very hard to break out of the usual parameters of the discussion.

So think about Point 6 – “most countries … are rapidly running out of money to cope”.

That is a plain lie.

All currency-issuing governments including the British government has no financial constraint in the way this framing suggests.

The ageing society problem is not financial. It is real. As the dependency ratio rises, each subsequent generation will have to be more productive than the last to maintain current material living standards.

It is true that we also should be aiming to reduce our material claim on the Earth’s finite resources. But that is a separate issue and unlikely to void the first statement I made in the previous paragraph.

Think about Point 7 – “voters … are not going to give him any money”.

Again, frame it that way and the straitjacket goes on policy options and the Left, no matter how well-intentioned have no room to move.

The first task for the Left therefore is to show leadership and pursue a major education campaign which will require the introduction of new frames, a new way of expressing economic concepts, and this may require foregoing the short-run claim to power in the interests of long-run viability.

This is why I have been so critical of British Labour’s Fiscal Credibility Rule. It is a dud. It privileges neoliberal concepts, uses false metaphors (for example, credit cards and households!), and gives the impression that fiscal aggregates independent of context and purpose are goals.

The goals of fiscal policy is not to achieve any particular balance, deficit or surplus. The government doesn’t even have full control over the fiscal outcome anyway – the non-government sector’s spending and saving decisions are important in determining what the final fiscal outcome in any period will be.

Trying to set targets that are meaningless without context and which one cannot control anyway is a recipe for failure.

And, as we have seen many times in the past, only serves to hoist the progressive side of politics on its own petard. They boast how they will achieve surpluses. A recession comes along and the deficits rise (sometimes because they have reduced spending in search of the surpluses) and the conservatives shriek failure and irresponsibility.

One capacity that humans have with respect to their cognitive abilities is known as construal. We can move from one construction of reality to another with the appropriate help in terms of reframing, language and new metaphorical constructs.

Progressives should be working on that agenda rather than writing stupid fiscal rules or writing UK Guardian articles about governments running out of money.

Second, the EU will have to collapse before its current neoliberal, corporatist bent is expunged. The neoliberalism goes to its core.

It is not a matter of reforming around the edges.

The core of the EU – the single market, the fiscal compact, the lack of fiscal capacity in the common currency, and the rest of it – cannot be reformed.

It has to be jettisoned and that means the EU has to be jettisoned and something entirely new emerge to fulfill functions that it might legitimately be the best scale to perform (climate change responses, migration, etc).

Europhile Leftists who think they can slowly pick away to get reform are dreaming. If anything the EU legislative mandate will become even more neoliberal not less.

Look at what Macron is up to in France with labour regulation, as an example.

Third, it is ridiculous to say that a one-size-fits-all approach is now all that is possible (Point 4 “they all face broadly the same economic problems”).

This sounds like TINA to me.

The hallmark of the neoliberal period has been TINA and the depoliticisation of policy as a result.

Britain does not face the “same economic problem” as the 19 Member States in the Eurozone (which is the significant portion of EU membership).

Those member states are financially-constrained because they chose to use a foreign currency. Quite apart from the fiscal rules they adopted which constrain their flexibility, these nations can only run fiscal deficits at the behest of the private bond markets.

Britain is not constrained in these ways at all, even though successive neoliberal governments (Tories and Labour) have lied to the population that the British government is so constrained.

Britain can run fiscal deficits whenever it wants and if the bond markets don’t like it and try to force rising yields on bond auctions then the government can do one of two things:

1. It can instruct the Bank of England to take up the debt through appropriate legislative or regulative changes.

2. It can just decline to issue debt and tell the Bank of England to go on crediting appropriate bank accounts. HM Treasury would then alter accounting structures which make it look as though taxes and debt sales fund government spending.

Not long after the Government did either of those things, the City of London would be screaming blue murder and demanding they receive their dose of corporate welfare (debt issuance).

The British government has all the power in that sort of relationship.

And if the City of London tried to get clever and short the pound or do some other financial gymnastics that might destabilise the British currency, then the British government can simply legislate to bring in capital controls.

Remember the City is the most unproductive sector of the British economy and drains smart people from otherwise productive pursuits.

So my view is that a Leftist Labour supporter is never going to be satisfied if Britain remains in the EU.

The Labour Party should reject Theresa May’s ridiculous ‘agreement’, which looks like it was drafted by EU lawyers.

It provides no exit at all.

And if that means a ‘no deal’ exit then that is still a superior option to remaining in the EU.

At least, it will force the Labour Party to confront the reality that a radical program will have to be instituted from day one.

And all the talk of a collapse in the British economy with a no deal is the usual scaremongering that the Remainers are using to distort the debate.

There will be some dislocation. There will be some supply chain frictions. But nothing that will not sort itself out relatively quickly.

When Britain dumped Australia in the early 1970s by accessing the Common Market our economy adjusted fairly quickly and moved on.

Britain simply must exit the EU monstrosity or accept a neoliberal future which will drive the austerity agenda even deeper into the institutional nature of British society.

It is unnecessary but incredibly destructive.

When libraries close and become crisis centres, you know the state if failing.

I hope Labour members in Britain ignore the message of this UK Guardian article – which is just channeling the typical argument of the Remain camp.

Sure enough the Tories are hopeless and the ‘agreement’ is ridiculous.

But staying within the EU for those reasons is equally ridiculous.

It is time for the progressive side of politics to show some progressive leadership and articulate a path out of the EU for Britain and ensures that people understand that an invigorated state with no fiscal constraints other than the real resources it can deploy for public purpose can attenuate any adjustment frictions that might arise in the transition.

My latest musical purchase …

Farazi is a musician-producer based in Instanbul and distributes his music on the Deadly Habits label.

There is not much more I can tell you about him.

But I heard this 5-track EP entitled Craft, which was released on July 20, 2018, while I was driving to the airport earlier this week and thought it was very chilled.

I like this sort of ambience-cum-mininalist style although I might have mixed the bottom end a little differently.

Here are two tracks from it. The first is Times.

The second is Beach.

Very chilled. Perfect for driving and/or flying.

That is enough for today!

(c) Copyright 2018 William Mitchell. All Rights Reserved.

Bill Mitchell
Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.

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