Brexit: take it or leave it - Oliver Wiseman (CapX)

Brexit's anti-climaxOliver Wiseman
CapX, March 30, 2018

Is Brexit a good idea? It sounds odd to ask so straightforward a question about such a well-worn subject. We are leaving. In a year. The referendum was two years ago. We are quite some way past weighing up the pros and cons.

So why ask the question? Because there’s long been a collective notion that once we have left the EU, and the transition period is over, the facts about our circumstances will offer up a definitive answer, that one side will be proved right, and that the debate will be settled.

Remainers convinced that Brexit will be a disaster take solace in their conviction that when the economy crumbles, it will be blindingly obvious that they were right all along.

Leavers, buoyed by the failed predictions of Project Fear, wait with excitement to say 'I told you so' when the sky doesn’t fall in.

Even for the vast majority of us, who see Brexit as neither an unmitigated good or an unparalleled mistake, there is a temptation to switch off - to tell yourself that there’s no point arguing about who was right now because we’ll soon find out.

But I have some bad news: the Brexit question will never be settled. There will be no satisfying finale to the saga.

The first reason for this is that partisans on both sides have inoculated themselves against inconvenient facts. If the economy takes a big hit when we leave, and the upsides of taking back control appear limited, Leavers will say there is nothing wrong with Brexit per se, just this particular form of it. Even if their economic doom-mongering doesn’t come true, Remainers will tell us we would have been even better off had we never left. There will never be a mea culpa moment.

The second, deeper reason is that the differences between Leave and Remain are not just analytical. What you think of Brexit depends on more than your prediction of what sort of deal we will get from Brussels. Its about values and priorities.

Some see national sovereignty as symbolically and practically essential to good government. Others think it illusory. Some value the ability to live and work anywhere in the EU over the ability to keep foreigners from doing the same. Others don’t. In other words, we aren’t all marking Brexit according to the same scoring system.  

It’s easy to despair at the prospect of no conclusive ending to Brexit. The thought that we could be stuck in a never-ending cycle of rows about passports, out-of-touch speeches from Tony Blair and nonsensical pronunciations from Nigel Farage doesn’t exactly lift the spirits.

But there’s a more optimistic interpretation. It might help us appreciate that the true significance of our decision to leave is not something hidden behind a curtain, waiting to be revealed when we’re out. It’s that Brexit is what Britain makes of it.

The truth about Brexit is less remarkable than either side claims. It is neither the end of the world nor the solution to all our problems. And if there is nothing intrinsically disastrous or miraculous about Brexit, that means the sort of Brexit we choose is incredibly important.

Take immigration, a major factor in our decision to leave. As Philippe Legrain argued on CapX this week, the current system isn’t fit for purpose. What we replace it with when free movement comes to an end matters hugely. The political, social and economic consequences will be huge. It is a conversation the government keeps putting off, but our immigration system will, one way or another, be a defining feature of post-Brexit Britain.

It is on this and numerous other issues - the regulations we keep and repeal, the taxes we raise and lower, the laws we make and amend - that the battle for Brexit will really be fought. And those who are waiting to see how it pans out are missing their chance to shape it.

Below you'll find some of our favourite pieces from the past seven days. Have a great weekend.

Oliver Wiseman
Editor, CapX

Produtividade nao e' tudo, mas e' quase tudo: o caso da GB - Robert Colvile (CapX)

O artigo trata unicamente da queda de produtividade, em última instância da fragilidade do capitalismo inglês, na Grã-Bretanha, mas se a economia tem "leis" mais ou menos universais, ele poderia igualmente ser aplicado ao Brasil, e sobretudo ao investimento estrangeiro.
Como diz o artigo, "foreign ownership makes each UK firm 50 per cent more productive. Such firms employ only 15 per cent of the UK workforce, but account for 30 per cent of the country's productivity growth - and 50 per cent of R&D spending, which is a staggering five times higher under foreign ownership."
Certas coisas são tão eloquentes, tão evidentes, que não existem contra-argumentos econômicos.
Não só a Grã-Bretanha -- que estava doente antes de Margaret Thatcher -- está doente novamente.
O Brasil também padece da mesma doença.
Quando é que vamos nos curar?
Paulo Roberto de Almeida 

Can we cure the British disease?

When Theresa May became Prime Minister, one of her first promises was (as the Daily Mail put it) to protect our “City icons” from “foreign vultures”.
It’s a widely shared complaint. From our rail companies to our energy companies, from London property to Cadbury’s chocolate, we’ve let asset-stripping foreigners make off with the family silver. And with the plunge in the pound due to Brexit, the problem is only going to get worse.
But there’s another way of looking at it - which is that the simplest way to make this country more prosperous would be to gift-wrap those City icons and flog the lot.
That is the implication of a new blog from two Bank of England economists. It points out that, controlling for everything else, foreign ownership makes each UK firm 50 per cent more productive. Such firms employ only 15 per cent of the UK workforce, but account for 30 per cent of the country's productivity growth - and 50 per cent of R&D spending, which is a staggering five times higher under foreign ownership.
Productivity isn’t everything. But as Paul Krugman says, in the long run, it’s almost everything. It is higher productivity that drives improvements in wages, living standards and prosperity. Andrew Haldane, also of the Bank of England, points out that if productivity had remained flat since 1850, we would be only twice as rich as the Victorians. Instead, we are 20 times better off.
And this is the single biggest problem with Britain’s economy. Since the financial crisis, the UK has created jobs at an enviable rate. But the flipside is that productivity has flatlined. Between 1950 and 2008, it grew at an average of 1.7 per cent a year. Since then, it has fallen by 0.36 per cent a year. The latest figures, released this week, only confirm the trend.
These are statistics that should set not alarm bells ringing, but whacking great air raid klaxons. Because the global economy is polarising, as Haldane points out, between the productive and the unproductive – between “frontier” firms and countries, which make full use of the latest technological and managerial innovations, and laggards.
As Britain slips towards the back of the productivity pack, it becomes a place that relies not on the dynamism of its workers, but the fact they are dirt cheap - which is not a comfortable or sustainable position to be in.
So how do we fix this - apart from inviting in those foreign “vultures” to teach us how to be proper capitalists?
One solution suggested by Sir Charlie Mayfield’s official Productivity Review is to make firms aware of the problem. Just as each of us thinks we are an above-average driver, every firm tends to think of itself as well run. Confront executives with the figures, and they will sharpen up their act.
We also need to expose firms to the global market. Companies that export tend to be more productive than those who don’t. That's why some Brexiteers saw a Leave vote as a form of shock therapy - a way to force complacent British firms to shape up.
But this is a policy challenge that stretches beyond company management. We need better education and training. We need greater investment in IT. And above all, we need workers to be in the right places.
One of the most interesting laws of population is that productivity, like many other things, scales up with community size. Huddersfield will never be as productive as London, simply because it is smaller.
So one reason Britain's housing crisis has inflicted such devastating economic harm is that low housebuilding and high house prices have pushed workers away from the most productive parts of the country, trapping them in towns and jobs where they cannot reach their economic potential.
A new Resolution Foundation study confirms that the young are decreasingly likely to move for work - which means the British economy is getting even worse at marrying people to the most productive jobs, and giving them the highest possible salaries.
Britain was once known as the sick man of Europe. Today, we are still sick. And low productivity is our crippling disease.
Robert Colvile
Editor, CapX