Economist Nonsense

A magazine/newspaper I find rather hilarious because of its deep seated loathing of Brexit and “All of its associated evils !” is The Economist which like many of the “Remain” camp see in the recent election result a call to arms to overturn the referendum result. What they fail to acknowledge is the very obvious “The Dog that Didn’t Bark” in that if the public had changed their mind on Brexit, they had the opportunity to make that abundantly clear and particularly in Scotland which voted for Remain by some margin but focused this time on avoiding Inderef2 rather than Brexit.

But an article this week led me to react with a comment which in this post I will expand upon somewhat, my original can be seen in the comments on:

My Starting Point

I would explain that I find an article which is no better in tone today by extolling the virtues of the recent past than similar ones in my youth that mourned the passing of an Empire, it is total nonsense because history is an ever moving pageant with no time for such emotional dithering, today very quickly becomes the past. A phrase that makes my teeth grind is whenever the “Special Relationship” with the US comes up, sure there is a deep cultural bond between all the English Speaking Nations but that does not mean that our interests are always aligned. Every British politician and journalist would do well to always bear in mind Lord Palmerston’s famous words:

“Therefore I say that it is a narrow policy to suppose that this country or that is to be marked out as the eternal ally or the perpetual enemy of England. We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

Never were truer words spoken and in particular with regard to the current situation of Brexit where matters have moved on beyond the simple result of a poll from over a year ago. What many fail to see, it seems to me is that the “actual result” changed everything and set in chain a series of unstoppable events from which there is no going back.

Yes there was a deep sense of shock even, hurt feelings within the EU but it was much more than that, someone had put a spanner in the works and said “STOP” in a very definitive way and this hadn’t happened before. True the French and the Dutch had famously rejected the EU Constitution that led directly to the Lisbon Treaty but never before had a major member state and financial contributor said “We are leaving the EU”.

A Time For Change

The problem was that this shock to the system came at a time when the EU was struggling with its own and all too obvious inconsistencies and short comings bought about by its rapid expansion and the creation of the Euro single currency. All of this was starkly illustrated by the drama of a flood of refugees invading Europe in 2015 and the resulting fragmented responses right across the EU that demonstrated a lack of cohesion at every level. In fact some two years later, the EU has still not managed a cohesive policy and system so that right now, Italy is threatening to close its ports to the landing of more ‘refugees’ because the EU has left the Italians to their own fate same as they did the Greeks previously.

The truth is that the EU as a whole should stop focusing on its historical horse trading behind closed doors to force particular policies on fellow member states and accept that a community of 27 member states is far too diverse in cultural and economic terms to commonly adopt any measures except at the level of the lowest common denominator. In today’s fast moving world this is way too slow and too little to do anything but disadvantage the EU and its member states, a change of attitude is needed and far greater flexibility, one size does not fit all.

For the EU, Brexit should represent the ideal opportunity to update the whole concepts behind the original Treaty of Rome which was drawn up in a post war Europe and originally had Iron & Steel output as its basis, the world has moved on, so should Europe. Negotiating Brexit should produce a template for a better and more flexible EU which may well consist of a kind of “variable geometry” in terms of groupings according to each nation’s interests and using the Council of Ministers as a way to maximise transparency and keep governments in touch with each other. The UK may be leaving but there will still be common interests so it is obvious that there exists the possibility to continue getting funding from the UK for those projects and services it is committed to in its own national interests.

My Reply, Opening Paragraphs

“What a load of drivel, change your byline to Cassandra and add a Greek Chorus singing “Whoa, Whoa a thousand times Whoa !” inserted after every paragraph.

Regardless of whether you think/voted for Remain or Leave the answer is, if you are a “Brit”, we now need to get on with it and most certainly look beyond Brexit. No, I don’t buy that suddenly free of the shackles of Brussels, international trade will blossom as never before for the UK but neither do I buy into the totally false assumption that the EU is some kind of ‘Promised Land’ when it clearly is unable and/or unwilling to solve its two fundamental problems both of which could be addressed by common sense. The EU is apparently too stupid to accept that given the number and diversity of its member states, one size fits all solutions however grounded in the Treaty of Rome, are just not possible and not accepting this fact can only lead to more sclerosis.

The thing that will kill the EU is of course the Euro, a fictional currency that Germany should have left 8 years ago so that it (Euro), could have devalued to the point where it might work for the Southern members and Germany could be unshackled from it.”

The Economic Issues

It is in Britain’s interests that the EU economies are successful but it is also in Britain’s and everyone else’s interests that the whole global economy is reasonably buoyant and this may not be as easy to achieve as people may imagine. To give this context I will return to another part of my comment:

“People like the Editor and staff of The Economist who believe that Brexit is a total disaster are as guilty and dim as Gordon Brown when Chancellor declaring, “I have ended Boom and Bust in the British economy !” He wasn’t stupid, he like people in the City and in the Media believed that in the rapid expansion of global trade had led us to some kind of perpetual motion as far as the flow of capital around the globe, they were convinced they had found the Alchemists Stone ! Well we all know how that turned out…too much money chasing too few investment opportunities and so on.”

My main point here is that we have a parallel situation today with regard to global trade where the global economy has become wholly dependent upon the consumer market. They need consumers to be constantly buying products and services in vast volumes but, there has been a dearth of genuine product innovation so that all that has happened is the consumer market is saturated with lots of the same “stuff”.

Allow me to elaborate upon this with regard to my personal passion of photography. I look at the reviews of the new cameras that come out but in reality, the changes tend to be incremental rather than fundamental to the point that providing you have a fairly recent camera model, there is little incentive to upgrade. In fact the only worthwhile thing to spend your money on is lenses because good ones go on forever but a camera is a camera and a new one won’t make you a better photographer.

Frankly you could say pretty much similar things about mobile phones and cars too, none of these things do people go out and buy a replacement for every year, they cost too much for the vast majority of people. So how much of a problem is over saturation in any market ?

A Drop in Demand

In modern terms, any major drop in demand can quickly become catastrophic and this is related to how modern manufacturing is conducted that can involve vast supply chains plus the knock on effects in the markets it is sold into. Whilst a mobile phone may be assembled in China, it may use components sourced from other countries and those may need to be ordered ahead in specific minimum quantities and payment terms in order to keep the price down, they in turn need to order in their raw materials too.

However the manufactured item itself is only part of the story an even greater impact is seen in the markets the product is sold into because the ‘phone’ is just the point of the spear, there are retail jobs in the stores that sell and support the product, network connectivity, finance because very few people splash out the cash upfront, they buy into a monthly contract and associated with that, the advertising revenue tied to ‘Apps’ a customer may use on their phone.

The sales trajectory of mobile phones in Western markets mirrors the earlier profile of personal computer sales, great when the market is expanding but a real problem when sales stagnate and then contract, the impact on jobs can be quite dramatic.

In the UK certainly and true in various ways in other countries, we have another big bubble that must burst sooner rather than later and that is motor cars which are in a similar position to mobile phones in terms of retail purchases funded by finance deals all of which are highly vulnerable in the face of a major economic slowdown.

Not the Only Bad News

Above I have briefly sketched out two immediate perils to the existing economy we have both here and in many other countries and to put that into perspective, the UK apparently buys 20% of all German car exports, if the UK stops buying these cars because of tariff barriers or because people in the UK don’t have the money then the German economy takes a big kicking too.

However, the story just doesn’t end with manufacturing and retail sales, there are bigger games afoot. The next big thing to hit the global economy is the massive job losses inherent in the next wave of the digital revolution but this time it will be attacking white collar and professionals more than any other group of people, the working classes have long since been decimated by it.

A UK Perspective on This

Why should you employ an estate agent or local solicitor to complete a house move when it can all be done on a smartphone direct with the lender ?

It takes roughly 10 years and £250,000 of public money to train one doctor who may then take their skills abroad or decide to only work part time. As Health and Care are two guaranteed growth markets, this is clearly a target for major reforms so that more medical staff can be trained faster, cheaper and with a totally different career development path. We might well see that instead of people starting from the 6th form on the path to becoming a doctor, they start out as para medic to nurse, practice nurse to nurse practitioner to junior and then senior doctor according to their ability and application. We don’t need for AI solutions in order to ‘capture’ best practice in medicine, relational databases can support medical staff today if we set up the teams to input and develop the knowledge base required.

Brexit and the “Great Repeal Bill” represents an ideal opportunity to document digitally our whole legal processes and current laws which in turn, will vastly undercut the costs of using lawyers as apart from advocacy in front of a court, the grunt research on case law etc could be done by anybody with access to a PC and to the databases.

Competent Teaching and Clergy are in such short supply today that video linking with local ‘class supervisors’ or ‘Deacons’ in a religious context is an obvious step in our near future, using technology to up the standard of the information whilst decreasing costs by deskilling the workplace or point of delivery is a tried and tested ‘next step’.

Social Changes

The point about all of this is that with it will come tremendous social changes and improperly handled the possibility of civil strife as one interest group battles with another over what resources are available. A UK that can find its own “British” solutions and compromises will be far better able to reorganise its economy, taxation and social arrangements without being tied to the dead hand of Brussels which will not be able to cope with these kind of changes across 27 countries at one time.

My point is that The Economist is guilty of a false assumption which is that things will continue economically as they are or, thought to be ( same as pre 2007/8) when in fact a tsunami of radical social and economic change is about to hit us all in the global economy. It is possible that we in the UK shall have a difficult time post Brexit but we will not be alone in this because economic forces are now global rather than just British or European. However, we will be better placed to recover and reshape our society because Brexit will have given us the chance to do so in a British context.

Not the Same But Parallel

The main reason that I feel that we should withdraw from the jurisdiction of the European Court of Human Rights has nothing to do with whether I think or don’t think that human rights are important, as it happens I do. It is because when first mooted and created in the aftermath of WWII and the background of the mass deportation and murder of millions by the Nazis, it made total sense in a pan European way but many decades later, does it still ?

I think not for two reasons, it tries to distil a pure legal view that is almost academic and apply it across the varied cultures of Europe as if they were all the same, they are not. But its main failing is that law and the rule of law must be done within the particular cultural context of the specific country else what appears nonsensical rulings handed down from ‘afar’ just turn the law into a total ass and diminish the rule of law in the process.

There are times when alliances can make a major difference but both the EU and the ECHR make the same mistake, they both want to impose something by treaty obligations that would be far better based upon there being a coalition of the willing motivated by their own free choice. The ECHR should provide models of best practice but be advisory rather than mandatory should the EU move more in that direction ? Perhaps.

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