[cherdano]

I am not sure any election in my life will affect me more than the referendum on Brexit (it might, or it might not - see below); yet I don't even get to vote, and the public debate seems dominated by ridiculous claims from either side.

Usually, my watercooler posts are rather sarcastic, or maybe a short reply where I find an interesting point to disagree with. Well, for once I think I should lay all my cards on the table. (You may want to check the full disclosure in the footnotes first.)

1. What is the EU?

That is a frustratingly difficult question to answer! But perhaps unsurprisingly so - after all, what exactly is the USA? The UK?

Let's start with the budget. The best summary I have seen from a UK perspective is here: http://www.ifs.org.u...blications/8226
The overall budget basically comes from 1% of each country's GDP (the details are a bit more complicated - see the link if you are interested; of course the main fine print here is the famous UK rebate). Some funds are directed to poorer nations, or to poorer regions (approximately 40% total I think). A still large but shrinking share goes to farming (40%). Some goes to foreign aid, some to research, some to finance Europe-wide law enforcement. 6% goes to administration - a number that may look surprising if you listen to the rhetoric about financing fat, overpaid bureaucrats in Brussels.

The UK's net contribution is currently about 8 billion GBP per year. (The *government's* net contribution is about 9.6 billion per year in 2015-2020, but it seems clearly right to subtract from that EU grants won by the UK non-government sector. Personally, I'd subtract even more, namely the UK's share of the EU foreign aid spending - that is money that the UK would want to spend anyway, and that is probably spent more effectively by pooling it with the other EU states.)

So the budget is spent ok-ish (noone is ever completely happy with any government budget); the UK's gross contribution is about 0.7% of its GDP, and its net contribution is about 1% of all of the UK's public spending. (For comparison, the budget of NHS England is about 103 billion GDP per year.)

I don't think we'd be having this debate if it were just about an expenditure of about 10% of the NHS England budget, or that could be made up for by cutting the Armed Forces budget by 25%. So I don't think the budget tells you what the EU is.

So what is it instead? I'd argue that in essence, the EU is still a free market, along with the freedom of movement.

Let's say you want to create a free market between three countries. The first step is easy: agree not to raise any tariffs. But there are still barriers for any company to sell their products across borders. Some of them are impossible to change - the Germans love their beer, and the British love their beer, and these two sentences mean different things. But others are possible to change - maybe tractor seats have to be 36cm wide in Belgium, and 34 cm wide in Germany; you throw a dice and decide that in three years from now on, tractor seats have to be one or the other in both countries. In the long-run, it's a win for anyone - companies don't have to produce two different kind of seats any more, and customers will be able to save a little every time they buy a tractor. [Sorry, I have a 20 month old son. Consequently, I love tractors.]

I think that this is still a large part what the EU is. If you really want to take advantage of acting like one large economic area, you have to make it easy for companies to sell and compete across state lines; in order to achieve that, you have to normalise regulations. Much easier for a small company if it just has to comply with EU regulations, rather than working out how to comply with German regulations, with UK regulations, with French regulations, and then give up about the smaller countries. Quite a lot of what the EU does makes sense just as a consequence of this.

And I think the EU has been fairly good about making these regulations benefit everyone, by making them benefit customers. Before the EU forced a breakup of the monopoly in Germany back in the 80s/90s, phone bills in Germany were ridiculously expensive. These days, it is much easier to compare mobile plans since you know they can't hit you with ridiculously high rates once you go across the (EU) border. They forced everyone to allow airline competition (much more difficult for Lufthansa to lobby the EU than to lobby the German government!).

Then there is a the freedom of movement, along with all the regulations that try to make that practically possible. Some of that seems obviously beneficial to everyone: if you are registered with the NHS, your healthcare is free no matter where in the EU you happen to be travelling at the moment. But of course the main issue from the UK perspective is that it allows immigration by basically any EU citizen (as long as they qualify as "worker"). The net EU immigration to the UK was about 184000 in 2015.
Well, I don't think I am going to change anyone's mind here. I don't think this number is particularly high (for comparision, it was about 500000 for Germany; Netherlands, which has higher population density than the UK, had approximately similar net immigration per capita). And I agree with all the studies that show it is a net benefit. After all, it is freedom of movement of *workers*, i.e. the EU immigrants will be paying taxes, and perhaps filling a shortage (say, in the NHS).

Coordination. Finally, I would say the EU is trying to solve problems that are no longer possible to solve by individual countries. Coordinating the response to the refugee crisis is the hottest topic among those. (I did say "trying to"!) But environmental standards also fall into that category - after all, what's the point of regulating emissions of a car factory if that just means that said factory would move across the border. The same holds for setting minimum labour protections. Etc.

2. What would Brexit do?
That question is even harder to answer. It would trigger negotiations between the UK and the EU about leaving the EU, and presumably replacing it by some sort of free trade agreement as well as associate membership. It could mean the UK promising to abide by essentially all EU regulations, as well as honouring freedom of movement, in exchange to free access to the common market. Or it could be a more meaningful split.

3. What would the effect be?
Well, the former case would basically be fine with me - I don't get a vote for the UK government after all, so what do I care about whether the UK government gets a say in the EU regulations it will be forced to adopt. But if I were a UK voter I would be pissed (especially if I voted for Brexit), and I doubt this is what anyone wants.
So let's take the other case. Well, I am sure it would discourage trade. Borders discourage trade (that's also why I voted against Scottish independence), and they discourage trade a little bit less when there are no tariffs and almost the same regulations on both sides of the border. So staying in the EU means a little bit more trade. A little bit more trade means a bit more economic growth (some of it for everyone as tax revenues rise), and it means more and better choice for consumers. That's why essentially all economists are in favour of the UK staying within the EU (see the guardian poll, a Financial Times poll; also the The Economist favour Brexit); that's why the Pound has fallen every time the Brexit odds went up (suggesting that its value will jump by an unprecedented amount once the result is know either way), and why the smart money bets on more UK companies going bankrupt in case of Brexit. Why should we trust economists this time, given they were wrong about XYZ? Well, first of all, I doubt they were as unanimous about XYZ back then. Moreover, it's not the the economic pundits who think Brexit would damage the UK economy a little bit, it's also everyone betting with their own money. And moreover, their argument is so simple: less barriers to trade, more growth.

But this also doesn't mean that the doomsday scenarios presented by Cameron and friends in their usual condescending tone make any sense. The differences are small, and if you have some serious political objections to the EU, you may consider them small enough to vote against your own economic interests. But there are meaningful, and much more meaningful than the 8 billions per year in net contribution.

So if you do have a vote, I hope that you "think very carefully about the future". Thank you.

Full disclosures
I may have some obvious biases here that I should disclose.
My research is currently funded by a grant from the EU (the ERC to be precise) - the grants include funds for myself, for two post-docs and two PhD students. I think this is less of a conflict-of-interest than it appears: the ERC is open to EU associate members, which the UK would undoubtedly become following Brexit. (And it would be silly for the UK not to join the ERC, as it wins more than its fair share of scientific grants.)
The bigger conflict of interest might actually be my status as a German living in the UK - in Scotland, actually. I don't *expect* that the UK would make it difficult for me (having lived here for 4 years) to continue to live and work in the UK, but you never know.

[mike777]

/from what I read:


1) 60% of the laws that govern the Brits are passed by the eu, NOT BRITS
2) Foreign judges tell the brits whether the laws are ok.
3) harm, economic harm will come if you vote to exit
4) I dont see bbo posters saying they owe any DUTY to the EU
5) aGAIN i ASK HOW DO YOU FIRE THOSE THAT GOVERN YOU OR DO YOU CARE?


Good luck

[cherdano]

I forgot to ask: please also think carefully before posting in this thread. There is another thread where you can post gibberish. Any thoughtful comments, factual corrections etc. are of course welcome.

[cloa513]

EU is not free market- so many internal barriers. They decimated the English fishing industry by giving their fishing rights to other countries. They have so many regulation on everything- even the smallest items that its impossible to comply with them. It is a disaster for consumers by destroying their suppliers. The EU doesn't know how many it has.

[dave251164]

Vote LEAVE so that our Supreme Court can be supreme and not over-ruled by Europe, so that Parliament can be Sovereign once again and not be like a glorified county council in Europe, so Parliament is the only body that can impose taxes on us and so we can control our borders and let in as many or as few people as we like - ones who have skills and qualifications that we need like doctors and nurses. Limiting the migrants coming in will help take the pressure off our country's creaking infrastructure, as they all need somewhere to live, jobs, access to GPs and hospitals and schools for their kids etc. If there wasn't an endless supply of cheap foreign labour, then employers would have to train-up young British workers so they could do the jobs, rather than getting benefits for doing nothing. Europe is heading for an even bigger and more widespread financial crisis that will effect everyone who is in it - Greece is already on financial life support and other countries will soon join it. We do not want to have to bail these other countries out too. The Euro has failed - one size does not fit all. Our leaving may even act as a catalyst to finish it off more quickly and put it out of it's misery, so countries like Greece can get the Drachma back and devalue and once again do what is best for it's own citizens. If we don't get out now, it will be too late. In 5 years time, millions of mostly economic migrants (young men) will have entered Europe and become citizens of their chosen countries and got passports and then where will they all want to come? Here where the 'living' wage' will be 3/4/5/6/7 times what it is in places like Romania and Bulgaria. If only one in a thousand migrants is a terrorist, thousands will gain access to Europe and potentially to Britain. For the safety of our country, for jobs and houses for the young, for the first choice of school places, for the NHS to survive, for us to control our own borders and our taxes and benefits, for us to be able to kick out people we don't want like preachers of hate, to protect our culture, our traditions, our tolerant nature and our version of morality then VOTE LEAVE!!! Vote Remain and we will be prisoners in a decaying Europe, ignored and treated with utter contempt - even more contempt than Our Prime Minister was treated with when he went crawling on his knees, cap in hand and even then only came away with a few crumbs, that ultimately may not be fit to eat. The threat of leaving got us next to nothing and voting to stay will get us even less as Europe has no desire to reform, only to expand it's tentacles evermore into our everyday lives.

[gordontd]

cherdano, on 2016-June-20, 00:06, said:

I forgot to ask: please also think carefully before posting in this thread. There is another thread where you can post gibberish. Any thoughtful comments, factual corrections etc. are of course welcome.

It was too much to expect that this would be adhered to!

[Zelandakh]

Well done Dave. You seem to have illustrated the point from the first sentence of the OP rather nicely.

[Trinidad]

Thanks for your nice summary of the facts, Arend.

Unfortunately, my experience is that facts are not that relevant to voters anymore. There used to be 2 main factors that made voters decide: Facts and ideology. Political parties presented the facts in the light of their ideology: Socialist parties highlight the "enormous" difference between rich and poor. Conservative parties highlight the "gigantic" tax burden. And politics was solution driven. problems may be solved the socialist or the conservative way, but we are trying to solve them.

Nowadays, facts or ideology play a minor role. The political "debate" has been hijacked by slick marketeers who say what the public wants to hear. They will say that the economy is in trouble (when in fact it is doing quite okay), that crime rates are sky high (when they have never been this low), etc. They are not bothered at all that their statements have no factual basis whatsoever. Each statement made attracts more voters. Getting an actual solution to (perceived) problems would be a really bad: These parties would loose voters.

So, while I agree with all your facts, I am fairly pessimistic about what they matter in "modern politics". But thanks anyway.

Rik

(FD: Dutch, currently working in Germany and the Netherlands, living in the Netherlands, with a Finnish wife and kids born in Sweden)

[shyams]

I agree with the gist of what Arend has written in his thoughtful post. However, I am also convinced that his interpretation is not widely accepted within the UK. Possibly because the voters see it not as a decision based on logic alone – there is a huge emotional content intertwined as well.

1. What is the EU?
It is more than what Arend has described.
--- I would say that Arend has described the European Economic Community (also called the 'common market'). This is merely a subset of the EU.
--- There is a VERY STRONG support in the UK for the common market. And if there is a cost of doing so (e.g. common standards, contribution to the EU budget), we mostly tend to accept it.

However, the EU is also a huge political construct. And it is not the EC bureaucracy I’m talking about – it is the political class. They drive the “big decisions” within the EU – e.g. how to deal with the refugee crisis (“let’s ask Merkel”), how to deal with Greece economic crisis (“let’s ask Merkel”), what about ‘ever closer union’ (“let’s ask Hollande and Merkel”). This often makes a parody of the entire democratic foundations that the EU prides itself on.

2. What is good in the EU?
I’m probably going to repeat some of the points I made on the other thread:
a. A freedom of movement of the people within the EU, allowing labour to be deployed effectively within the EU.
b. A powerful & effective bureaucracy that has thwarted various anti-competitive moves by corporates. It has also driven costs down (e.g. “roaming costs” for mobile phones within the EU), and is continuing to hold corporations to account (on emission standards, data regulations, food quality standards).
c. EU is one of the largest opponents of GM-foods. And is a proponent of enhanced disclosures/labelling standards for food items sold within the EU.

3. What is bad in the EU?
The end-state vision of a “super-state” with ever closer union.
The patently undemocratic decision-making at the EU Council level.
No mechanism designed within the EU to make the freedom of movement productive for the host nation.
--- The so-called “benefit migration” is not entirely a myth although it is also not as big a problem as the Leave folks make it appear.
--- There is a resistance to encouraging common languages within the EU (because everyone knows that English will become the dominant common language) so the host nation often finds it harder to deploy incoming workforces effectively.

dave251164 wrote “Europe is heading for an even bigger and more widespread financial crisis that will effect everyone who is in it”. And although this is not top of mind for many UK voters, it is indeed a concern. In fact, I would be happy to bet a sizable amount of money that (if UK votes leave) the future for the Eurozone will be worse in 3 years’ time than that within the GBP zone.

He also wrote “contempt … our Prime Minister was treated with when he went crawling on his knees, cap in hand and even then only came away with a few crumbs”. This really happened! David Cameron may have been unsavvy in his dealings with the EU leaders, but there have been many occasions where he has been treated as a pariah and had to endure humiliation. His main flaw? He (like most of the people of the UK) absolutely disagrees with the “ever closer union”


And most UK voters will not give all these points any consideration. Instead, they will vote one way or another based on gut feel. I hope we vote to Remain, but I dread that the Leave campaign is not too far from a win.

Edit: Naturalised British -- I have a right to vote in the referendum.

[fromageGB]

Shyams made some very good points, and it is the political construct that is driving many of us away from wishing to be in the EU. Lack of local accountability and control is the biggest issue, as Dave said in the start of his rant.

However, the "powerful and effective bureaucracy" is not good, but bad. It takes the concept of "you can have too much of a good thing" to extremes, and it does not stop growing. It needs cutting back. It is also not particularly effective : take the case of emission standards that Shyams raised. The standards are not enforced, and as the Volkswagen diesels have shown, there is no concern or care for EU citizens. Where is the redress for us, that is being offered to deceived purchasers in the USA?

GM foods is an issue on which opinions divide, and while I would certainly not feed my rats on GM maize saturated in weedkiller, I can easily see the benefits of GM. That should not be of supranational concern. There are far too many areas where the EU interferes unwantedly, and those concerns are growing. I bought a hairdryer recently because I wanted a more powerful one than the EU will shortly allow.

The EU does have its good points, but the balance has tipped too far. The main aim of the EU still is "ever closer union". Some of us want out.

(English, resident, and voted.)

[hrothgar]

Two quick thoughts about the European Union

1. In retrospect, it feels as if folks made it much too easy to join the EU and especially to join the monetary union. I think that things would have been much better off had countries been forced to demonstrate that they could peg their currency to the Euro for some significant period of time (say 20 years) before they would be permitted to join the Eurozone

2. I think that there are some very fundamental tensions in the monetary union that need to get worked out. The so-called PIGS (Portugal Italy Greece Spain) help to shield countries like Germany from currency appreciation. if the PIGS weren't dragging the Euro down, the Euro would have appreciated much more with a consequent negative impact for the export driven German economy. I think that it is possible to make a strong argument in favor of transfer payments from the export powerhouses to the South to deal with these sorts of issues. However, politically, this becomes very difficult (hence my comments that many countries should start by tryig to maintain a long term peg to the Euro before doing something irrevocable like taking on Euro denominated debt)

FWIW, I am off the opinion that politics here in the US is about to go through a significant realignment.

For a while, the primary axis of division has been along cultural lines. I don't think that is sustainable. (The left won the culture wars and Trump showed that you can win the Republican nomination while ignoring this completely). However, the US is a two party state which means that the system will demand sme new way to fragment the body politic. I THINK that its going to be along the lines of globalization and international trade with the white trash and the trade unionists on one side and the constituency for finance and tech companies on the other. Mind you I have no idea which side the "Republicans" will take and which side the "Democrats" will be on, but I can't see them both on the same side.

Interesting times

[Vampyr]

timestamp=, on 2016-June-20, 08:15, said:

FWIW, I am off the opinion that politics here in the US is about to go through a significant realignment.

I don't know. I think that too many people are wedded to the ideas of guns and denying other people's rights (to love, how and when to procreate etc).

Anyway, without the UK's moderating influence, ever closer political union may proceed apace, perhaps provoking Swexit and Denexit? Will the EU eventually become Germany and France (and then when Germany loses patience with the French work ethic and negotiation by strike, just Germany) holding sway over a bunch of smaller countries?

Someone mentioned freedom of movement, and how it doesn't work as well as hoped. I have always thought that it would be unlikely that, eg, lots of Portuguese would wish to bring their families to Finland for work, facing significant language and cultural differences. Will they next move to Romania? Is the EU ideal to produce a homogenised Europe similar to a giant Epcot Center? This would be really sad.

I am pessimistic about the future of Europe with and without Brexit.

[wank]

It's the UK (mainly) that created the democratic deficit. The power being in the hands of the Council of Ministers is because further political integration has been blocked so national governments (in particular the UK) can wield a veto over certain supposedly key issues.

I'm British and I'm wondering if I can get myself a Scottish (newly independent, and remaining in the EU, of course) passport in the event of a Brexit.

[barmar]

I haven't been following the Brexit closely, but the main story on this week's "Last Week Tonight" was about it, and John Oliver (a British ex-pat) made a number of good arguments debunking the pro-Brexit arguments. Executive summary: the EU sucks, but leaving it won't solve any problems that are blamed on it.

[shyams]

barmar, on 2016-June-20, 09:22, said:

I haven't been following the Brexit closely, but the main story on this week's "Last Week Tonight" was about it, and John Oliver (a British ex-pat) made a number of good arguments debunking the pro-Brexit arguments. Executive summary: the EU sucks, but leaving it won't solve any problems that are blamed on it.

True, but "the grass is always greener on the other side" as far as voters are concerned.
And, in the case of the US, Donald Trump is definitely a reflection of the voters' appetite for "greener grass", however illogical that may appear to an outsider.

[Trinidad]

hrothgar, on 2016-June-20, 08:15, said:

2. I think that there are some very fundamental tensions in the monetary union that need to get worked out. The so-called PIGS (Portugal Italy Greece Spain) help to shield countries like Germany from currency appreciation. if the PIGS weren't dragging the Euro down, the Euro would have appreciated much more with a consequent negative impact for the export driven German economy. I think that it is possible to make a strong argument in favor of transfer payments from the export powerhouses to the South to deal with these sorts of issues. However, politically, this becomes very difficult (hence my comments that many countries should start by tryig to maintain a long term peg to the Euro before doing something irrevocable like taking on Euro denominated debt)

The transfer payments have become politically difficult, because we made them politically difficult. Before the PIGS entered the European Community, large amounts of money were transferred from the North to the South. Nobody had a problem with those. The difference was that in those days these payments were called "development aid". When they entered the Eurozone, there didn't seem to be much of a problem helping these countries. But years (and a lot of populist politics) later, the perception in the North is that they should be able to take care of themselves. And nobody asks the question: "Why should they be able to take care of themselves?"

Rik

[helene_t]

Vampyr, on 2016-June-20, 09:07, said:

Someone mentioned freedom of movement, and how it doesn't work as well as hoped. I have always thought that it would be unlikely that, eg, lots of Portuguese would wish to bring their families to Finland for work, facing significant language and cultural differences. Will they next move to Romania?

In my experience, freedom of movement works wonders. When I first moved from DK to NL in 1996, NL was yet to implement the Maastricht treaty so things like residence permision and health insurance were major PITAs. Today, moving from NL to UK is no more of a hassle than from Yorkshire to Lancashire. We have a truly Europe-wide labour market which is good for employees as well as for employers.

[Vampyr]

helene_t, on 2016-June-20, 10:25, said:

In my experience, freedom of movement works wonders. When I first moved from DK to NL in 1996, NL was yet to implement the Maastricht treaty so things like residence permision and health insurance were major PITAs. Today, moving from NL to UK is no more of a hassle than from Yorkshire to Lancashire. We have a truly Europe-wide labour market which is good for employees as well as for employers.

I think that your experience is limited. Mine is too, because living in the UK I see people from all corners of the EU, the commonwealth and the world, as there is effectively no language barrier. In any case, According to these statistics, EU-EU immigration is small in some and negligible in most countries apart from Germany and the U.K.

[cherdano]

cloa513, on 2016-June-20, 00:41, said:

They have so many regulation on everything- even the smallest items that its impossible to comply with them. It is a disaster for consumers by destroying their suppliers.

Can you give an example of such a superfluous regulation? I tend to take the simplistic view that it is easier to comply with one EU regulation than with 30 national regulations.

Also, when I buy a fridge, I want to be sure that it is safe, that it won't cause environmental hazards, and I want to be able to compare its electricity costs over its lifetime with other fridges. There is a small set of regulations that care of these, and each of them are a good thing. But the economy has lots of things more complicated than a fridge! That adds up to a lot of regulations - but it's all fine, since noone except those producing or selling a fridge need to worry the regulations about fridges.

[barmar]

cloa513, on 2016-June-20, 00:41, said:

EU is not free market- so many internal barriers. They decimated the English fishing industry by giving their fishing rights to other countries. They have so many regulation on everything- even the smallest items that its impossible to comply with them. It is a disaster for consumers by destroying their suppliers. The EU doesn't know how many it has.

Be careful with this one -- it's one of the claims that John Oliver put the lie to last night.

The pro-Brexit movement claims there are 190 regulations regarding pillows. But it turns out that when making this list, they just looked for any regulations that contain the word "pillow", and many of them are in a totally different context.

And exiting the EU is not likely to mean that British companies don't have to obey many of these regulations. If manufacturers want to sell products to EU countries, they'll have to make the products conform to EU policies, unless they want to have different models for sale within the UK and for export, which is likely to be more expensive.