A discourse on the EU referendum – Part 2

So, four months after it was announced, and now just four days to the final vote, will the UK (and Gibraltar) vote to stay in, or leave the EU?

It’s a debate where facts have been bandied around with gay abandon, where expert opinions rubbished, or lauded depending on the opinion of the person speaking. It’s a debate which often boiled down to being too scared to leave but too scared to stay in.

It’s all very scary.

If we leave, this will happen, if we stay that will happen — lots of opinions and very few hard facts. Unsurprising that facts about what will happen are scarce, as the last time a country left the EU it was Greenland, and with their tiny population, that’s akin to the city of Canterbury declaring independence.

So not much of a benchmark to work from.

The referendum has therefore, been an election without a manifesto – we know that one side or the other will win, but we really don’t have much idea of what will happen afterwards.

Will the economy soar, or tank, will immigration plummet or surge? No one is really that sure.

If the UK leaves though, there are a few things we can be sure of.

The economy and trade

At the moment, the UK is in a trading block known as the EU. If we leave, we have two main alternatives. One, is to join a sort of Tesco Value EU, known as the European Economic Area (EEA), which gives many of the trading benefits, but without the politics.

The other is to be totally outside the EU, but trade with it on World Trade Organisation rules.

To look at the WTO first, it’s not bad and does promote freeish trade between nations, but is best applied to global, or long-distance trading relations, between, for example the UK and China. There is a reason why regional trade blocks exist — they are better than the WTO for local trade.

We have the EU, in the Americas, there are trading blocks in both north and south. Africa has three trading blocks, and Asia has one. Regional trade blocks are good for regional economies. That’s why countries create them.

So, there is the European Economic Area (EEA), a regional trade block, without the politics of the EU.

While uncertain of the outcome of post-leave negotiations, most of the leave camp have promoted the EEA as a good alternative.

But.

The main thrust of the leave camp has been to control borders and cut down the money sent to Europe.

If the UK were to switch from the EU to the EEA nothing actually changes. I mean, literally, nothing.

The EEA still requires freedom of movement between countries. That is a non-negotiable fact of membership. If the UK wants to block freedom of people to work in the UK, then it cannot be a member of either the EU or the EEA.

So, plenty of Polish plumbers will be working in the UK after Brexit.

The other aspect is cutting the cost of membership.

Well, sort of.

Lets look at Norway, a member of the EEA and often cited as an example of how a post-EU Britain could work. It also pays a membership fee, and has to comply with EU regulations. In fact, it’s estimated that the cost of EEA membership is only marginally less than full EU membership.

We’re having a referendum to decide a financial cost equivalent of a Premier League footballer’s salary.

It’s hardly worth the effort.

However, is spending money supporting poorer parts of Europe a bad thing? London is estimated to be subsidising the cost of the rest of the UK to the tune of around £20 billion per year, and that’s no bad thing. Supporting poorer areas is enlightened self-interest, as poorer areas that become richer have more money to spend buying the good produced by the richer areas.

Scale up London to the UK, and the UK to Europe, and what the UK is doing for Europe is no different from what London does for the UK.

If it’s good for a richer part of the UK to help a poorer part, why is it wrong to scale that up regionally as well?

And the sums are piddling. In 2013, the UK economy was worth around £1,900 billion, and the money sent to Europe was around £6.2 billion.

Or roughly what the UK spends in high street coffee shops each year.

Obviously, it’s a sum of money, and maybe some would prefer that money to be spent in the UK.

Migration

As I have noted before, there are roughly the same number of Brits living on the mainland as their are mainlanders living in the UK. Talk of the UK being swamped by migrants is a nonsense, because the net effect on the size of the UK population has been zilch.

We’re not quite a nightclub, but the effect has been pretty much one in, one out.

If the UK leaves the EU, but remains part of the wider European Economic Area, then nothing changes. Brits can move around Europe, and Europeans can move around the UK.

But, let’s presume somehow, the borders are locked. No more Europeans coming to work in the UK. But that’s not a one way bargain. Immigration doors rarely swing in just one direction.

We can be pretty sure that Brits wont be able to work on the mainland either.

And that is a side to the migration debate that is being oddly ignored by both sides, both pro and anti EU.

It may be that the Brexit voters consider that a price worth paying, and we often make choices based on comfortable preferences rather than techocratic absolutes. Which is fine.

Regulation

Argh, so much red tape, bendy bananas, health and safety gone mad, and it’s all Europe’s fault!

Yes, there is tons of red tape, but have you ever stopped and wondered why? What is the cause of it all and why does it need to be there.

As it happens, all governments are very good at creating red tape regardless of membership of a trade group, and you only have to look at the UK tax code which over the past few decades has exploded from a few shelves worth to enough to fill a small library — and tax is entirely a UK affair.

But why is the EU imposing additional regulations.

Actually, in a way, it isn’t. It’s a bit like the nightclub again, one in and one out.

What is happening is the building of a common market. Rather than a collection of 28 different standards for a widget, the EU seeks to create one single standard that applies in all countries.

Makes sense to have just one common standard for each widget, even if it does mean that the old standard has to be removed and the new one implemented. And that’s where most of the fuss exists. People see the new regulation appearing, but don’t take notice of the fact that it is simply replacing an existing older regulation.

It does make a lot of sense for a UK manufacturer to be able to make one gadget and sell it in 28 countries than have 28 different models, one per country. The cost savings for both manufacturer and consumer are clear.

Not everything can be harmonised. We are too entrenched in how our domestic plug sockets work, or which side of the road we drive on for those to change — despite the very substantial cost savings it would engender.

But, frankly, most EU regulation isn’t on top of what went before, but a like-for-like replacement.

So does being in the EU matter? We could still apply EU regulations to goods we sell to the EU, and we don’t need to be a member to do that. But as someone who worked in regulated industries, there is one thing you absolutely have to have — and that is a chair at the table when regulations are being designed.

If we leave, we lose the negotiation position, and in the future, regulations can appear which UK firms selling into the EU would have to comply with, but would have no control over.

For any regulated industry, that is a disaster.

The UK government does a pretty good job of adding more red tape without the EU, and regardless of how the vote goes on Thursday, I doubt we will see a bonfire of the regulations as a result.

Benefits

So, being in, or being out, doesn’t really seem to make a huge difference in technical terms to how the UK works.

Frankly, the whole referendum is giving a voice to the people, but result is unlikely to have any significant material impact on people’s lives. It all rather sounds like things are out of our control and whatever we want we can’t have.

However, what if there’s another way of looking at it — what are the benefits of being in a large trading block?

Well, the main reason the EU was founded was to try and create common cause in trade so that wars would be less likely. And in that, the EU has done a magnificent job. In 2012 the EU received the Nobel Peace Prize for advancing the causes of peace, reconciliation, democracy and human rights in Europe.

The lack of war aside, we are all joint holders of a Nobel Prize!

However, being part of a large group has other advantages as large capital costs can be spread amongst far more people. Part of the reason the USA can afford a vast science budget is because the cost per person is tiny, even as the total collected ends up huge.

The UK, a leader in space technologies could never afford to have its own NASA. But the European Space Agency gives NASA a good run for its money especially in satellite launches.

We’re building our own GPS, called Galileo, so that Europeans wont be reliant on the USA or Russia for theirs.

The phone in your pocket is a direct consequence of moves by the EU for single standards. Back in the early 1980s, every country in Europe had different mobile systems and few worked with each other. Overseas roaming was unheard of.

Then along came the GSM phone.

Technology changes would have seen something developed, but it was the EU that required member states to adopt a single standard — much to the annoyance of rival US companies — and thus the digital phone revolution was born.

In fact so good was the European developed GSM system, that non-European countries adopted it (first was Australia) and thus a plan for a single European phone became a global standard.

As the time, back in the 1980s is was so unthinkable that such a plan would work that several satellite networks were launched to provide international phone services. They weren’t needed. Thanks to the EU mandating a single standard for all Europeans.

Much of the cheaper travel across Europe is thanks to the EU bureaucrats being supportive of free trade in a trading block set up to support free trade and movement of labour.

It may surprise you to learn that much of the economic liberalisation across Europe was driven by the Brits — as the UK has traditionally supplied more staff to the bureaucracy than other countries.

An EU without the surprisingly large British opinion within its trade laws would have been far less open minded and less liberal in promoting competition and driving down prices.

Much of these changes took place in the 1980s and 1990s, and it has somewhat slowed down over the past decade, in part because much of the regulations have been agreed, and frankly, a global recession does tend to snarl up the corridors of power.

The EU is not perfect. Its accountancy is a joke, and more money is spent on farming than its economic benefit would justify. It’s still far too fragmented in how decisions are made.

It needs a good kick up the arse.

But, look at what it is — a grand experiment bringing so many countries together to form one of the world’s leading liberal minded free trading blocks.

Not for us the gun toting, screw the poor capitalism of the USA, nor the dubious human rights of some parts of Asia.

We helped to craft the European Union, and the result is a bastion of free trade with respect for human rights and liberties at its heart.

And that’s something we should all be proud of.

Which is why on Thursday, my vote will be for remain.