• Who’s to Blame?

    The Bank of England’s chief economist, Andrew Haldane, has had the good grace to admit that the Bank’s forecast of the likely economic consequences of Brexit – that consumption, employment, share values and economic activity in general would fall – was, at least in the short term, mistaken.  The British economy, since the Brexit referendum, has prospered and has out-performed most other developed economies.

    In making his mea culpa, he acknowledged that the error had further weakened confidence in the economics profession, but it is not only economists who must shoulder the blame.  There was no shortage of establishment voices – business leaders, media commentators and politicians in particular – who issued similar ill-founded warnings; remember George Osborne’s need for an “emergency budget” in the event of a decision in favour of Brexit?

    In reality, Andrew Haldane did no more than concede the truth of what had already become apparent.  But the interesting aspect of his admission is not the fact that he made it, but the explanation for the error that he offered.

    The experts, it seems, did not take into account the “irrational behaviour” of those who live in the real economy, rather than in one of those economic models so beloved of economists.  If only people had reacted to Brexit as the experts thought they should, the forecast would have passed with flying colours.

    Let us pass over for the moment the irony that what was supposed to be an admission of error on the part of those who claim to know best became the vehicle for, yet again, shifting the blame for the error on to those who were supposedly too stupid to listen to what the experts told them and to know what was expected of them.

    It is nevertheless worth pausing for a moment to unpick the convoluted logic employed by Andrew Haldane to explain what went wrong and presumably endorsed by those many others who are used to being taken very seriously on important matters.

    The starting point, it seems, is that those who know best were agreed that Brexit would be an economic disaster.  At this stage of the argument, facts and rational analysis were apparently not needed to validate this position.  It was enough that they said that it was so – and they were then able to construct a whole supposedly “economic” forecast on the basis of this rickety and insubstantial foundation.

    It was then assumed that this consensus on the part of the important people – those who just knew, whatever the arguments, that we must belong to a particular economic arrangement called the European Union (not the “Europe” to which we have belonged from time immemorial) – would be listened to and acted upon.  It therefore followed that, in the event of a pro-Brexit vote, the British people would be so alarmed that they would lose all confidence in their economic future, and their reaction would produce such a downturn in economic activity as to validate the initial projection as to what would happen.

    This circular process, where it was not the prediction itself but the response to the prediction that was at issue, was no more than an exercise in picking oneself up by one’s own bootstraps.  The British people, however, failed to react according to the script.

    Perhaps they were not impressed by a perennial deficit in our trade with “Europe” in manufactured goods, or by an unstoppable inflow from “Europe” of cheap labour, or by the prospect of further concessions to meet the interests of major corporations at the expense of working people.

    Perhaps they sensed that they had lost what has long been an essential part of the British heritage – the power to govern ourselves – and that it had been lost to a hegemonic continental power which, parading as “Europe”, was in reality a direct successor to many earlier attempts to establish just such a hegemony.

    Whatever the explanation, the fact is that they have so far reacted positively to Brexit when the experts said that they would pull in their horns.  The lesson we should learn is that experts are valuable when they deploy their expertise accurately – but postulating an a priori position and then seeking to validate it retrospectively on the basis that – true or false – people will believe it and act upon it is not expertise but charlatanry.

    Bryan Gould

    7 January 2017

  • Can We Be Pro-Brexit and Progressive?

    Jeff Sparrow in the Guardian (2 January) allows a thoughtful article to be vitiated by an error familiar to all readers of that esteemed organ – a mindless lumping together of those who voted for Donald Trump on the one hand and for Brexit on the other, and branding them all as bigoted and racist.  “Progressives”, on the other hand, (defined by implication as those who voted for neither Trump nor Brexit) now need, he argues, to recapture the agenda so as to help the benighted souls who were led astray by the hateful doctrines of the right.

    One of the reasons for the failure of the “progressives”, he says, is that they did not register the genuine and understandable grievances of so many who felt that they had been ill-served by the democracy in whose name so much had been promised.  The left, he says, needs to re-discover the concept of progress, so as to turn that dissatisfaction into more constructive channels.

    One can only say “hear, hear” to that – but some of us were there long before him.  We represent a body of opinion whose existence is virtually ignored and denied by mainstream media – so obsessed are they by the need to stereotype both those who agree with them over Brexit and those who don’t.

    We have the temerity to assert that the issue of Brexit or not should have been analysed from the outset in the terms advanced by Jeff Sparrow – that the question should have been all along as to whether the way we organise our affairs (and that necessarily includes EU membership) has been fully serving the interests of ordinary people.

    Instead, the debate has been dominated – and still is – by those who insist on a convenient polarisation.  According to them, ranged on one side are those who are said to have the good sense and purity of spirit to recognise the nobility of the European ideal – not to say the attractions of European culture, food, music – and for whom the day-to-day challenges for some of their fellow-citizens of making a living and bringing up a family are a mere distraction.

    On the other side are those who have been encouraged by right-wing demagogues to attribute the harsh realities of their lives to malign forces unleashed by our European involvement, so that the political choices we make domestically are exonerated.

    There is no room in this polarised debate for those who argue that the good times enjoyed by a minority over recent years – by virtue of a globalised economy (of which the EU is a subset) – have been bought at the cost of an increasingly difficult struggle for many others, and that the economic and social consequences for those others of EU membership cannot be absolved from responsibility for their plight.

    There is, in other words, a “progressive” analysis of EU membership which does not rely on the ignorance and prejudice exploited by the right, but which does not shrink, either, from an analysis of the EU that identifies some of its inherently anti-democratic, pro-capitalist and “free-market” characteristics.

    It is, of course, precisely those characteristics that have manifested themselves in the lives of so many pro-Brexit voters.  We cannot expect those voters to overlook the impact of those characteristics in favour of the “finer sensibilities” of those who have done well, when that impact includes the decimation of British manufacturing and a perennial trade deficit which together have led directly to the loss of jobs and a more general job insecurity, an inflow of cheap labour which has further threatened job security and wage levels, and a sense that democratic control over their lives has been lost or is at least ineffective.

    These impacts are not accidental, but eminently foreseeable – and therefore intended.  The EU is consciously an “intervention-free” zone, deliberately created to hand power to unelected bureaucrats so that market forces and powerful corporations are allowed free rein without intervention from elected governments.  There can be nothing less “progressive” than to overlook this in the name of the “European ideal” and then to castigate those who register and bewail what they have lost – democracy and self-government – as bigots and ignoramuses.

    If we are really to embark on a new progressive agenda, as we surely must, we must have the courage to identify what is and has been wrong and therefore must be changed. It is not an auspicious start to characterise the “progressive” stance as that held by those who have all along prioritised their own sense of intellectual and cultural superiority over any attempt to grapple with the real and practical issues – not least as a consequence of EU membership -confronting so many of our fellow-citizens.

    There are many who abhor all that Trump and his British equivalents stand for and who nevertheless understand that EU membership has served primarily the interests of the haves, not the have-nots.  If we really want to re-establish the “progressive” agenda, we could do with less castigating and more listening.

    Bryan Gould

    3 January 2017.



  • Democracy is the Missing Element

    Simon Wren-Lewis, with whom I usually have little difficulty in agreeing, has published a blog in recent days in which he explains why, in his (and others’) views, it is impossible to play a full part in the global economy – in other words, to enjoy free trade – while maintaining the full powers of self-government that one would usually expect in a mature and democratic nation state.

    He links this point to the Brexit vote, in order to suggest that the obligations that must be accepted in return for free trade (or – in the Brexit case – access to the single market) must necessarily entail a diminution in the powers of self-government.

    He is of course right to say that free trade often requires individual governments to make concessions concerning domestic policy, if only because the maintenance of various non-tariff barriers, such as subsidies and other preferences given to domestic producers, will run counter to the goals that are sought through free trade. But such concessions are a fairly normal incident of trade relations and would not usually be considered, when approved by a democratically elected government, as implying a substantial derogation from national sovereignty.

    It should be conceded straightaway that there are modern versions of supposed free trade that do indeed collide rather directly with the normal concept of self-government.  The Transatlantic Trade and Investment Partnership (TTIP) and its Asia-Pacific equivalent (the TPPA) both masquerade as free trade deals but represent in fact major additions to the powers of international corporations at the expense of elected governments.

    That is why they have been opposed by so many – and Simon Wren-Lewis is right to signal, by implication at least, the incompatibility between such arrangements and the usual principles of democratic self-government. Faced with that choice, most informed citizens seem so far to prefer self-government.

    But are the concessions negotiated as a matter of course between sovereign governments really incompatible with the concept of self-government?  National governments, even the most powerful, are of course necessarily constrained by all kinds of limitations, including the demands made by other countries.  That is the nature of the real world.

    But there is a world of difference between that situation – analogous, as Wren-Lewis points out, to how relations between individuals are managed – and the proposition that governments should not just negotiate (after careful consideration of their own interests, as individuals would do), but should hand over in its entirety to a completely different (and unelected) authority the power to decide for them, in advance and en bloc, what concessions should be made, and what interests should be sacrificed to those concessions.

    It is the by-passing of elected governments that is, after all, at the heart of the objections to the TTIP and the TPPA – and it is clear that voters in Britain (and in other countries like New Zealand) are in no doubt that the power to decide what concessions should be made, in return for what benefits, should remain with their elected governments and should be exercised on a case-by-case basis.

    It is also clear that the same distinction was an important factor when voters came to make up their minds as to whether they were happy to see the EU exercise the powers that had hitherto been exercised by their own elected governments.  The issue was not, in other words, whether or not concessions should be made in return for free trade, but who should make them and whose interests should they represent.  Would the decision-makers, above all, consult and reflect the views of voters who had been confident in their belief that they had elected governments to protect their interests?

    No country is more experienced than the UK in negotiating the unavoidable give-and-take of international diplomacy and economic relations.  We do not need reminding that such negotiations require commitment and careful judgment.  That is why the constant efforts from some quarters to undermine our negotiating position in the forthcoming Brexit talks by urging that it should be abandoned or reversed give comfort to those we are to negotiate with and are potentially so damaging to our interests.

    Simon Wren-Lewis has done us a favour – perhaps inadvertently – by reminding us that the important decisions that have to be made if we are to secure our objectives – in trade, as in other spheres – could be inimical to democracy and self-government, unless decided by a government elected for the task.

    He may not quite have grasped, however, that those who voted for Brexit got there before him.  The import of their decision is that important issues need to be decided by democratic institutions – and in particular by elected governments.  The first requirement is, in other words, that the proper democratic framework exists; it is only when that democratic process is in place that we can use it to consider and approve the concessions that might be made to other interests in our name.

    We don’t resolve these issues by first conceding to undemocratic institutions, like the EU, the power to decide issues which are properly the preserve of elected governments.  The democratic process should not be seen as an inevitable and acceptable casualty of free trade arrangements but as the only mechanism by which the concessions needed to secure them are made acceptable.

    Bryan Gould

    21 December 2016






  • What Lies Behind the Brexit Vote?

    I am proud to be a sixth-generation New Zealander.  But I am also gratefully aware of my British heritage.

    All eight of the families of my great grandparents came to New Zealand, from England, Scotland and Wales, and had settled here by the mid-nineteenth century.  I had the pleasure of returning to the UK as a student and spending a substantial part of my working life there.

    My involvement in British politics meant that I took more than a passing interest in the referendum on whether the UK should remain in the European Un ion.  I was surprised, but pleased, at the result, but I have been even more surprised – and less pleased – at the reaction to that result, not least the reaction of some prestigious organs of opinion whose opinions I normally respect.

    To hear it the way they tell it, one would think that the vote in favour of Brexit was a calamity brought about as the consequence of the bigotry (not to say racism) and ignorance of those who knew no better.  Their task now, it seems, is to show them the error of their ways, and find some way of reversing or overriding what was a democratic decision.

    There is no recognition of the perfectly rational considerations that might have led many voters to say of the EU “enough is enough”.  For many citizens, British and European, membership of the EU has meant joining an economic zone specifically created to allow powerful corporations to bypass elected governments and to achieve what they want by dealing directly with unelected bureaucrats in Brussels.

    For Britain specifically, it has meant a massive trade deficit, particularly in manufactured goods – a deficit that has decimated British manufacturing, destroyed jobs, especially in the regions, and made it impossible for the British economy to grow for fear that the deficit will get worse.

    For many workers, it has also meant an unstoppable inflow of cheap labour from Eastern Europe – a tap that cannot be turned off.  To express concern at this might look like racism from the leafy suburbs of southern England, but it looks rather different to those whose jobs are at risk, whose wages are undercut, and whose housing, schools and hospitals are put under pressure.

    Yes, the Brexit vote may have been partly a protest on the part of those who felt that their interests had been ignored.  But there is more to it than that.

    Many of those most likely to bewail the Brexit vote do so from a position of assumed cultural superiority.  Outside the EU, it seems, they will suffer a deprivation not endured by lesser mortals; they will be denied access to European culture, food, holidays – a loss that may not matter to others but is important to them.

    The paradox is that this manifestation of supposed superiority is entirely misplaced.  There is nothing that – whether in or out of the EU – can deny the centuries-old British involvement in or access to Continental Europe.  Britain has always been historically, geographically, culturally, economically and in every other way a part of Europe and has often played a crucial part in its affairs – something for which Europe has been at times very grateful.  The question is not – whether Europe, but what kind of Europe.

    And on that issue, it may well be that the instincts of the Brexiteers are more reliable and culturally authentic than those who profess themselves to be the most committed “Europeans”.

    The British have always feared and opposed the emergence of a dominant European power.  The Spanish launched their armada and were defeated by Francis Drake; Napoleon made his attempt at European domination and was stopped at Trafalgar and Waterloo; and the Germans had two cracks at it last century and it took two world wars to halt them.

    It may not be appropriate in polite company these days to recall these aspects of past British involvement in Europe.  But these events leave their imprint – and the British preference for a Europe at peace with itself but not subject to domination by any one power remains a strong element in the British cultural identity.

    The British have always valued their independence – and, translated into modern terms, that means the value attached to self-government and democracy.  That is the element that, in their keenness to emphasise their “Europeanness”, is overlooked and misunderstood by the Brexit critics.

    Much of the impetus behind the decision to leave the EU came, in other words, from that long-standing British commitment to running their own affairs, without interference from Continental powers.  They wanted to regain “control” – perhaps an abstract concept but one that mattered to many Brexit voters.

    Those who condemn those voters for their ignorance and bigotry might ask themselves whether it is not the critics who reveal their ignorance.  Even at 12,000 miles distance, I fancy that I understand what those voters were seeking to achieve.  The drive to achieve and retain the right to self-government is not to be derided; it has served both Britain and Europe very well in the long history they share.

    Bryan Gould

    19 December 2016


  • We Failed the Brexit Test

    It might have been thought that the decision made by the British people in the recent referendum that they wished to leave the EU would have drawn a line under that issue, and that we would now be addressing the many new challenges and opportunities that are now before us.  But, such is the arrogance of those who were sure they knew best that it now appears that the referendum was not so much an exercise in democracy and for determining the will of the British people as a means of testing whether their fellow citizens were really up to it.

    There was, in other words, only one right answer, and the failure to produce it means that the test must either be treated as a nullity or it must be taken again (and possibly again and again) until the right answer is reached.

    This determination to treat the referendum as an examination that has been failed has led one of the candidates for the leadership of the Labour Party to choose as one of the main planks in his platform a commitment to provide a second opportunity to achieve a pass mark.  And, in the expectation that such an opportunity will arise, a huge effort is being made to ensure that the delinquents who got it wrong and voted to leave must be re-educated and shown the error of their ways.

    So, we are subjected to endless stories designed to show how mistaken the decision to leave really was.  Even the most improbable link between the Brexit decision and some real or supposed misfortune is triumphantly reportedly; headlines along the lines of “Brexit Means My Ingrowing Toenails Will Get Worse” are now commonplace in the pages of such as The Guardian.

    There are, in addition to those whose superior brainpower and knowledge of the world enabled them to reach the right answer, others who are outraged by what they see as an irresponsible offence against civilised values.  For them, the Brexit decision was a denial of their European identity and a bar to their ability to enjoy European food, music, art and travel – as if those pleasures were dependent on a particular trading arrangement, and were not part of our European involvement and identity since time immemorial.

    Then there are those who profess to have been morally offended by what they see as the false prospectus which produced the Brexit decision.  Yet, in the chorus of condemnation that has greeted Brexit “lies”, there is little reference to what was surely the biggest lie of the campaign – the warning by the then Chancellor of the Exchequer, no less, that Brexit would mean a £30 billion hole in the government’s finances and would necessitate an emergency budget.

    Many of those apparently angered by the democratic decision reached in the Brexit vote seem to believe that their particular sensibilities entitle them to ignore rational argument and the practical realities that membership of the EU has meant for so many of their fellow-citizens.  Indeed, the offence supposedly committed against those sensibilities should be treated, it seems, as just that – an offence for which they and we must be punished.  The greater the alleged penalties to be suffered for Brexit, in other words, the more satisfied the referendum losers are that justice has been done.

    They are even able to welcome the presence of an appropriately stern prosecuting counsel – not to say hanging judge – in the person of Jean-Claude Juncker, the President of the European Commission.  This unelected official presumes to threaten retribution for the British people’s daring to reclaim some degree of self-government.  It is a measure of how little understanding there is of such issues in some quarters that Juncker’s autocratic (and probably illegal) ban on discussions taking place between British and EU officials is not recognised as a striking example of the democratic deficit which continues to handicap European integration and to alienate British opinion.

    There is, of course, a post-Brexit reality that demands all of our attention.  It is already clear that the dire predictions of calamity have not been realised – and even the most persistent of the supposed downsides, the weakness of sterling, has meant for those with the wit to see it, a boost to British competitiveness of which the inflow of tourists is just one immediate manifestation.

    Instead of looking back to an EU membership which constrained us in a straitjacket of austerity and the priority given to corporate interests and that precluded us from taking up economic opportunities on our own account, we should now be striking out for a new and dynamic approach to economic and trading policy.  The qualities that served us so well as a self-governing democracy over such a long period can now be brought to bear – as soon as we are no longer distracted by the prospect of going backwards rather than forwards.

    Bryan Gould

    13 September 2016