Category: brexit

Singapore

So, people have been going on about “Singapore” again. Last week I had to look up information about Singaporean data protection laws – that’s life in the private sector, folks! – and I found something interesting.

Brexit fans are very keen on the idea that you could somehow be a “business hub” outside the EU by getting rid of regulations. It’s a strategic aim of the Singaporean government to be a “hub” (that fucking word again) for data centres, hosting, and cloud computing in Asia-Pacific. It’s not a bad idea. So what does actually existing Singapore do about, say, data protection? Presumably they’ve abolished all regulations on what you can do with other people’s data, and let the market decide?

Well, in 2013 they passed a stringent Personal Data Protection Act (PDPA). It turns out that if you want people to trust you with their secrets, you probably better not leak them! Further, if you’re hoping that foreign investors will build their data centres in your country in order to export their services to other countries, you’ll have to respect the standards in force in those other countries as well. Regulation is a strength.

One of the major problems of our time is that the political understanding of what “City interests” might be has diverged from the City’s understanding of them. The Tory dread of “Brussels regulation” spoiling stuff was crucial, as Ivan Rogers points out, in sending David Cameron off down the track of Brexit.

I dunno, but maybe injecting massive regulatory uncertainty into everything is why the “Business investment” line item in this OBR chart is so horrible.

Very real very real concerns: Derby, Ellesmere Port, and Luton

I don’t know about you, but this seems worrying.

Wednesday’s Derby Telegraph:

When Toyota announced plans to invest £240 million in its Burnaston plant, the car giant called for continued tariff- and barrier-free access between the UK and Europe. Mr Leroy expressed his concerns about the Government’s approach to Brexit in an interview with Reuters at the Frankfurt car show.

“A few months ago the Government was saying ‘we’re sure we’ll be able to negotiate (a deal) without any trade tax,'” he said. “They are not saying that any more.”He added: “It’s clear that, if we have to wait two to three more years to have clarity on this topic, we will have a big question mark about our future investment in the country.”

Mr Leroy, Toyota’s top foreign executive, said the company could not wait indefinitely before deciding whether to build a new model at the site after production of the ageing Avensis model ends. Burnaston also builds the smaller Auris.

“We cannot take this kind of decision before we have clarity on the future trade relationship,” said Mr Leroy. “We will not close the plant tomorrow morning, but if in two to three years we have to decide some future investments, of course the key point will be the competitiveness of this plant in future.”

And today, in the Daily Hell:

The fate of Vauxhall’s two UK factories and their workforce is on hold until their new French bosses receive ‘guidance’ from the UK and EU over what sort of trade deal will be in place post-Brexit.

Ministers and politicians in Britain and on the Continent need to explain ‘how they want to play the game’, before serious decisions can be made on whether to keep, close or even expand the UK plants, said Carlos Tavares, chief executive of new Vauxhall Owners, PSA Group.

’I would prefer to have some guidance from the UK government and from the European Commission about how they want to play the game,’ he added.‘It would be much better for everybody, not just the PSA Group, but also for all the other stakeholders, that we have some guidance about how this is going to unfold.

‘The sooner we have some guidance from the UK government and the European Commission about how they want to play the Brexit, the better it will be.’

Tavares also said that the PSA Group operates a five-year plan….sorry….product cycle, and the next one is up in 2021, which implies that the decision process has already started.

a hurricane, after all, is a lot of hot air moving in the same direction

Alex Massie has long served as “that guy on the Spectator it’s OK to like”, but this post of his serves as an excellent demonstration of a point made here.

When this magazine endorsed Brexit, it did so in typically trenchant and elegant fashion. ‘Out and into the world’ we said. The central thesis of The Spectator’s case for Leave was that the European Union has become a parody of itself, a sclerotic, irredeemably unreformable, set of institutions that are, at some core, fundamental, level intrinsically incompatible with this country’s instincts, traditions, and future.

So, you’re agin it? The problem here is that this is all vague, aesthetic, assertion-led attitude. There’s nothing concrete there. What “reforms”? Which “instincts”? How “incompatible”? What are these things you are talking about? Could I kick one across the street?

Similarly:

Those figures are accurate but misleading and, in other circumstances, I suspect The Spectator would be the first to tell you so. The relative proportions matter rather more than the absolute numbers. 44 percent of UK exports go to EU countries (a figure you may, with some reason, think depressingly high) but only eight percent of EU exports come to the UK.

Why depressingly? It’s next door!

Anyway, Massie spends most of the rest of the article pointing out that the mag’s case for Brexit was a load of nonsense without, you know, saying so. But I will.

#AllOutWar: One, We’re Agin It

So I read Tim “Not the Doctor” Shipman’s All Out War instabook on the referendum campaign and after. Shipman argues strongly for the continued importance of the old 90s Tory Eurosceptics in the whole thing – this is partly a consequence of his method, writing down stuff MPs tell him, but I think also a useful insight. Whatever happened in the country, in Westminster, David Cameron only called the damn referendum to please them and therefore you have to accept their agency.

More importantly, though, beginning the history in 1991-ish explains something very important. Stephen Bush says the talks are stalling because the government doesn’t know what it wants. This is a consequence of the broader problem, which is that the Eurosceptics don’t know what it is about the European Union they’re actually against.

Tory Euroscepticism was launched or relaunched as a project in order to oppose British membership of the Euro. When they got angry about “the veto”, the veto they were angry about was the one on economic and monetary union. When they quibbled about the details of qualified-majority voting, the issue that QMV was going to apply to was the economic and monetary union. When they argued that having one’s own currency was a defining attribute of sovereignty, that’s what they were arguing. I remember them remaining convinced we were secretly joining the Euro deep into the Blair years. The Euro was the issue. You cannot overstate the importance of opposing the Euro in creating the style, institutions, and personal networks involved.

The problem, however, was that John Major had already shot their fox way back in 1992. The UK wasn’t joining the Euro, didn’t join the Euro, will not do so in the future.

But you can’t unring a bell. A while ago I happened to discover a friend of mine was wearing fluorescent yellow underpants. Ever since, I can’t see him or think of him without wondering: has he got the hi-viz undercrackers on? Are they just for special occasions, or does he have half a dozen identical pairs? It’s impossible not to speculate. He could burn them, but it still wouldn’t change anything. He is indelibly associated with the possibility of day-glo drawers. Making an enemy of the prime minister is a bit like that. As Winston Churchill said, precisely about betraying your political party, you can rat but you can’t re-rat.

And so they had to keep going. There was no way to undo the offence caused or to rebuild the trust destroyed. That’s why so many people in All Out War seem to be on a personal mission to get their own back on Major; because they were. Having made an enemy of the prime minister and the Conservative Party both, the only option was to stay hypermobilised forever if they wanted to keep their political careers. There is a hugely important political lesson here – stump-dumb stubbornness and North Korean Mass Games loyalty often work, especially in intra-party politics.

With the Euro fox shot, they had to find something else to be furious about. The something else varied, as you’d expect from a belief that existed solely because it was useful. The enduring core, the tao, of the movement could be summed up as hating the prime minister and wanting a referendum. Prime ministers are by definition electable, the products of the electoral system. The Eurosceptics knew they couldn’t win through the normal electoral system (Nigel Farage’s seven failed candidacies are a case in point), so they sought something they could win, hence the obsession with a referendum on something, anything, even the Amsterdam Treaty.

This explains the odd vague quality of the whole business. Are they against the single market? Not really. Are they against freedom of movement? Yes, but not if that means any change. Do they want a libertarian race to the bottom? Not really, they want to have mutually recognised (i.e. the same) regulations.

It also explains a lot about David Cameron. It was often said about him that he was “really a Eurosceptic” or some such. More precisely, he adopted some of the style tropes but didn’t commit himself to any particular content. But how could he have done so? There was none. That was what was so attractive. So he repeatedly pulled on his Eurosceptic jacket when he wanted more power or more money, taking advantage of the fact it didn’t commit him to any specific course of action. Once he got what he wanted, he stripped it off and went back to his purple webcam modern dad self-presentation. This worked very well for him until it didn’t.

And one important feature of being against the EU in general but not in particular is that it allows the imagination a great deal of free play. This works well from a campaigning point of view – you can pretend the 35 hour week is in force, or that the EU is secretly trying to replace the army – but it’s problematic when the rubber meets the road, because the other side of the table can’t make concessions on things you only pretend exist.

Precisely because he – and they – couldn’t specify what they were actually against, they had a lot of difficulty forming a strategy to “renegotiate”. To begin with, all they could think of was weak-sauce stuff from the late 90s like opting out of the working time directive. This must surely have been something they remembered being in the papers back in the day. It was only later in the process that they hit on immigration, not least because Theresa May’s own version of sucking up to the far right and then doing what you want anyway now began to get in the way.

But Cameron was now committed to renegotiate a relationship he didn’t meaningfully want to change, and then hold a referendum on the results. How could that ever work?

The bureaucratic imperative rules, or maybe just reigns

The point’s been well made, notably by Heidi Alexander MP, that shadow trade secretary Barry Gardiner’s arguments against the EEA are even stronger arguments for just staying in the damn EU already. But I would like to draw attention to another aspect of his piece:

As a transitional phase, a customs union agreement might be thought to have some merit. However, as an end point it is deeply unattractive. It would preclude us from making our own independent trade agreements with our five largest export markets outside the EU (the US, China, Japan, Australia and the Gulf states).

Why is Gardiner going on like this? The simple answer is that he is shadow trade secretary. As such he is structurally, ineluctably in favour of trade secretaries. Whatever confused vision he is offering here, it will certainly involve extensive trade negotiations with various powers. In the event of a Labour government, these negotiations would be the responsibility of Barry Gardiner, and were they successful, their success would redound to his credit. Just as the disgraced Liam Fox is structurally in favour of strange globe-trotting trade schemes, so is his shadow. Maybe this is why the Department for International Trade even exists. The bureaucratic imperative rules.

Or perhaps the bureaucratic imperative only reigns? This FT story has had a lot of play for its description of a thoroughly dysfunctional government, which is well worth reading. But I was interested by this graf:

Some civil servants say Jeremy Heywood, the cabinet secretary, should have done more to challenge the secretive and tightly held decision-making structure. “Jeremy Heywood has achieved a lot but he placed the value of getting into the room with the PM above the need to deliver tough messages,” said one senior Whitehall figure. “If the cabinet secretary doesn’t turn and fight, then the rest of the civil service won’t either.”

The point that comes to mind is that David Cameron’s government was the first for a long time to go after the core civil service as an enemy. A key early doors initiative was the whole project of breaking up the role of Cabinet Secretary and Head of the Home Civil Service – remember all the complaining about Gus “GO’D” O’Donnell and briefing that Heywood was a secret socialist? – in order to diminish the power of the top civil service. The new post of Civil Service Chief Executive was created, pretty much deliberately as a rival pole of power, more in the gift of the prime minister. The Cabinet Secretaryship was split up into the No.10 Downing Street Permanent Secretary and the Head of the Service.

This project was a bust. The CEO job – aka “let’s give it to Branson or someone” – never amounted to much. Heywood emerged as the key civil service figure largely because the No.10 permanent secretary by definition had permanent access to the prime minister, and eventually the bureaucratic papacy re-emerged around him. But it’s worth remembering that the top civil service spent the post-2010 period frantically defending the institution itself against the prime minister. The obvious counterpoint is that they do that all the time.

Looking at the Cameron-May years, though, does anyone honestly think the government is getting too much professional advice? OK, right. Also, does anyone begin to think 2016 wasn’t as much of a caesura as it looked? And if Heywood is avoiding conflict with the prime minister, can anyone perhaps see why?

No, Steve Rotheram is not taking over the Brexit talks

While I’m shitting on my own doorstep, what about this post from Paul Cotterill? This is another go-round on his idea of Labour mayors trying to take over the negotiations with the EU so that Liverpool and Manchester (oddly he doesn’t mention London or Sadiq Khan) can stay in the EEA, but it still doesn’t explain how this could possibly work. Wouldn’t that imply a customs border on the M62? How would freedom of movement work with regard to the rest of the country? Wouldn’t we need ID cards or worse?

Also, what standing would they have to do this? What would happen if the UK government disagreed, seeing as it owns all the governmental functions that are involved? Why would the EU delegation bother? This is a silly idea, and if Andrew Lilico or the disgraced Liam Fox offered it, everyone I know would hoot with laughter and start swapping memes about passport control in Standedge Cutting. But I see people taking it seriously.

I just think this is a case of mogging, as in Jacob Rees-Mogg – my argument doesn’t actually hold water, so I’m going to mogg, scatter it with obscure quotes and what MPs apparently think of as “long words”. Note that it’s quite possible to mogg without really intending to do so.

Habermas schmabermas. The idea of city centres staying in the EU doesn’t make sense, you can’t make it make sense, and its place is in the inevitable BBC I Love the 2010s Summer of Brexit episode when that rolls around.

the Airbus supply chain, the press, and leopards

The Daily Telegraph is suddenly worried about the future of the aviation industry post-Brexit. As well it might be.

But I remember distinctly that the source, the Engineering Employers’ Federation, spoke out in this sense during the referendum campaign. So did the individual companies involved, and the trade unions. And the Telegraph thought this was all a lot of evil propaganda from George Osborne, a politician whose career it had been systematically promoting for years.

To adapt a now-classic joke, it’s as if the Institute of Leopards and Faceripping had issued the following warning: Voting for the Leopards Ripping Your Face Off Party may cause your face to be ripped off by leopards! And the Daily Telegraph replies: We’ve had enough of experts’ so-called advice. Vote leopard!

52% duly vote for the leopards. A few months on, the Institute of Leopards is back: We’re observing unusually high incidences of faceripping associated with leopard activity. And the Daily Telegraph is all: Shit! Leopards! Somebody do something!

The Rogers Legacy

Does anyone else think Sir Ivan Rogers quit when he did in order to make sure his replacement was someone like Sir Tim Barrow?

Rogers’ ostensible explanation for quitting was that his posting was coming up anyway in a couple of months and he wanted to give his successor some time to read themselves in. Naturally he then gave the real explanation further into the letter. Had the appointment process been allowed to run its course, there would have been time for an organised campaign for some clown like [fill in the blank] to get it, and for David Davis to try to grab the UK Permanent Representation to the EU away from the Foreign Office. Instead, as Rogers quit with immediate effect and an immediate replacement was needed, the process was telescoped into 24 hours, giving a huge advantage to the immediately available institutional candidate who was also the safe option.

A clear statement about migration

I wrote this for Politico Europe, but they weren’t interested after much editing about. Apparently there were too many charts.

A clear statement about migration, says Theresa May of the vote for Brexit. The last thing you’ll find in the data is clarity. Or migration.

There has been a wealth of efforts to understand Brexit through data. But the most telling statistic in most of them is the R^2 value, the measure of how well a regression line fits the data. The higher the R^2, the more of the spread in your data you’ve managed to explain. Famously, although there is a faint correlation between some measures of migration and the vote, the R^2 value is pathetic – the data set is nothing but outliers.

It gets worse. Some analysts tried to save migration as an explanation by looking at the change in foreign-born population, rather than its level. This chart from The Economist is the classic statement. Perhaps the voters were shocked and bewildered by the speed of change, rather than its content, or something like that. Or maybe it’s a soft racist argument like Jacques Chirac’s Le bruit et l’odeur speech.

econochart

The problem is, again, the R^2 – without a very few extreme outliers, mostly very conservative small towns in the Fens with significant numbers of migrant farm workers, there wouldn’t be any effect at all, as Jo Mitchell points out here. You’ll notice they didn’t quote an R^2.

It gets still worse, though. Those outliers are dramatic, but they disappear when we control for the size of their population (from here). Small populations exaggerate all percentage changes; they show extremely high rates of immigration precisely because they have so few immigrants, and even if they voted Leave by a big margin, they had little impact on the contest because they have so few voters. We can deal with this by plotting votes rather than percentages – I’ve plotted the net Leave lead, i.e. Leave minus Remain, giving us each local authority’s contribution to the overall result.

brexitimmigrationvotes

As you can see, the Fenland outliers have vanished and so has the correlation. It makes sense; nobody ever won a general election in South Holland and the Deepings, a constituency that has been Conservative since 1922. Instead, a clutch of populous, Leave-leaning but contested, urban but not metropolitan districts emerge as the key battlegrounds. Dudley, for example, contributed 61,666 net Leave votes.

Let’s try something else. One argument – classically put by Daniel Davies in Vox – is that the problem is migration, but it’s internal migration. Post-industrial northern towns and the run-down seaside are emptying out as the young seek opportunity in the big city. It’s an elegant argument, with all the more emotional force because both Dan and I did just that ourselves. Unfortunately, the data doesn’t stand it up.

brexitinternalmigration1

In fact, it’s the other way round, the correlation is quite strong, and the R^2 is at least less bad. This seems baffling; London is actually more populous now than it’s ever been, and deeply Remainy. Also, Cornwall is hardly the land of opportunity. The explanation may be age structure – young people flock into the big cities, retirees go the other way – but we’re already trying to save our hypothesis by fitting stories to an unconvincing data set. It needs a lot of nuance.

What about total population growth? Sorry, but that’s even less helpful.

brexitpopulation

We could try some other approach. The Right is convinced it’s all about immigration. The Left is convinced it was a massive protest vote about austerity. This is hard to test because there is no official data on total government spending by locality. Without it, we’d have to build our own private hell of cost-allocation problems. The Centre for Cities managed to create a snapshot for 2013-2014, but austerity is all about change in the fiscal stance. Also, a Keynesian would object that the allocation of the government deficit is what counts, so we’d need tax revenue data as well. And, anyway, it doesn’t tell us much.

brexitausteritycentral

There is, however, data for spending by local governments. A large fraction of the UK austerity programme consists of cuts to the Department for Communities and Local Government’s financing to town councils, so this ought to be a useful proxy for total spending.

We don’t find much correlation with the level of spending. But we do with the change from 2012-2016. Austerity, defined as the reduction in local government spending power, predicts about 20% of the variation in the net vote for Leave.

brexitausterity

Another variable that does seem to have some predictive power is pay. The short-term change in median gross weekly earnings doesn’t seem to matter, but their level does, quite strongly. In fact, it’s better than austerity as a predictor; it’s the best one I found, with R^2 of 0.23. I ran the same analysis, using the Annual Survey of Hours and Earnings data set, for the 25th, 75th, and 90th percentiles of earners, but I didn’t find anything interesting.

brexitpay

So, it looks like the immigration story is a bust. The internal migration one might be saved with a lot more nuance, and you know what they say about nuance? And a pretty direct leftwing story about austerity and poverty seems to work better than anything else. Until you actually look at poverty itself. The standard measure of poverty in Britain is the government’s Index of Multiple Deprivation, which sums up a gaggle of social evils as a handy score.

This is interesting because the IMD tells us what happened after the welfare state did its thing – it’s a measure of poverty and inequality after redistribution, while the ASHE is a measure of income as determined by the market, before taxes and transfer payments. And the IMD doesn’t seem to show any correlation at all.

brexitpoverty

Now this is interesting. A major economic and political orthodoxy throughout the world since the late 1980s has been that economic change, however jarring, is basically healthy because the winners can compensate the losers through the tax and transfer system. This doctrine was the source of legitimacy for the whole free-trade agenda – NAFTA in the States, Single Market completion and the Eurozone in Europe. And now it’s breaking down. Transfers don’t buy legitimacy, and maybe they never did.

For the UK, there’s an important and difficult problem here. The UK doesn’t do regional policy well, but redistribution of income between regions does happen to a very significant extent. Leaving aside the rows about the Barnett formula and Scottish oil, let’s just remember that 30% of all taxes paid in the UK are paid by Londoners, who make up 13% of the population. How much more are you going to ask them for?

Part of the problem is that redistribution must be done, but it must also be seen to be done, like justice. The UK, very unusually among federations, doesn’t really have an explicit political process to determine how government spending is divvied up. There’s no equivalent of a Länderfinanzausgleich. Therefore, it’s hardly surprising nobody thinks they have any control over it.

This also suggests another way economic unions fail. It’s a commonplace that the Eurozone is troubled because it lacks both a big discretionary budget and full labour mobility, unlike the United States or Germany. Therefore, bits of it can end up with an inappropriate real exchange rate and high unemployment for an indefinite period of time. But the UK doesn’t have any language barriers, and it does have a big federal budget. You could say the same for the US. However, bits of it still seem to end up stuck in a low-income equilibrium for decades.

Perhaps that internal migration hypothesis deserves another look? Perhaps, without explicit and forceful regional policy, some places just empty out? And does that remind anyone of Donald Trump?