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othing better reflects the muddled thinking of the mainstream European left than its stance on Brexit. Each week seems to produce a new chapter for the Brexit scare story: withdrawing from the EU will be an economic disaster for the UK; tens of thousands of jobs will be lost; human rights will be eviscerated; the principles of fair trials, free speech, and decent labor standards will all be compromised. In short, Brexit will transform Britain into a dystopia, a failed state — or worse, an international pariah — cut off from the civilized world. Against this backdrop it’s easy to see why Labour Party leader Jeremy Corbyn is often criticized for his unwillingness to adopt a pro-Remain agenda.
The Left’s anti-Brexit hysteria, however, is based on a mixture of bad economics, flawed understanding of the European Union, and lack of political imagination. Not only is there no reason to believe that Brexit would be an economic apocalypse; more importantly, abandoning the EU provides the British left — and the European left more generally — with a once-in-a-lifetime opportunity to show that a radical break with neoliberalism, and with the institutions that support it, is possible.
Predictions and models of British economic malaise post-Brexit (specifically, post-Brexit vote) have all been wrong. The British economy is actually doing decently on common indicators, well above the negative scenarios. This serves both to demonstrate that Brexit per se won't be a disaster, and that the economists making these predictions have a fundamentally wrong set of premises, which produce fatally flawed models inconsistent with empirical data.
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As Larry Elliott, Guardian economics editor, wrote: “Brexit Armageddon was a terrifying vision — but it simply hasn’t happened.”
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The neoliberal biases built into these models include the assertion that markets are self-regulating and capable of delivering optimal outcomes so long as they are unhindered by government intervention; that “free trade” is unambiguously positive; that governments are financially constrained; that supply-side factors are much more important than demand-side ones; and that individuals base their decision on “rational expectations” about economic variables, among others. Many of the key assumptions used to construct these exercises bear no relation to reality.
Even British manufacturing is doing well, due to "benefits of the lower pound and improved world trade conditions."
EU membership has had fewer economic benefits than purported. With EEC and EU accession, the growth in GDP per capita fell below the 2.75%/year trend of the 50s and 60s. EU membership did not improve EU-15 measures of GDP-per-labour-hour or per-capita income relative to the United States. The single market and the common currency did not increase the proportion intra-EU or intra-Eurozone exports (it decreased intra-Eurozone). UK exports to EU and Eurozone as share of total UK exports have been falling since the recession.
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The much-vaunted establishment of the Single Market in 1992 didn’t change things — neither for the UK nor for the EU as a whole. Even when we limit ourselves to evaluating the success of the Single Market on the basis of mainstream economic parameters — productivity and GDP per capita — there is very little to suggest that it has lived up to its proponents’ promises or to official forecasts.
[Of course, this napkin-back analysis does nothing to indicate that EU/EEC membership was worse than the alternative of non-membership... The point about trade doesn't even address the context of changing trade patterns outside Europe, as though the only way the EU could be successful is if members did all their trade between each other. Maybe EU membership enables diversification of exports outside Europe. And this author doesn't explore the possibility that international trade is not the only measure of human success. Anyway...]
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As the Cambridge researchers note, this suggests “a negligible advantage to the UK of being a member of the EU.” Moreover, it shows that Britain has been diversifying its exports for quite some time and is much less reliant on the EU today than it was twenty or thirty years ago. A further observation drawn from the IMF Directions of Trade database is that while global exports have grown fivefold since 1991 and advanced economies exports have grown by 3.91 times, EU and EMU exports have only grown by 3.7 and 3.4 times respectively.
These results are consistent with other studies that show that tariff liberalization in itself does not promote growth or even trade. In fact, the opposite is often true: as Cambridge economist Ha-Joon Chang has shown, all of today’s rich countries developed their economies through protectionist measures. This casts serious doubts over the widespread claim that leaving the Single Market would necessarily mean “lower productivity and lower living standards.” It also exposes as utterly “implausible,” in the words of the Cambridge researchers, the Treasury’s claim that Britain has experienced a 76 percent increase in trade due to EU membership, which could be reversed upon leaving the EU. The Cambridge economists conclude that average tariffs are already so low for non-EU nations seeking to trade within the EU that even in the case of a “hard Brexit” trade losses are likely to be limited and temporary.
[The supersized text is kind of true. Alexander Hamilton is probably one of the top-five most influential economists in history.]
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Furthermore, it is often forgotten in the debate over Brexit that the Single Market is about much more than just trade liberalization. A crucial tenet of the Single Market was the deregulation of financial markets and the abolition of capital controls, not only among EU members but also between EU members and other countries. As we argue in our recent book, Reclaiming the State, this reflected the new consensus that set in, even among the Left, throughout the 1970s and 1980. This consensus held that economic and financial internationalization — what today we call “globalization” — had rendered the state increasingly powerless vis-à-vis “the forces of the market.” In this reading, countries therefore had little choice but to abandon national economic strategies and all the traditional instruments of intervention in the economy, and hope, at best, for transnational or supranational forms of economic governance.
This resulted in a gradual depoliticization of economic policy, which has been an essential element of the neoliberal project, aimed at insulating macroeconomic policies from popular contestation and removing any obstacles put in the way of capital flows.
The EU-as-neoliberal-institution.
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In this sense, it is impossible to separate the Single Market from all the other negative aspects of the European Union. The EU is structurally neoliberal, undemocratic, and neocolonial in nature. It is politically dominated by its largest member and the policies it has driven have had disastrous social and economic effects.
The Left has a hard time abandoning its affection for the EU because it has internalized wrong ideas about trade and prosperity, the importance of public deficits and debts, the possibility of reform, @
Husar and that countries can't survive with pooling their sovereignty in supranational institutions.
Even a hard Brexit is likely to have minimal effects on British economy, and most of Britain's worsening problems are related not to Brexit but
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to the extent that the UK continues to face serious economic problems — suppressed domestic demand, ballooning private debt, decaying infrastructure, and deindustrialization — these have nothing to do with Brexit, but are instead the result of the neoliberal economic policies pursued by successive British governments in recent decades, including the current Conservative government.
The UK needs more democracy.
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While it may be true that in some areas previous right-wing British governments have been positively constrained by the EU in their push for all-out deregulation and marketization, the notion that the British people are incapable of defending their rights in the absence of some form of “external constraint” is patronizing and reactionary.
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As John Weeks, professor emeritus at the University of London, writes: “The painful truth is that the vast majority of British households will be better off out of the European Union with a Labour government led by Jeremy Corbyn than in the European Union under the yoke of a Conservative government led by anyone.”
The author writes concordantly with the Mason article's argument:
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This leads to an obvious conclusion: that for a Corbyn-led Labour government, not being a member of the European Union “solves more problems than it creates,” as Weeks notes. He is referring to the fact that many aspects of Corbyn’s manifesto — such as the renationalization of mail, rail, and energy firms and developmental support to specific companies — or other policies that a future Labour government may decide to implement, such as the adoption of capital controls, would be hard to implement under EU law and would almost certainly be challenged by the European Commission and European Court of Justice. After all, the EU was created with the precise intention of permanently outlawing such “radical” policies.
That is why Corbyn must resist the pressure from all quarters — first and foremost within his own party — to back a “soft Brexit.” He must instead find a way of weaving a radically progressive and emancipatory Brexit narrative. A once-in-a-lifetime window of opportunity has opened for the British left — and the European left more in general — to show that a radical break with neoliberalism, and with the institutions that support it, is possible. But it won’t stay open forever.