Brexit means Brexit?

Post-referendum thoughts, and indeed Say no to Brexit refer. But so do Timmy’s NO, DON’T LET MPS HAVE A VOTE ON BREXIT (Timmy is very shouty, as you’d expect) and The Brexit Conundrum – Freedom Of Movement Means Only Hard, Or Clean, Brexit Is Possible (so perhaps it is the ASI that is shouty. Well, you know what they’re like).

Before we get into all the messy and unpleasant politics, here’s a picture.

DSC_6045

Chamois against the Pelvoux, seen from where the glacier Jean Gauthier used to be. You should see my close-up of a marmotte. Anyway, onwards.

[Far too late update: I’ve now added the question mark to the post title that should have been there all along. Just to make clear that I don’t agree with our idiot pols, in case that was in doubt.]

The issue: we know that “Brexit means Brexit” – which is to say, the vote to leave was a vote to leave, so we have to leave something, but what that actually means is up for grabs. And naturally, therefore, any number of pols and the intelligensia are grabbing it as hard as they can. If you’re an MP, but not in the cabinet, then your natural method of grabbing is to assert that MPs must have a vote on whatever. If you’re in the cabinet, or still better the PM1, your method of grabbing is to say that MPs won’t get a say. Anyone telling you this is a matter of principle is lying.

regret Another part of the grabbing is “regret”. If enough people come to believe that enough “leavers” regret what they did, then maybe we can ignore them. The trouble is that the number is rather small – 6% according to the Economist. yes I know that technically if those 6% switched sides the result would be the other way but they didn’t so that doesn’t matter; what matters is that most haven’t changed their minds. Actually I’m surprised by how few have changed.

We need to “negotiate” the terms and conditions of our exit. Our continental partners have declined to negotiate before article 50 is invoked. I’m not entirely sure why; probably a stroke of idiot cunning. But what it means is that all the initial conversation is occurring here, uninfluenced by them very much, except for some megaphone diplomacy. The main element of which appears to be “you accept free movement or you get nothing”.

And this is where the up-for-grabs bit comes in. We can’t ask 52% of the population what they actually meant by “Brexit”. Therefore whoever is in charge gets to interpret it as they see fit. And not entirely implausibly, however much I might disagree with it myself, what they’re saying is “not free movement”. Which means, unless them on the continent change their minds at some point – tricky, because they aren’t talking to us, by their choice – we’ll end up with “oh all right then, no deal at all”. That – interpreted as unilateral free trade – is exactly what Timmy wants, and what I think I’d choose, if Brexit really means Brexit means no-free-movement. I have a terrible feeling, though, that as a solution it is far too simple for our idiot pols; it doesn’t leave enough pies for their sticky fingers; it requires too much bravery. So we’re more likely to end up with a worse-of-both-words scenario. I sound more like my father-in-law every day.

The nominal opposition, the Labour party, have 170 questions for the govt about all this. But I ask you: 170 questions? That’s not sensible. It makes me think of either the “why why why” of a whiney child, the endless “I don’t believe you” of a GW denier, or what I imagine the agenda of the Marxist-Leninist committee meeting might be like. I didn’t read them. But if I read the start I find “This is the list of 170 questions – one for each day before Theresa May’s self-imposed deadline to start the process for leaving the EU” which makes it perfectly clear that the 170 reflects politics not anything real.

And as a reward for reading all that, here’s another one. This is the remains of the Glacier du Monetier.

DSC_6009

Notes

1. In my current opinion, Theresa May is shaping up to be a bad PM: anti free trade and over regulatory, Little Englandish. Better than Trump, obviously, because she isn’t actually a baboon. Better than Hillary, probably (could I defend that?). But bad.

Refs

* MPs to debate massive disaster then do it anyway
* Foreign policy ‘entirely based on 70s war comics’
* The Shortage Of Tech Jobs Is A Joy Of The Tech Revolution, Not A Problem With It
* A little light relief from Twitter, via Paul.
* UK Government Wins Brexit Court Challenge – Pound Falls And FTSE 100 Rises
* Charlemagne: If the EU cannot do trade, what can it do? The CETA debacle heralds the age of “vetocracy”
* Oct 2016: People still want to ignore the referendum and let MPs reject it. At the moment, I don’t think it will fly. There needs to be much better evidence that people have changed their minds.
* Brexit to require parliamentary approval in setback for Theresa May says the Graun.
* Tariffs Did NOT Fuel American Economic Growth – Cafe Hayek.

Comments

  1. #1 crandles
    United Kingdom
    2016/10/12

    In addition to the people who regret their decision….

    Whose opinions should matter?

    Eligible voters at time of original referendum or at time of leaving or perhaps when terms of deal are agreed so people know what brexit means? I would suggest later dates are more preferable. If not the referendum date, and the relevant time is a couple of years or more after referendum then there are lots of new young voters and quite a lot that have died or no longer willing and able to vote. Not really sure how much effect that has: Certainly young strongly wanted to remain while elderly were strongly for leave, but do people getting a couple of years older tend to change their mind towards leave? Those regret numbers don’t seem to suggest that is happening but then people haven’t aged much since referendum yet.

    [Update: there’s been some talk that many who voted Leave will be dead by the time it happens and that’s Unfair; but its also Just Tough, I think -W]

    While I am unclear on size of effect, if there were another referendum it seem likely the swing towards remain would be larger than the (6% of 52% minus 1% of 48%) regret figures due to new voters and voters dropping out.

    The more it is believed that a new vote would get a different result, the better the argument for a new vote.

    [Well, that was my original post-vote hope. That no-one would commit themselves to anything too specific, and gradually sentiment would clarify enough that a new vote or overturn would be possible. But sadly our dear PM went for the hard line -W]

    This doesn’t seem likely at present but trying to present it as an inappropriate power grab by the PM/cabinet seems quite a tough case to argue.

    [Oh, I’m not trying to suggest the PM has done anything inappropriate; I’m suggesting the “MPs must have a vote” people are -W]

  2. #2 Vinny Burgoo
    2016/10/12

    Excellent chamois pic! Very hard to get. (Close-ups of marmots? Not so hard.)

    [They conveniently posed on the ridge line. I had to move a little to get them just in front of the glacier -W]

  3. #3 Russell
    2016/10/13

    Could you persuade Cambridge & vicinity to take Trump off our hands and send him off to the Europarliament?

  4. #4 David B. Benson
    United States
    2016/10/13

    From this side of the pond, plus almost the entire continent, I was under the impression that the British expected the Parliament to vote on such weighty matters. I now suppose my year of European history, emphasizing Britain, was wrong? Or it doesn’t apply to the 21st century?

    [Parliament will probably get a vote on “here’s the deal we’ve done: take it or leave it?” But not on “how should we negotiate?” -W]

  5. #5 andrew adams
    2016/10/13

    There was a narrow victory for a particular proposition which could actually mean a number of different outcomes. 48% of people voted for the status quo, people who voted to leave did so for differing reason, even if there were particular recurring themes, one of which was upholding parliamentary sovereignty.
    Therefore I don’t think we can say there is one particular outcome which would be a true reflection of the will of the British people. There also a limit in any case to the extent to which the wishes of one section of the population can be allowed to trample over the wellbeing of another. You can argue that there is no mandate for staying in the single market, I would equally argue there is even less of a mandate for a “hard Brexit” where we walk away completely and rely on WTO rules.
    So there are still very big decisions to be made which will have big consequences for all of us, there are very large practicalities which have to be addressed. If those responsible get it wrong there could be a severe negative impact on this country.

    [All of that I agree with. That we have a “Brexit” vote, but we don’t know exactly what those who so voted meant is precisely my point -W]

    Given what’s at stake it seems absurd to suggest that it should simply be left to a small group of ministers to decide what is best for all of us and present us with a fait accompli. It should absolutely be up to parliament to have a say in the outcome,

    [That I think is where your logical syllogism fails. Someone has to interpret the “will of the British people”. Who should that be? There are various possibilities, and asserting that only one of them is correct is implausible. By observation, I deduce that people are making that assertion based not on principle but on what outcome they want -W]

    and also ensure that the government has properly evaluated all of the options and the questions which needs to be addressed. The fact that our prime minister has seemingly been captured by the extreme right of her party and she has appointed a bunch of clueless charlatans to handle the process makes this even more crucial, but the point would stand in any case.
    The 170 questions Labour has raised are actually on the whole serious and substantial ones. For once they have actually raised their game and are acting like a proper opposition, for which I’m grateful.

    [They had a chance to be serious; but they just sound whiney. The bare minimum of doing it seriously, rather than just making a point, was not to play games with numerology. They failed -W]

  6. #6 Nick Barnes
    2016/10/13

    Hilarious seeing Worstall stand up for utility maximisation when, essentially all of the rest of the time, he and his ilk argue for wealth maximisation at the expense of any non-monetary utility.

    [I’m dubious you’re correct. Can you point to evidence? It needs to be from Timmy himself since “ilk” is too vague -W]

  7. #7 Jazzlet
    2016/10/13

    All the percentages being discussed are of the people who voted, as well as young people becoming qualified to vote there are all the people who didn’t vote in the referendum and who now may feel strongly enough to vote. I’ve not seen any work on whether they are more likely to be in or out.

  8. #8 Steve Milesworthy
    2016/10/13

    “That I think is where your logical syllogism fails. Someone has to interpret the “will of the British people”. Who should that be?”

    The Government’s legitimacy to make the decision has to be questioned because of the lack of clarity and the lack of transparency.

    The PM was allegedly a Remain supporter who allowed immigration to rise when in the Home Office, stood by during the referendum, and kept quiet during the leadership battle. So she has no policy or mandate. The Tory manifesto assumed continuing membership of the EU, and is now having to ignore several of its key promises.

    May has now put in place three “Brexiteers” with three different views who are publicly slugging it out among each other while she pretends that she won’t give a “running commentary”.

    Effectively there is a power and knowledge vacuum till May decides which of the three Brexiters she can safely sack or sideline. By the time this happens Parliament will have little information or time to build a case to support or reject the Government’s position before Article 50 is invoked.

  9. #9 andrew adams
    2016/10/13

    There have even been some leave supporting MPs who have argued for parliament having a say as well, but anyway it’s hardly unusual for people to make arguments on points of principle which support their preferred outcome, that doesn’t in itself make the arguments wrong.
    The same could be said of the Brexit supporters who are arguing against any parliamentary scrutiny, the problem is their argument is that the people have spoken and the government has to implement the will of the people, but we’ve agreed that actually the will of the people isn’t clear so their argument falls on that basis.
    We do actually have an established system for implementing the will of the people. The government puts forward legislation, parliament votes on it. What some of us are arguing for is to uphold that principle. So both the government and parliament have a role, it’s not one or the other. And it’s not just about determining a particular outcome, it’s about ensuring that decisions are made which properly take into account the interests of the whole country and are arrived at through proper consideration of the consequences and the practicalities involved.
    If it was just a case of promoting my own interests I’d be arguing for parliament to throw the whole thing out and end this charade, but I’m not saying they should do that (not here anyway).
    We’ll have to disagree about Labour’s response, yes the way it was framed was a bit gimmicky but their question are still serious ones, it’s not just whining. But that’s an argument more about tactics than principle.

  10. #10 Turboblocke
    2016/10/13

    There are four components to UK immigration. UK citizens and those with the right to abode in the UK living abroad who return to the UK. This is strictly a UK issue and nothing to do with the EU. Non- EU immigration which is also a strictly UK issue and nothing to do with the EU. Refugees which is a 1951 UN Treaty on the status of refugees issue and nothing to do with the EU. EU immigrants which is one of the four pillars of the EU, so an EU issue. The media confused the issue by lumping then all together.

    Now the result of the vote has been a 20% drop in the game of the pound. This will help to make the UK less attractive for immigrants, so may solve the EU free movement issue. However, there are a few hundred thousand expat OAPs who have lost 20% of their purchasing power thanks to their pensions being paid in pounds. If they decide to return to the UK, then the NHS is likely to need some of the money promised to it. Oh hang on a sec…

  11. #11 Turboblocke
    2016/10/13

    “value” not “game” Weird auto correct!

  12. #12 Expat
    France
    2016/10/13

    To follow up Turboblocke’s comments, it is unclear just how many ex-pats like me there are. Figures of a couple of million in Europe are sometimes mentioned. Those of us who have lived abroad for more than fifteen years are ineligible to vote in the UK and, in a travesty of democracy, could not vote in the Brexit referendum. Perhaps those arguing for a hard Brexit should also offer to guarantee the pre-referendum exchange rate for our pensions (along the lines of ‘put your money where your mouth is’)? Alternatively, the haters now thriving in the UK should prepare for the return of hordes of angry, aged and unproductive Britons claiming priority for housing and health care – and compensation.

  13. #13 tadaaa
    cambridge
    2016/10/13

    @ Turboblocke

    “EU immigrants which is one of the four pillars of the EU”

    and not withstanding that EU immigration was based on the principle of the free movement of labour – not some automatic right to live anywhere in the EU

    http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:l33152

    “EU citizens with a valid identity card or passport may:
    Live in another EU country for up to 3 months without any conditions or formalities.
    Live in another EU country for longer than 3 months subject to certain conditions, depending on their status in the host country. Those who are employed or self-employed do not need to meet any other conditions. Students and other people not working for payment, such as those in retirement, must have sufficient resources for themselves and their family, so as not to be a burden on the host country’s social assistance system, and comprehensive sickness insurance cover”

  14. #14 James Annan
    http://blueskiesresearch.org.uk
    2016/10/13

    Constitutionally it seems pretty clear that parliament is sovereign over these sort of things. Just because people are arguing, doesn’t mean that both sides are equally valid – as anyone with a passing understanding of climate science should know!

    “so we have to leave something” is also false as a matter of law and constitution, especially as the tories were elected to govt on an explicit manifesto promise to stay in the single market.

    [You are correct, in a theoretical constitutional sense, but not I think in a political one. And, as I was trying to say in the post and replies, it rather depends on what the govt wants to do and say. And of course simply giving parliament a vote on the deal at the end would satisfy the “constitutional” side of things -W]

  15. #15 James Annan
    http://blueskiesresearch.org.uk
    2016/10/13

    Or more explicitly:

    “Under the UK’s constitutional arrangements Parliament must be responsible for deciding whether or not to take action in response to a referendum result.”

    http://www.publications.parliament.uk/pa/ld201011/ldselect/ldconst/34/3404.htm

  16. #16 Nick Barnes
    2016/10/13

    Sorry, one dose of Worstall is enough for a month or two: not digging through more to support my assertion. Maybe another time when you post a link to him I’ll remember this and see if he’s gone back to assuming that wealth maximisation is the only thing that matters.

    [Well, as I said, I think you’re wrong. But I can wait for next time -W]

  17. #17 Kevin O'Neill
    2016/10/14

    Nick – you are not incorrect. In Worstall World utility maximisation almost always equals wealth maximisation. I think that’s been made abundantly clear.

    I’ve always liked this golden oldie: Wind Power’s Just Too Expensive To Actually Use

    At which point [$80/tonne SCC] basic economics tells us what we want to do. Our aim is to maximise the utility of all humans over time. That really is what we’re trying to do: get everyone that optimal mix of whatever it is that makes them as happy as they can be within the constraints we face of resources and technology.

    So, given that utility maximisation we would like people not to do the emitting of a tonne of CO2 if they get less that $80 of utility from it but to go on and emit it if they get more than $80 of utility from it. This is how we maximise utility over time: sure, using a petrol driven ambulance to get the pre-eclampsic mother to hospital causes $80 of damage in the future but a live, not dead, mother and baby right now. My driving to buy the bread for lunch probably has less value and so perhaps I should walk rather than driving with the associated emissions.”

    Wind power kills babies!

    Of course we could re-estimate the SCC at $300/tonne and see if Worstall sticks by his ‘principles’ :)

    [Your evidence is that Timmy proposes a course that, in his opinion, would kill fewer babies? That’s pathetic. You need to provide actual evidence in favour of the propsition, not just “words from someone else that I don’t like”. Try to think -W]

  18. #18 Eli Rabett
    http:/rabett.blogspot.com
    2016/10/14

    So do the Tories split with the Remainers going off to join the Liberal Dems?

  19. #19 ...and Then There's Physics
    2016/10/14

    As much as I might hate to admit it (because I think we will end up regreting what we are about to probably do) I think Tim Worstall is broadly correct. As I understand it, remaining in the single market would require free movement of labour and paying almost as much as we were paying as a member of the EU (largely, I think, because we had a favourable deal as one of the founding/early members). This doesn’t really make any sense. If we really want to change our relationship with the EU then this is not a viable option. We have to accept that to achieve what motivated the referendum, we will just have to accept that can no longer be part of the single market. If we decide that the single market is crucial, then we should simply remain part of the EU, which seems unlikely to be acceptable.

    There are two aspects of this that are frustrating, to me at least. One is that this seemed pretty obvious before the referendum, despite suggestions that we could stay in the single market and get away with paying less and controlling movement of people. The other is that we are probably about to do something that will make us worse off than if we’d chosen to remain in the EU (I hope this is wrong).

    [I rather agree with that. The “worst of all worlds” option, which I fear has a tolerable probability of occurring, is that we leave the EU (because the referendum says we must) but we end up (due to stupidity, fear or muddle) “negotiating” a deal with all the conditions of being in (but which we somehow slip past the voters due to some cosmetic concessions); which would be a total waste of time and very disruptive and likely cost more anyway -W]

  20. #20 verytallguy
    2016/10/14

    [The “worst of all worlds” option, which I fear has a tolerable probability of occurring, is that we leave the EU (because the referendum says we must) but we end up (due to stupidity, fear or muddle) “negotiating” a deal with all the conditions of being in (but which we somehow slip past the voters due to some cosmetic concessions); which would be a total waste of time and very disruptive and likely cost more anyway ]

    Why would this be bad? Surely this is the best possible outcome. A messy fudge whereby we save sufficient face to avoid embarrassment but maintain the things that actually matter. Very much in the tradition of the British constitution, and EU negotiations.

  21. #21 CIP
    United States
    2016/10/14

    About the Marmots – Probably you should have grabbed a few to take back home. I understand they are prime ingredient of that treasured, and now endangered, Brit delicacy, Marmite.

  22. #22 Turboblocke
    2016/10/15

    The EU primarily gets funded by import duties, a 0.7% of a country’s gross national income and 0.3% of VAT receipts. So it looks like just the vote on Brexit is going to help reduce the UK’s payments to the EU as the economy shrinks.

  23. #23 Russell Seitz
    2016/10/17

    21

    A recent outbreak of The Black Death in Central Asia was traced to undercooked marmot in a Mongolian not-so hot-pot.

  24. #24 Russell the Stout
    At the Mouth of the Wood Chipper Shouting NO
    2016/10/18

    “About the Marmots” would make a good movie title.

    But anyway, what is the effect of Brexit on greenhouse gas emissions?

  25. #25 David B. Benson
    United States
    2016/10/19

    Meanwhile, a court case about the use of the royal perogative progresses.

    [Yeah, maybe. http://www.bbc.com/news/uk-politics-37691270. I wouldn’t take it too seriously though -W]

  26. #26 Russell the Stout
    USA
    2016/10/20

    I should have said “what is the effect of Brexit on greenhouse gas emissions agreements, treaties etc.” If any.

  27. #27 Steve Bloom
    SF Bay Area
    2016/10/22

    Interesting to see Mencken applying so well to the UK:

    “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

    May seems to have too far down the road on freedom of movement to negotiate anything non-hard. But the consequences of following that path will loom sufficiently large by the time the vote occurs that pro-Remain Tory MPs will use them to justify voting against the deal, more out of a desire for political survival than principle.

    So what happens then? My suspicion is that the passage of time will have allowed the EU room enough to allow the UK to stay, probably along with some suitable slap on the wrist.

    Will the Tories be wrecked either way?

    [FWIW I see it as mainly the EU putting up obstacles to useful negotiation. Much as I regret it, I think that “no free movement” is indeed what my idiot compatriots voted for, though I admit you can’t ask them all to find out. So I think the EU ought to be trying to throw some bones to the Tories in that direction. Instead of which they’re concentrating on being Tough, which is only going to lead to TM being Tough, and it all going downhill from there. If no-one manages to negotiate anything intelligible by next march, and we do invoke article 50, then there’s a 2-year hard deadline which ought to concentrate minds a little -W]

  28. #28 Kevin O'Neill
    2016/10/23

    WC writes “[[Your evidence is that Timmy proposes a course that, in his opinion, would kill fewer babies? That’s pathetic….]”

    You have a short memory. We’ve been over this ground before – specifically his idiotic ‘wind power kills babies’ meme. Clues: Piketty. Inequality.

    TW’s “Our aim is to maximise the utility of all humans over time. “ is a classic bait-and-switch. The woman with the dead baby is not going to see her utility maximized by giving Rupert Murdoch another billion or two. TW’s policies are *wealth* maximisation policies disregarding the distortions in distribution of that wealth.

    You really ought to get out more — i.e., read thoughts from somebody other than Worstall.

    Barry Ritholtz – Doomsayers Keep Getting It Wrong on Higher Minimum Wages
    Simon Wren-Lewis — Neoliberalism and Austerity
    Nick Bunker – Yellen poses important post-Great Recession macroeconomic questions

    What’s truly ‘pathetic’ is that you give any credence to anything Worstall writes. He’s a representative of the economic equivalent of the GWPF.

    [Timmy makes a great deal of sense; I will continue to read and quote him. I think you’re blinded by your hatred. I read your min wage article. No, it isn’t convincing. The correct minimum wage is zero -W]

  29. #29 Kevin O'Neill
    2016/10/23

    WC – Daily Treasuries Real Yield Curve Rates (10-21-2016)

    5 Year -0.31
    7 Year -0.13
    10 Year 0.07
    20 Year 0.46
    30 Year 0.66

    Now, plug those into your IAM and tell me the appropriate SCC. This is why I laugh when TW says it’s all in Stern. He’s no different than a pseudoskeptic pointing to Hansen 1988. Fine, take Stern and use actual, real-world empirical data that wasn’t available to Stern at the time.

    For people who profess to believe in the power of markets to ignore what the markets are saying is rather comical. Based on the yield curve we have an equivalent discount rate over the next 30 years of 0.2%. Of course we can always bluster our way out of it – it being using actual market data – which is why I initially said those many months ago that the whole enterprise is a ‘feelgood’ solution, but proponents of said taxes immediately change their minds if real-world discount rates are used.

    [OK, I’m baffled. If the yield on 40 year treasuries if 0.66%, why do you think the correct discount rate is 0.2%? -W]

  30. #30 Kevin O'Neill
    2016/10/24

    WC – I don’t know if I’d say the ‘correct’ rate is 0.2% We have multiple estimates of the rate at different time intervals. 0.2% is simply the average of these using interpolated values for every year. While this is a rather naive way of calculating the discount rate, it is in one respect rather conservative since the pure rate of time preference is baked into the treasuries – an amount we would actually rather remove. This is offset by not taking population increases into account – so it’s probably a wash in the end.

    It would be ‘cherry picking’ to choose any single interval, but even taking the largest/longest value at 0.66% should give pause. As Frances Woolley has written at (Worthwhile Canadian Initiative:

    The most fundamental public policy choices we face involve trade-offs between current and future consumption: the desirability of tax cuts and deficit finance; the value of reducing greenhouse gas emissions; the advisability of investing in infrastructure. If you want to know an economist’s views on things that matter, forget about minimum wages or free trade. The most important question of all is “what is the social discount rate”? The moral argument for discounting the well-being of future generations has always been dubious. The opportunity cost argument might have seemed convincing during the heady days of the tech boom. But now that negative interest rates are a serious possibility, even the opportunity cost of capital argument for discounting seems questionable.”

    Discounting our way out of the problem is *not* the answer.

  31. #31 Andy Skuce
    BC Canada
    2016/10/25

    “Unilateral free trade” actually means “unilateral tariff-free imports” . This would quite obviously be a boon to British consumers who could be able to buy cheap cheese, wine and BMWs. Johnny foreigner, meanwhile, would be able to apply any tariff or non-tariff barrier to any British export on a whim. I doubt that British exporters would view, with equanimity, the prospect of capricious import duties or regulations being placed on their products. Perhaps Worstall has a more sophisticated idea in mind, but I haven’t read it..

    [Yes, it is true, we can’t prevent J. Foreigner cutting off his nose to spite his face. But there’s no point in us doing the same when we don’t have to -W]

    On a personal level, what ticks me off as an expat British passport holder is that my rights to live in Europe have now about to be removed thanks to a narrow vote in a referendum. I’m OK, as a non-resident, with not having been able to vote on it. It’s the principle that specific rights of individuals can be rescinded by a close vote on a general question. Sensible countries have constitutional protections on individual rights that require more than a show of hands to alter them.

    [Your “right” to live in Europe is granted by the Europeans. It is they that will be withdrawing it -W]

  32. #32 Kevin O'Neill
    2016/10/25

    FYI – An odd exchange on Brexit, by R. Tol.

    [That is indeed quite odd. I think it tells you lots of things, some of them quite cheerful. Firstly, with at least some MPs and at least some questions, you can get detailed non-trivial answers to questions, even if you ask the questions in a hard way. Secondly and possibly most surprisingly, there is a lot of politics in politics and like any specialised thing, the most obvious interpretation of a given event may not be the correct one. And, of course, thirdly that no matter how politely you talk to RT, if he doesn’t want to hear what you say he won’t be nice back -W]

  33. #33 Phil Hays
    Over the pond and far away.
    2016/10/25

    “Your “right” to live in Europe is granted by the Europeans. It is they that will be withdrawing it -W”

    A mutual agreement is what gave UK citizens the right to live in Europe. Withdrawing from that agreement is Brexit. Unless you expect the EU to honor the agreement after the UK voids their end, which doesn’t seem reasonable at least to me. Mutual agreements are mutual, Brexit is Brexit.

    [Well yes I agree. And I was being somewhat tongue-in-cheek. But nonetheless it is true: it is the EU countries that are choosing to withdraw your right to go there. They don’t have to do that it they don’t want to. Nothing forces them to make that choice -W]

  34. #34 Phil Hays
    Over the pond and far away.
    2016/10/25

    “Nothing forces them to make that choice -W”

    Yes, if one party withdraws from a mutual agreement the other party might continue to honor the agreement, at least to some extent. Generous Tit for Tat, Tit for Two Tats and Tit for Tat With Forgiveness all might be slightly better strategies than pure Tit for Tat. But only slightly.

    [You – and they – make it sound like a zero sum game. But it isn’t. If we agree that free movement of people is good, then perhaps we could also agree that free movement only one way is also good. Not as good as free movement both ways, but good nonetheless, and better than free movement in neither direction. So why not continue it? Why remove it just because the other side has? -W]

  35. #35 J Bowers
    2016/10/26

    Of course MPs must have a vote. Parliament is sovereign and Parliament took us into the EU in the Act of 1972. The 1975 referendum on whether to stay or not was only advisory, just as this recent referendum was *in law*. If Royal Prerogative can take us out then why wasn’t it used in 1972 to take us in? Theresa May trying to sidestep Parliament through Royal Prerogative is tantamount to an executive coup against our democracy and constitution, which even Tory MPs (including pro-Brexit ones) are voicing concerns about. Timmy’s capitalised call to not let MPs have a say is just his mask slipping a bit.

  36. #36 Phil Hays
    Over the pond and far away.
    2016/10/26

    A zero sum game is like chess, one player wins and one player loses, or they tie. Both players can’t win. Tit for Tat strategy usually doesn’t apply. Games usually need to _not_ be zero sum to make Tit for Tat and variations the best strategy.

    Prisoner’s Dilemma as usually stated isn’t a zero sum game, both players can win by if both players cooperate. Both players can lose if both defect. And similar games can be all positive sums:

    https://en.wikipedia.org/wiki/Prisoner%27s_dilemma#Special_case:_Donation_game

    [But why is that relevant? This isn’t a game, zero-sum or otherwise. Both sides can gain, by their own actions, if they so choose. Co-operation isn’t even necessary. If you think free movement is good, then you should think the EU continuing allowing 1-way free movement would be good, for them. If you think (correctly, IMHO) that they won’t do that then the question becomes: why not? Just unthinking politics? That’s what I’d guess -W]

  37. #37 Phil Hays
    Over the pond and far away.
    2016/10/26

    Game theory isn’t just for “games”.

    [I think you’re unsubtely evading my point -W]

  38. #38 Phil Hays
    Over the pond and far away.
    2016/10/27

    I thought I was answering this point:
    “Nothing forces them to make that choice.”
    I hold that: Game theory strongly suggests that they make that choice or similar.

    “Zero sum” isn’t involved as this isn’t a zero sum game. Might even be a all positive sum situation (“1-way free movement would be good”), and same conclusion would apply. See donation game, referenced above.

    And yes, “game theory” is somewhat misnamed as applies to a lot of politics, business and assorted human interactions.

    Or maybe I should word it this way: divorces can get messy. Sometimes very messy. Expecting the other party to give you something you are not willing to give to them leads to escalation.

    One interesting alternative is the asymmetric response. Tit for Tat: Tat, UK removes freedom of movement for EU citizens. Tit, EU allows freedom of movement for (at least) bankers and related occupations from the UK, but prohibits various business such as banking across the border. That way the UK based banks can and will move to the EU much easier and quicker. The more banks that leave, the more incentive is for others to leave.

    Imagine Central London as a slum in a decade’s time. Brexit is Brexit.

    Cooperation is required. Mutual agreements are the foundation of civilization. Touch existing mutual agreements, or enter into new ones with great care. Brexit is Brexit, little to no care seems to be involved at this time, at least from the view seen over the pond.

    If you want to know more about the sources of cooperation, I’d suggest reading this book:

    https://en.wikipedia.org/wiki/The_Territorial_Imperative

    Did you have another point you wanted me respond to? Is there something I’ve missed?

    [Yes, you’ve missed my entire point. I’ll try once again and then give up. The point is… actually, lets do this point-by-point and see where you start to disagree:

    1 allowing immigration is good,
    2 and this is true regardless of whether the “other side” allows reciprocal immigration
    (3 and this is exactly the same as the case of free trade. It is good, even if the other side doesn’t do it)
    4 so if the UK withdraws from the EU, the EU should continue to allow free immigration from the UK

    OK, at which point do you stop agreeing? -W]

  39. #39 crandles
    2016/10/27

    >”[If you think (correctly, IMHO) that they won’t do that then the question becomes: why not? Just unthinking politics? That’s what I’d guess -W]”

    An alternative to unthinking might be a view that they are afraid of EU falling apart so they (remaining EU countries) have to set a lesson that anyone who leaves will be punished. That might be a bad way to run an organisation, but they might feel it is politically necessary. Or maybe this is what you mean by ‘unthinking politics’?

    Maybe if punishment for leaving is harsh enough, UK gov’t could say we didn’t expect this from negotiations and will therefore offer another referendum on the terms now being offered? I doubt they could secretly arrange this without a leak occurring.

    [I think they are, indeed, thinking of “punishment for leaving”. But, you can see the problem with that, I hope? Apart from anything else, it just makes the EU seem like a nasty place to be, and even pro-EU types start to get embarrassed. Meanwhile, those pushing for a hard Brexit get extra ammo. So, as a strategy, i think it is self defeating. Wouldn’t you prefer an EU that people actually wanted to be in for positive reasons, rather than because the boyz will be round with baseball bats if they start looking wobbly? -W]

    Also just because free movement is good doesn’t IMHO necessarily mean 1 way free movement is good. Perhaps there are economic benefits of movement but if it is too one directional then it causes stress on services which if severe enough might outweigh the economic benefits. Having 1 way free movement sounds like a fairly sure way to get too much one directional migration.

    [I’m not sure I believe that. But I grant you its a possible argument. Obviously the anti-Syrian folks will be heartened by you saying it, because people xfer between the EU and Syria is essentially one-way -W]

  40. #40 crandles
    2016/10/27

    >”[I’m not sure I believe that. -W]”

    Then I would like to see your cost benefit appraisal for 1 million migrants arriving to within 20 miles of where you live within the next month. OK that is probably excessive in order to make the point that some might be good but a lot too many is likely bad.

    Germany taking millions of migrants and UK taking 20,000 over 5 years seems to me to be placing a lot of stress on services on Germany and UK not pulling its weight.

    I think we should take more but if there are issues and cost arising we should be able to say so rather than not being allowed to say so because it might be ‘politically incorrect’. Will the anti-Syrian folks will be heartened by me saying this?

    [You can take almost any reasonable scenario to extremes and make it unreasonable; I’m not convinced its helpful. The original context was free movement within Europe; I don’t see why the (existing, apparently unproblematic) export of people from the UK to Europe should suddenly become problematic just because the UK refuses to accept europeans. But I’ve said this before upthread, and not a single person reading this understood me, so I really don’t see why repeating myself is useful; so I’ll stop doing so -W]

  41. #41 Phil Hays
    Over the pond and far away.
    2016/10/27

    “OK, at which point do you stop agreeing? -W”

    “1 allowing immigration is good,”

    If it makes you feel any better I also disagree with:

    “allowing immigration is bad”

    The issue is far more complex than a simple binary answer. Immigration can be mostly good for some people, mostly bad for others, and a mix of good and bad for still others.

    [I don’t think its “far more complex” is a good excuse. You would not say that you refuse to call limiting or reducing GHG emmissons “good” because its far too complex for a binary choice -W]

  42. #42 J Bowers
    2016/10/27

    crandles – “Then I would like to see your cost benefit appraisal for 1 million migrants arriving to within 20 miles of where you live within the next month.”

    Are the pensioners and ex-pats coming back to Blighty already? But I thought there was more than twice that number in the EU anyway?

  43. #43 JD Ohio
    Ohio USA
    2016/10/27

    What I would propose for the USA is a flyover Exit. The liberal Northeastern Coast and the West Coast (with the exception of the most northern part of Calif) could form one country, Liberal USA, and the rest (flyover country) would be Conservative USA. Personally, H Clinton is so unbelievably and completely dishonest on every little point that I can’t listen to her for even a minute or two. (What is the point. Being truthful is not even a consideration for her, so whatever she says has very little bearing on what she will do or what she actually thinks)

    The Left is continually peeing on the right (The deplorable categorization. Inventing new, bogus phobias, like Islamophobia), so it would be wonderful to have to not even acknowledge the Left except as a separate country. In the event of the Flyover exit, I would expect the Left to fund a great deal of their simpleton government assistance schemes and go broke quickly. Meanwhile conservative USA would go about its boring existence and be a country that would actually work.

    I realize there are many faults on the right, but at least with the right there is tolerance of difference of opinion and not an attempt to demonize different points of view. (Compare the Left’s nearly universal embrace of Clinton who is 100% corrupt with the many voices in the Republican party who oppose Trump.)

    To save time, I will state that I think there is a 100% chance that a Clinton presidency will be a disaster and a 90% chance that a Trump presidency will be a disaster. (There is a small chance that Trump will grow in office. Clinton will be what she has always been, 100% corrupt.)

    JD

  44. #44 Kevin O'Neill
    Crystal palaces for floral kings
    2016/10/27

    WC – as has been demonstrated many times, in many places, throughout history free-trade can have a heavy cost.

    [{cn}} -W]

    The impact of free-trade depends largely on a country’s stage of development in the affected markets. The idea that free trade is double-plus good may be a libertarian mantra, but it is not borne out by experience.

    Open borders and free-movement (in theory) should help to offset the negative impacts of free trade.

    [{{cn}} -W]

    It also helps to disperse displaced persons – as they can move to more attractive working/social conditions. Just as important, since capital knows few borders, lack of free movement seriously disadvantages labor.

    Selfishly, many would choose to gain the rights and privileges of being a member without the responsibilities. And, given human nature, if Jill is granted all the rights and privileges without any of the responsibilities, then Jack is going to be upset and want equal treatment. And with good reason.

    That the UK wants to abandon its responsibilities while maintaining its economic perogatives cannot be covered up by simply blaming it on the EU. Special snowflake pleading really holds little weight.

    Up a level on the meta, nation-states and borders are all so 2nd millennium. A rational person cannot defend these arbitrary lines on maps. Or as I wrote many years ago:

    We excel in creating arbitrary lines on maps; delineating countless villages, towns, cities, counties, states, and nations from one another. These arbitrary lines exert influences on our lives subtle or great. For many they are the difference between life and death.
    Children die everyday in America, the richest nation on earth, for lack of healthcare. Some of these kids live just a few dozens of miles from Canada – a place with national healthcare. The difference is even greater comparing Mexico to the United States. San Diego is just twenty miles from Tijuana, but the arbitrary line that divides the lives of their respective citizens is of unimaginable consequence. But even within nations arbitrary lines determine our lives – from the schools we attend to the doctors we see to the politicians that represent us.

    Wire, a British art-punk band from the 1970’s, wrote a song that doesn’t directly address this issue, but that I’ve always associated with it – Map Ref. 41°N 93°W, from their album 154 released in 1979.

    Perhaps the reason is because poetry is not dead, but is visible most prominently today in song lyrics. And, as postulated by Walter Pater, the poet creates a sense of an idea and doesn’t have to spell it out exactly. Ambiguity, metaphor, interpretation. I choose to interpret this as a song about arbitrary lines on the map.

    Of course I also like the song because the map coordinates land suspiciously close to my favorite city – Madison, Wisconsin.

    Those that work to deepen the scars of these arbitrary lines should be held up for scorn – not applauded. Those that work to remove them from our lives should be lauded.

  45. #45 crandles
    United Kingdom
    2016/10/27

    >”Are the pensioners and ex-pats coming back to Blighty already? But I thought there was more than twice that number in the EU anyway?”

    Obviously some are but then there always are some. I have no idea if the numbers are abnormally high, feel free to enlighten me.

    Twice which number? 1 million or 20,000? Sure there is more migrants but not that many arrive to stay in a 20 mile radius in a short period of time like 1 month or if they do then there are large migrant camps (usually caused by a closed border) and lots of problems and political pressure to solve the problems.

    The purpose of my large number (in small space and time) problem was to make clear the non-linear nature of the stresses caused. Small numbers can be accommodated but large numbers cause a long list of problems. I am not getting the purpose of your questions. If I don’t understand the purpose then I am unlikely to answer them well.

  46. #46 J Bowers
    2016/10/27

    There are over two million Brits living and working in the EU. If we do a Hard Brexit (and may have no choice in the matter) then we can perhaps expect a substantial portion of those 2.3 million fairly suddenly back here. That includes pensioners and retirees who will need lots of medical care from a UK that kicked out a hefty chunk of its health professionals because they’re furriners (anyone trusting Liam Fox of ALECs Atlantic Bridge fame to negotiate a mutually beneficial outcome needs their bumps feeling). Of course, EU member states are already signalling that they want to poach our brightest minds and give sanctuary to our youth, so there might be more room than I give credit for.

  47. #47 Phil Hays
    Over the pond and far away.
    2016/10/28

    The issue is far more complex than a simple binary answer. Immigration can be mostly good for some people, mostly bad for others, and a mix of good and bad for still others.

    “I don’t think its “far more complex” is a good excuse. You would not say that you refuse to call limiting or reducing GHG emmissons “good” because its far too complex for a binary choice -W”

    Err, I have. For decades now, and in public forums that you read.

    A large fraction of the GHG emissions to date are “good” in the sense the increase avoids the next ice advance. I’m in favor of avoiding glacial advances.
    Another large fraction of GHG emissions to date are “neutral” in that the net cost in climate change is relatively small. I’m slightly against, but only slightly.
    I’d say we are currently in the “cheap” area, but the borders between areas are fuzzy. Maybe we are still “neutral”, maybe we are getting into “expensive”. I don’ t know.
    As the amount of emissions pile up, the cost of each unit of emissions keeps rising. “Expensive”, “disastrous”, “catastrophic” and “fatal” would be useful terms to describe future ranges of GHG emissions.
    In 1896, Arrhenius argued that CO2 releases were positive. In 1896, at that level of CO2 in the air, I think he was correct.

  48. #48 Kevin O'Neill
    2016/10/28

    [kto] “as has been demonstrated many times, in many places, throughout history free-trade can have a heavy cost.”
    [{cn}} -W]

    Really? You need a citation to a history book? You’re just playing games, WC.

    [That seems remarkably bad faith on your part. I am not playing games; I do doubt your point -W]

    But start with Kicking Away the Ladder: Development Strategy in Historical Perspective,Ha-Joon Chang.

    [Before I commit plentiful money, but scarce time and energy to reading that, I’d like to know that it is in some sense canonical; that it represents a more than just the author’s viewpoint. And indeed, that it is to the point. Could you perhaps quote something relevant from it? Or even give the relevant chapter? Just “read this book” is somewhat vague -W]

    [kto]”Open borders and free-movement (in theory) should help to offset the negative impacts of free trade.”
    [{{cn}} -W]

    Again? Are you unable to figure any of these problems out from first principles?

    [Yes -W]

    Take the US-Mexican border. NAFTA decimated Mexican farmers, causing a huge surplus in Mexican labor.

    [Again, is that true? If I search for it I find a pile of tired usual suspects saying it. For example http://www.nytimes.com/roomfordebate/2013/11/24/what-weve-learned-from-nafta/under-nafta-mexico-suffered-and-the-united-states-felt-its-pain. But those are the kind of people who always think free trade is bad. Via http://www.cfr.org/trade/naftas-economic-impact/p15790 I find http://faculty.som.yale.edu/lorenzocaliendo/ETWENAFTA.pdf which seems more useful.

    “How has it affected the Mexican economy? NAFTA gave a major boost to Mexican farm exports to the United States, which have tripled since NAFTA’s implementation. Hundreds of thousands of auto manufacturing jobs have also been created in the country, and most studies have found (PDF) that the pact had a positive impact on Mexican productivity and consumer prices.” OTOH “Mexican unemployment also rose, which some economists have blamed on NAFTA for exposing Mexican farmers, especially corn producers, to competition from heavily subsidized U.S. agriculture. A study led by CEPR economist Mark Weisbrot estimates that NAFTA put almost two million small-scale Mexican farmers (PDF) out of work, in turn driving illegal migration to the United States.”

    And so on -W]

    Even *without* open borders a large number of Mexicans chose to move illegally to the US. Do you really need a citation to claim the number would have been even larger with open borders?

    [{{cn}} -W] seems to simply be a stand-in for, ‘I don’t have an argument, but don’t want this to appear unchallenged.’

  49. #49 Kevin O'Neill
    2016/10/28

    “For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength. After two centuries, England has found it convenient to adopt free trade because it thinks that protection can no longer offer it anything. Very well then, gentlemen, my knowledge of our country leads me to believe that within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade.”
    Ulysses S. Grant, quoted in Capitalism and Underdevelopment in Latin America by AG Frank, Monthly Review Press, New York, 1967. Also cited by Ha Joon Chang.

    [That’s a nice quote from Grant, but what makes you think he is correct? Many politicians say many things that are not correct. Grant is arguing for a certain position, and adducing “evidence” that is essentially just his opinion. That Britain didn’t have free trade is undoubted. That it benefited from that arrangement is an entirely different matter -W]

    Mexico Employment in Agriculture – % of total employment

    Mexico Unemployment – 1987 to 2015

    I’m not sure your point. You initially questioned whether open borders should offset negative impacts of free trade. Then you cite sources that point out some of the negative impacts.

    My point was that open borders allows those negatively impacted to seek a better situation. Case in point, Mexican farm workers post NAFTA. You provide no argument against this. Of course there *is* no argument against it – open borders obviously allow workers to freely move – whether they’ve been displaced by economic policy or not. For some reason you need to contest such an obvious proposition that I can only consider it disingenuous – whether you think that fair or not.

  50. #50 Kevin O'Neill
    2016/10/28

    P.S. Your CFR report inaccurately portrays what’s in the CEPR report Did NAFTA Help Mexico? An Assessment After 20 Years. The CEPR report actually shows (Table 2, page 13) that between 1991 and 2007 there was a loss of over 5 million family farm workers. This loss was partially made up by an increase of 3 million paid farm workers. Reporting just the net loss disguises the true loss in family (small scale) farm jobs.

    Conclusion:
    As was well known at the time of NAFTA’s passage, the main purpose of NAFTA was to lock in a set of economic policies, some of which were already well under way in the decade prior, including the liberalization of manufacturing, foreign investment and ownership, and other changes. The idea was that the continuation and expansion of these policies would allow Mexico to achieve efficiencies and economic progress that was not possible under the developmentalist, protectionist economic model that had prevailed in the decades before 1980. While some of the policy changes were undoubtedly necessary and/or positive, the end result has been decades of economic failure by almost any economic or social indicator. This is true whether we compare Mexico to its developmentalist past, or even if the comparison is to the rest of Latin America since NAFTA. After 20 years, these results should provoke more public discussion as to what went wrong.

    Fig. 3 on page 7 is what the argument on development paths is really about. The Soviet Union, South Korea, China and most of the countries that have successfully industrialized over the past 100 years have done so *not* by following free trade as their guiding policy, but protectionism. Just as the UK, Germany, the USA, et al did on their way to the 1st world And we won’t even get into plunder, resource extraction, slavery and the other tactics that have nothing to do with free-trade that allowed many 1st world countries to reach their 1st world status.

    [Losing a large number of “family farm worker” jobs was probably part of the point. Any country moving from peasant status to developed status does the same: low-wage low-productivity peasant work just isn’t competitive. As demonstrated by its disappearance any time the peasants get a chance. Admittedly sweat-shop workers don’t look as nice to well-off furriners as “happy peasants” do, but you can’t expect them to sweat on the soil just for your aesthetic sensibilities -W]

    [Speaking of Mexico, http://www.forbes.com/sites/timworstall/2016/10/29/how-walmart-and-big-box-stores-make-us-all-richer/ is timely -W]

  51. #51 Kevin O'Neill
    2016/10/28

    […That Britain didn’t have free trade is undoubted. That it benefited from that arrangement is an entirely different matter -W]

    See – now this is where I just think you’re being disingenuous. Britain and the textile industry in the 18th and 19th century and it’s importance in the industrial revolution have been chronicled ad nauseum. You seem to be denying its importance.

    Here’s as good a succinct account as I’ve run across: The Early British Industrial Revolution and Infant Industry Protectionism: The Case of Cotton Textiles

    [I’m baffled; you’ve become recursive; that’s just quoting Ha-Joon Chang, Kicking Away the Ladder again. Why would you expect echoes to be convincing? That blog makes the same mistake you’ve made already: it claims that English protectionism was a success, without attempting to see what would have happened without it; any free trader would of course claim that we’d have been better off overall under free trade. It is hard to see how one could make that evaluation, of course; it would require work and thought -W]

    British textile goods probably became internationally competitive by the mid 1820s (when tariffs were still in place). The British protectionism that lasted until the 1820s allowed British goods to become competitive.

    It is estimated that by 1820, 46% of Britain’s exports were cotton textile goods. These exports displaced India’s textile exports in world markets. Thus Britain itself had an “export-led” model of economic growth even in the early stages of the industrial revolution, by taking away the market share of India through technological innovation allowed by protectionism and tariffs.

    Yet, according to classical free trade theory, the British should not have bothered to develop a textile manufacturing industry, if they were able get Indian cotton textile goods at a price 50 to 60% lower than domestic textiles. India did have a comparative advantage in production of cotton textiles even around 1810 when the British textile industry was developing. If real free trade had been implemented, the protective tariff would have been abolished and the market for British-made textiles at home would have collapsed. There would never have been a later opportunity to compete internationally.

    Yet nobody can seriously deny that having a large productive textile industry was the foundation of Britain’s industrial revolution and in the long run good for the economy.

    This is not the whole picture either, because from 1757 the British East India Company (EIC) won control of Bengal, the centre of Indian textile manufacturing.

    The Indian states could not impose retaliatory tariffs on British goods in the early 19th century in response to British protectionism, because they were effectively ruled by Britain through the East India Company.

    After the successful decades of tariff protection and shelter from competition, British goods succeeded in global markets at the expense of India’s exports. Bengal and the textile manufacturers were ruined and the resultant de-industrialization impoverished the previously prosperous towns.

    And of course Britain’s cotton came largely from slave plantations in the US.

  52. #52 Kevin O'Neill
    2016/10/29

    WC writes: ” [Timmy makes a great deal of sense; I will continue to read and quote him. I think you’re blinded by your hatred….]

    You do realize this is equivalent to saying a flat-earther makes a great deal of sense, right? The EMH never made any sense except perhaps in its weakest form – but Worstall is a semi-strong, if not strong form, adherent.

    Whether we look at the dotcom bubble or the housing bubble did the markets process all the publicly held information efficiently?

    [The dotcom bubble is, in the long or even medium term, uninteresting. The housing bubble can be blamed at least in part on the inability to short housing. Timmy explained this a while ago to anyone who had the sense to read him: http://www.forbes.com/sites/timworstall/2015/12/10/getting-the-economics-of-the-big-short-wrong/ -W]

    Yeah, just try to make that argument. Seriously, just try to make it. There were numerous signs the system was in deep, deep, doo-doo long before the markets reacted.

    I’ve used this quote from Tanta at Calculated Risk here before. It come from Tanta’s post Subprime and CDOs: Illiquifying the Liquified
    “I am not a historian of financial markets, so perhaps it is true that the Whigs always win in this regard. But I would be inclined to think that perhaps it is true that in some cases “opaque, illiquid markets” become large enough to implode spectacularly before they ever get around to becoming “transparent.” In fact, I wonder if in certain cases “opacity” is a feature, not a bug.

    I do know enough of the history of the mortgage market to be willing to claim that it was, once upon a time, an opaque and illiquid market that did indeed become both very large and highly transparent for quite a while there. You can get an amazing amount of information about one of those nice low-yield boring vanilla GSE MBS, you know, not to mention a price right off the old Bloomberg terminal. Now, you might want to say that in the last few years somehow that famous liquidity and transparency of the residential mortgage market has largely evaporated on us, right at the time that tons of unregulated private money started pouring into it and yields of 12-18% became just not good enough. You might observe that right about the time, historically speaking, when we’d managed to accumulate giant performance databases about mortgage loans, we started offering “low doc, no doc and snow doc” deals with drive-by “appraisals” and automated underwriting and tiny due diligence sampling and every other mechanism we could think of to assure that there was, in fact, no data to be “transparent” about.

    So now that we’ve “innovated” our way into a situation in which nobody has the first bloody idea what’s going on with a huge portion of recently-originated mortgage loans, we’ve noticed that we’ve innovated our way into a situation in which nobody has the first bloody idea what’s going on with the securities they’re in or the CDOs that buy the tranches of the securities or the hedge funds that buy the tranches of the CDOs of the securities of the mortgages that were written on a hope and a prayer and a FICO. And this is a “teething” problem? Holy Mastication, Batman, you think this thing will improve if it grows some fangs?”

    Tanta is just one of the examples of information that was out there. CEPR (yes, the same CEPR that falls into your ‘usual suspects’ category was calling it a housing bubble as early as 2002. The Run-Up in Home Prices: Is it Real or Is it Another Bubble?

    This paper examines whether the increase in home prices can be grounded in fundamental economic factors or whether it is simply a bubble, similar to the stock market bubble. It concludes that there is a housing bubble. While this process can sustain rising prices for a period of time, it must eventually come to an end.”

    Of course the EMH doesn’t actually allow for bubbles. As Investopedia says: “The efficient market hypothesis (EMH) cannot explain economic bubbles because, strictly speaking, the EMH would argue that economic bubbles don’t really exist. The hypothesis’s reliance on assumptions about information and pricing are fundamentally at odds with the mispricing that drives economic bubbles.”

    This isn’t some recent revelation. John Quiggin was writing about it 20 years ago. Will rational bubbles fall on the infallible markets. It’s a topic he has revisited numerous times since and even gave it top spot in his review of refuted economic doctrines: Refuted economic doctrines #1: The efficient markets hypothesis

    This has always been the problem with the Fama/Prescott/ Chicago School theories — they can’t stand up to empirical analysis.

    P.S> — “Hatred”? ‘Scorn’ would be a much better word. Not sure I actually ‘hate’ anyone.

  53. #53 Phil Hays
    Over the pond and far away.
    2016/10/29

    Suppose no one in the world had freedom of movement. Then one day, some group gets full freedom of movement.

    Who gains?

    The people that can now move, of course. They can move to where their skills are more valued, where food is cheaper, where the roads and schools are less crowded, and so on. There is little downside to gaining freedom. Even if they don’t move, competition for jobs and resources is reduced if others do move.

    Who else gains? Those elsewhere than can benefit from those skills. Those elsewhere than can gain from more demand for their products, and so on.

    Who loses? Those elsewhere who now face more competition for jobs, for food, more crowded roads and schools, and so on.

    [I agree that those granted the new freedom clearly gain; this can be told from first principles. And inevitably, with any change, someone will lose (our collective failure to be able to cope with this concept is one of the diseases of our soft west). That any significant number lose is not at all clear, and can only be told by experience and study -W]

    1) It is clear to me that the world summed as a whole gains by this. More efficient allocation of labor and resources. Individuals will both gain and lose.
    2) It is clear to me that the people gaining freedom of movement gains. Little downside.
    3) It is not clear that the rest of the world gains. They might, and they might not. Depends on details.

    From the point of view of the UK, maintaining free access to the EU while denying free access to the UK is probably a net gain for the UK. I can see why the UK might want this.

    What I don’t see is why the EU would, should or could agree, except on cases that are clearly in the EU’s favor. Like convincing the City to move elsewhere. Seems to be well underway, even if the UK stops Brexit in a year, the banks are moving. The City may soon be gone for good. Scotland voted Sstay. As the disaster of Brexit continues, Scottish Nationalism gets rocket fueled. Little England without Scotland and the City will be a much poorer country.

    [I don’t *expect* them to agree; politics is full of stupidity. Almost all pols are opposed to free trade, for example, which is deeply stupid of them. But I think it would be a net gain for EU-not-UK to allow it -W]

    When you write “allowing immigration is good,” do you mean (1), (2) or (3)?

    [In general it is a good. Like telling the truth is a good. That doesn’t mean it isn’t good to lie in some circumstances -W]

    The best deal the UK can expect to make is to maintain current status. The best time to make this deal is today.

    [Update: you might like http://www.economist.com/news/britain/21709298-how-not-cope-globalisation-policies-help-britons-who-lose-out-free-trade-are%5D

  54. #54 Kevin O'Neill
    2016/10/30

    WC writes: [[I’m baffled; you’ve become recursive; that’s just quoting Ha-Joon Chang, Kicking Away the Ladder again. Why would you expect echoes to be convincing? …]

    Umm, no. The linked post does not quote Chang. It references his book once – “An excellent overview of infant industry protectionism can be found in Ha-Joon Chang, Kicking Away the Ladder: Development Strategy in Historical Perspective (London, 2002). “

    The Bibliography doesn’t even list Chang –

    *******************************

    Alavi, H. 1982. “India: The Transition to Colonial Capitalism,” in H. Alavi et al. (eds), Capitalism and Colonial Production, Croom Helm, London.

    Bairoch, P. 1997. Victoires et déboires: Histoire économique et sociale du monde du XVIe siècle à nos jours, Gallimard, Paris.

    Chanda, N. 2007. Bound Together: How traders, preachers, Adventurers, and Warriors shaped Globalization, Yale University Press, New Haven.

    Clairmonte, F. 1960. Economic Liberalism and Underdevelopment: Studies in the Disintegration of an Idea, Asia Publishing House, New York.

    Das, T. 1946. Review of The Economic History of India: 1600–1800, American Historical Review 51.2 (January): 312–314.

    Frank, A. G. 1998. ReOrient: Global Economy in the Asian Age, University of California Press, Berkeley.

    Kennedy, P. 1989. The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000, HarperCollins, New York.

    Landes, D. S. 1969. The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present, Cambridge U.P., London.

    Marks, R. 2002. The Origins of the Modern World: A Global and Ecological Narrative, Rowman & Littlefield, Lanham, MD.

    Moe, E. 2007. Governance, Growth and Global Leadership: The Role of the State in Technological Progress, 1750–2000, Ashgate Publishing, Aldershot, UK.

    Mukerjee, R. 1967. The Economic History of India: 1600–1800, Kitab Mahal, Allahabad.

    Parthasarathi, P. 1998. “Rethinking Wages and Competitiveness in the Eighteenth Century: Britain and South India,” Past and Present 158 (February): 79–109.

    Perlin, F. 1983. “Proto-industrialisation in Precolonial South Asia”, Past and Present 98: 30–95.

    Pomeranz, K. 2000. The Great Divergence: Europe, China, and the Making of the Modern World Economy, Princeton University Press, Princeton, N.J.

    *******************************

    Your argument is then that Britain would have been better off without protectionism – though you have no evidence to actually make that argument and no serious academic has actually tried to make that argument. Sounds an awful lot like climate fairies.

  55. #55 Kevin O'Neill
    2016/10/31

    WC writes: [The dotcom bubble is, in the long or even medium term, uninteresting. The housing bubble can be blamed at least in part on the inability to short housing. Timmy explained this a while ago to anyone who had the sense to read him…]

    Well, yes, the dotcom bubble is uninteresting – in fact it is usually ignored – * by adherents of EMH* because it doesn’t add up. Bubbles themselves as pointed out by Fama don’t exist. Got that? The guy who wrote EMH says bubbles don’t exist.

    Timmy’s explanation of the housing crisis is *not* a defense of the EMH. In strong-form efficiency, share prices reflect all information, public and private. So the thousands (tens of thousands? hundreds of thousands? millions?) who sought loans they couldn’t afford, the loan officers that sought and approved such loans, the investment banks that primed the pipeline and then repackaged this shit as securities, etc., etc all should have worked to deflate market prices – but they didn’t.

    But there was plenty of *public* information available long before the bubble burst – so the semi-strong EMH failed as well.

    I don’t think you really even understand this basic point: the EMH basically says there’s no such thing as Keyne’s animal spirits (a term also used by John Stuart Mill and Karl Marx). The EMH has information at its core – there’s no room for irrational behavior. Bubbles are irrational. Belief in the EMH is the belief that markets are rational. Centuries of market history say otherwise. Recent history says otherwise. It’s another case of who ya gonna believe? Timmy or your lyin’ eyes?

  56. #56 Kevin O'Neill
    2016/10/31

    Timmy: Well, no, we do in fact know what caused the crash. Widespread stupidity. Or more accurately, widespread belief in a fact that turned out to be wrong. That because there never had been a coordinated crash in the American housing market across all regions then there never would be a widespread crash in American housing prices across all regions. Everything else in the system worked just fine.”

    Now, go upthread and read my quote from Tanta. What she was saying is the system is working *exactly* as it was designed – like shit! Yet Timmy believes the system worked fine – except for an irrational belief that there couldn’t be a crash. Tanta must be rolling over in her grave.

  57. #57 Kevin O'Neill
    2016/10/31

    WC – I would really suggest you read these two interviews.

    Federal Reserve Bank of Minnesota, Interview with Richard Thaler, and Chicago Booth Review, Richard Thaler interviewing Eugene Fama, Are Markets Efficient?

    Of amusing note in the 2nd link is Fama’s response on the CUBA Fund – “That’s an anecdote. There’s a difference between anecdotes and evidence, right? A very, very strange idea of what constitutes an anecdote.

  58. #58 Phil Hays
    Over the pond and far away.
    2016/10/31

    Who loses? Those elsewhere who now face more competition for jobs, for food, more crowded roads and schools, and so on.

    “That any significant number lose is not at all clear, and can only be told by experience and study -W”

    What a novel research idea. I wonder if anyone is going to look into it…

    Consider most of human experience. Almost everyone fished, hunted or gathered their food. An immigrant usually meant less to eat, as more competition for fishing, hunting and gathering. Usually a immigrant was an invader, to be repelled by force if possible. The major exception was out group marriage, a social adaption along with incest taboos that helped to maintain genetic diversity.

    Only in very recent years have immigrants sometimes actually been welcomed. It is a new thing.

  59. #59 Kevin O'Neill
    2016/10/31

    Phil – as someone with a decent amount of Ojibwe blood in my veins I hold a dim view of immigration to North America :)

    That said, the US and Canada have been built on immigration. Immigrants have been welcomed in both countries through most of their history. Though, of course, WASPs were preferred.

    Nevertheless, the Statue of Liberty is inscribed with:

    “Give me your tired, your poor,
    Your huddled masses yearning to breathe free,
    The wretched refuse of your teeming shore.
    Send these, the homeless, tempest-tost to me,
    I lift my lamp beside the golden door!”

    The inscription wasn’t by accident.

  60. #60 Phil Hays
    Over the pond and far away.
    2016/10/31

    Kevin – The US and Canada are recent events. Also the US and Canada are the aftermath of successful invasions. Also should mention Iceland and Greenland in the 800’s and 900’s, as the Norse found the lands open. And Australia and New Zealand, invasions. Northern Ireland, wars and the Plantations. So when are immigrants welcomed? Perhaps when there was significant open good farming land was the rule until before industrialization.

    Recent history, the past century or so, things changed and became more complex. But start with the long view… Immigrants mostly equal invaders and a threat, with the exception of thinly settled lands.

  61. #61 Julian Frost
    Gauteng North
    2016/11/23

    http://www.news24.com/World/News/britain-lost-15-trillion-in-household-wealth-since-brexit-vote-20161123.
    “Zurich – Britain lost $1.5 trillion in household wealth in 2016, a blow caused by the pound’s free-fall after the Brexit vote, Switzerland’s second largest bank Credit Suisse said on Tuesday.”

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