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September 11, 2016

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Dipper

I believe what he actually said was "This country is not the free trading nation that it once was. We have become too lazy, and too fat on our successes in previous generations."

So he didn't say that businesses are fat and lazy, he said the country was.

And if anyone is an expert on being fat and lazy, surely it is Liam Fox?

Ralph Musgrave

The above suggestion that UK businesses are too lazy to bother with exports to non-EU countries not consistent with the fact that over the last decade, UK exports to non-EU countries, as a % of it's total exports have risen significantly, while exports to EU countries as a % of total exports have fallen. See:


https://fullfact.org/europe/do-half-uks-exports-go-europe/

Dipper

and as a Leave voter I love the way you think that what Brexiter politicians promised and what Brexiters voted for are the same thing. As if the notion that politicians might not be telling the full truth had never occurred to us.

Metatone

The real foundations of the Gravity model are physical.
Time and distance still matter, both in terms of cost and convenience.
Not for everything, but for a lot of things.

Large scale, long-distance international trade is concentrated in very specific sectors. Now you can argue the UK should have a greater share of those sectors, but it very much needs an argument, not an assertion.

Dipper

meanwhile in a parallel universe we are finally looking at the fact that there is no plan for the "vote to stay in a reformed EU" option. There is no agreement on what the actual reforms are, no plan to get our EU neighbours to support them, and Juncker is saying that he said loud and clear there would be no more reform of the EU and that's what we voted for.

To borrow a phrase, the choice we had on 23rd June was between shit and shite. Pointing out that one option is unpalatable isn't really moving the debate on.

Dipper

and, the EC commission projected that between 2013 and 2050 the population of the UK would increase by 16 million. Now some of that is home-grown more-births-than-deaths but quite a lot of that is immigration.

The population of the Netherlands is 17M so, give or take, that's an additional population of the size of the Netherlands in 35 years. The infrastructure to support that is, I would guess, roughly the infrastructure of the Netherlands minus the canals. All in 35 years. 8 universities, a massive airport, 400 rail stations including some really big ones etc etc

We could do this as two cities both the size of London, i.e. 30 miles in diameter of solid urban development. I'm beginning to quite like this option - lots of opportunity to build green, healthy, driverless car fully internetted-up places, the world's leading city, but the point here is that no-one on any side has discussed this at all. Perhaps there's a cunning plan to just squeeze them all in. And no-one anywhere has discussed why we need to grow our population by 16M. As skills gaps go, that's quite a big one.

Liam Fox calling businesses fat and lazy is fairly low down on my list of concerns. Why is it so high up yours Chris?

Dipper

and just one last thing. This post is what is wrong with economics.It starts with our culture as a given and optimises policy to produce the best result. But our culture can be changed, and that change in culture and outlook is what many Brexiters are hoping to achieve by leaving.

D

Dipper, first of all: relax. Take a breath.

Then consider why the proportion of exports to non eu could tries has risen.

Luke

Dipper,
"But our culture can be changed, and that change in culture and outlook is what many Brexiters are hoping to achieve by leaving."

Come on. The Brexit vote was a howl of protest against anything at all changing ever in any way. You, Portugal's finest, Tim Worstall, and Dan Hannan, Magna Carta underpants man, don't count as many. And given your comments on immigration, I am sceptical about your wholehearted embrace of change.

Dipper

Luke - I disagree. Most Leavers I know thought long and hard about it. The arguments going on now about the difficulties UK faces outside the EU are a sign of how much we have lost both in terms of capability and in terms of ambition. So there have been elections, leadership contests, and now there are political disagreements and we face some uncertainties about what we will be able to negotiate with other countries. These are the challenges independent nations face all the time. Most people who comment on blogs such as these face these issues all the time in their own lives and learn to back themselves and their abilities. It should be no different for us as a nation.

I'm not sure what you interpret my comments about immigration as meaning. Most of the Remainer arguments on immigration - skills gaps, economic benefit etc were arguments for leaving as we can have all that through administering our own immigration rules. What is evident from the EC population projections is that many EU countries are economically dead, and the solution is for lots of people to move to the UK (and Sweden and France) to work here. The EU are insisting on Freedom of Movement not because it benefits the UK, but because it benefits them.

Luke

Dipper,

"Most of the Remainer arguments on immigration - skills gaps, economic benefit etc were arguments for leaving as we can have all that through administering our own immigration rules. "

So you and your fellow liberal Leavers are happy with massively increased immigration (let's say doubled) from India, Pakistan, Nigeria and Ghana?

Dipper

Luke - no. I favour controls so immigration is done on a basis of benefit to the UK. The reasons that were given - filling essential skills gaps, for instance, are limited and finite in contrast to giving 500M people a right of residence.

I'm not bothered where they are from. A good mix is best I think.

Bob

We can't constantly fawn to big business and give them whatever they want.

Liam Fox is quite right. Some british business are fat and lazy - why the hell are left wing individuals defending them? Of course the Conservatives will do little to help. What is needed is to cut taxes and raise spending to replace 'corporate confidence.'

Here is how to control them (part 1 I will post part 2 in a reply):

Part 1 - we need price stability. That requires uncertainty so that business that raise prices tend to go to the wall.

The State needs to take a more pro-active approach towards attacking rent-seeking. The level of competition considered ‘acceptable’ by regulators is too low. And that’s because of the ‘business confidence’ meme that scares them into inaction.

You can get to that by increasing the heat of competition. Breaking up firms, requiring them to be smaller and there to be many more of them in any particular marketplace.

The natural capitalist approach is to eliminate competition using a variety of techniques – from market niche to oligopoly. The state should spend a lot of its time ‘stirring the pot’ to prevent this happening. And the indication that the pot needs stirring is price rises of any magnitude in any market. That means encouraging and even funding competitors, forcing IP to be shared, etc to break the market power.

In a market with effective competition a business that increases output will out compete businesses that put up prices.

Companies like Whitbread and Wetherspoons use the brand identification trick to create a ‘monopoly of one’ arena. That is what brand management is all about – eliminating competition in the eye of the customer.

If you get firms that abuse the monopoly that brand gives, then they should be *subject to a competition investigation and broken up*. The threat of a break up should be sufficient to get the management of the company to consider investment and productivity improvements.

Bob

So once you realise you can always cut taxes and raise spending to replace falls in corporate confidence, you are no longer beholden to the whims of business and can tell them to go hit the wall if necessary.

Also what is needed, once immigration is controlled, is to eliminate shit jobs. The way you solve this problem is actually to nationalise the minimum wage. The idea that Chris and I have mentioned before is called a ‘Job Guarantee’:

http://www.3spoken.co.uk/2015/11/job-guarantee-jobs-for-people.html

The government offers a job at the living wage to all fitted to the person working for the public good. The definition of ‘work’ is expanded. Work could include things such as open source programming, social care, environmental work, teacher assistants, community dial-a-ride services, looking after a child under a certain age and so on. We would have to sample local areas to see what needs doing.

There will be some contracts that can be ‘shelf contracts’ that are given a fixed ‘take it or leave it’ price. Replacing the central reservations of motorways with concrete is one type of contract that has served well as a counter-cyclical balancer over the last few years. A set of those should always be available so that contractors can drop onto them when the private sector has one of its wobbles.

That then eliminates worse jobs via simple competition. Unlike a minimum wage it does not require enforcement by a police force, and it also requires businesses to provide good *conditions* as well as guaranteeing a minimum wage. If you are working part-time elsewhere, then you can ask for a top up to full time from the Job Guarantee. You’ll never be short of work, or a living wage.

The retired, sick and the disabled are treated as working full time.

Because of this:

(i) people can choose to go onto social security via the JG. This disciplines the standard economy. All of a sudden 'no deal' is an option in the normal business jobs market and that makes the job market behave, well, like a market. The JG operates much more completely than a 'minimum wage' ever can, but doesn't disrupt the wage structure entirely as an income guarantee would. Minimum wage can't provide an income if there aren't the jobs, and needs enforcing by a police force, whereas an income guarantee (at the very least) cripples the spending half of your auto-stabilisers - requiring taxes to be hiked massively on the other side to make the numbers add up.

(ii) Because they are working, the number of people on a JG becomes less of a social issue - no more 'bring down unemployment', no more 'shirkers'. Therefore normal businesses can be allowed to go bust, not pay redundancy, etc because the JG will catch people who lose their jobs during a retrenchment. That disciplines the spending and wage channels since there need be no bailouts or the 'special industries' that pump-priming requires. Overpaid workers get an imposed wage cut when they are forced to move to the JG as do greedy bosses. See how 'corporate confidence' is no longer of overriding concern?

(iii) People on the JG are working and producing output - so they are more socially productive than on unemployment benefit or income guarantees. And because they are seen to be working they become cheaper to hire from a normal business's point of view (there is always less hiring risk if you know people are working). That eliminates a current risk cost completely from the economy (the 'long term unemployed' issue).

(iv) Forcing businesses to compete for staff should accelerate the capital development of the economy, and replacing jobs with better machines is what we want the private sector to do. People need to be expensive to use, and jobs in the normal business jobs market must not be sacrosanct. Business models that fail, must be allowed to fail without any sentimentality.

(v) The JG is a *very* strong auto stabiliser. If the living wage was set at £10 per hour and you worked 37.5 hours a week you would get a gross wage of £375 per week. That’s five times the current rate of Job Seekers Allowance of £73.10 per week. When you start a Job Guarantee the first thing you do is pay people the wage while you ramp up the job side. That money given to people will in the short term bring the effective demand of the economy up to speed causing the economy to hire any remaining skills off the pile – reducing the number of people on the Job Guarantee.

Only when that effect subsides do you then look for and create jobs *that match the people* on the Job Guarantee. That’s the key difference of JG that solves the matching problem. Find people something to do, not come up with something to do and find the people.

Bob

My point is the right wingers attacking Fox hate price stability and want inflation, as usual, like their hating the 'loose' full employment of JG.

Similarly with forcing people onto welfare handouts instead of giving them a job. The replacing of currently employed people (and threat of replacement) with the cheaper people on the JG buffer at the appropriate margins – which helps prevent wages from rising quite as fast as things tighten. With a JG the previously unemployed people are cheaper because they are demonstrating they are employable on a current JG job rather than sat around somewhere being long term unemployed. That reduces the implicit cost of hiring risk making substitution cheaper.

Why so Fox haters vicious anarchic support of people who want to abolish nation states and want large corporates to be the 'big man' in the country rather than the government? Why do they oppose anything that harms 'corporate confidence' as a plan? Do they think nothing would happen ever to hurt business with Remain? Don't they see how dangerous that is?

Bob

"In the real world, competition doesn’t grind so finely that it swiftly eliminates mediocrity, incompetence and laziness."

Ooo the right wing libertarian corporatists are gonna hate this!

It can with an active state and loose full employment!

Bob

"Ooh it'll take jobs we have to subsidise it"

SCREW THAT

Those right wing libertarians and New Keynesians who think there is a relationship between *employment* and inflation that have the construction incorrect. And that is a key difference – the correct viewpoint on the relationship. Because viewpoints matter.

Employment is Natural and the natural rate of employment is that everybody who wants to provide a living for themselves can do. If inflation disturbs that natural order then it has to be dealt with appropriately *in the context of the notion that employment is natural*.

MPC

One thing that struck me is... I work in engineering and it takes upwards of 2-3 year to develop a product for a new market. For the sake of our Country we must export but how can you when different governments constantly fall out and pull the carpet from any plans to export. Example Russia and now Europe.

When you put your sweat and hard earned cash into a project its a major investment which governments feel nothing to changing the rules and pulling the plug on. Any investment made is written off.

So please Mr Fox work for a peaceful and prosperous new world, where everyone prospers and we can hope to be a great exporting Country again. ...

Bob

MPC, you are better off selling to British customers. Exporting is pitting real goods and services out of the country. You want to do as little of it as possible.

butcheringOfNews

«Perhaps there's a cunning plan to just squeeze them all in.»

The cunning plan was and is to make property prices and rents much bigger, so people who already own UK property (mostly Tory and New Labour voters in the south) live in comfortable luxury waited upon by cheap hired help, and the others live like this:

https://www.theguardian.com/society/2015/jun/25/overcrowding-housing-raid-26-living-three-bedroom-east-london#img-1
http://www.dailymail.co.uk/news/article-2337695/Shanty-town-suburban-London-street-Romanians-scrape-living-amid-squalor-dump.html

Blissex

«controls so immigration is done on a basis of benefit to the UK»
«giving 500M people a right of residence»

An example of my impression that some "Leavers" hated not free movement, but that it was a right, instead of a concession for which "Johnny Foreigner" would have to beg.

People of Bristol may well be outraged that millions of funny-speaking scroungers from places like Sunderland have been given right of residence in Bristol -- it seems incredible that the geordie can just go over to work in Bristol like that, without begging a Bristol residence permit. Because immigration from the north to Bristol should only be "done on a basis of benefit to Bristol".

Plus of course in the EU case UK citizens have every right to work and residence in the rest of the EU without "Johnny Foreigner" being so arrogant to expect reciprocal rights.

Because "Britannia rules the waves!" :-).

Or because the UK will never have a recession like that of the 1990s in which many UK unemployed found jobs abroad.
Just like Ireland, that would never have had a recession that triggered a new wave of emigration.

Dipper

Blissex - Not so much missing the point as just all over the place.

Are you in favour of absolutely free immigration of anyone who wants to come here? Because if you are then I've got about 100 million who would come here right now. And if you aren't in favour of free migration of absolutely anyone, then why draw the line at 500 million?

Probably best to keep your impressions to yourself, I think, particularly when there is no actual evidence for any of them.

Blissex

«And if you aren't in favour of free migration of absolutely anyone, then why draw the line at 500 million?»

But what about the free migration to Bristol of millions of funny-speaking geordies? Shouldn't migration to Bristol "done on a basis of benefit to Bristol"? Why are the rights of residents of Bristol to manage migration to Bristol trampled upon by a distant, federal entity like the UK?

And if you aren't in favour or migration of absolutely everyone, why draw the line at geordies, brummies, scouses, scots, etc. then?

But there are strong reasons to draw line at some time point:

#1 Whether there are common institutions and some amount of shared revenue and expenditure.

#2 Whether the right of work and residence is reciprocal.

#3 Whether the reciprocity of the right translates also to reciprocity of benefit.

Because "free movement" is a *business* arrangement, whether within the UK or the EU, and the line is drawn at the point where all parties have the same rights and have a broadly similar benefit from the deal.

Consider point #3 above...

The people of Bristol give an automatic right of residence to funny speaking geordies because they like the idea of being able to move to Sunderland if they so wished.

The people of Hamburg have given an automatic right of residence to the people of Bristol for the same reason.

Now the question is whether the reciprocal right of residence is equally valuable to both parties.

Across the world, even in rich countries, an EU passport which gives automatic right of work and residence across many advanced, mostly safe, countries is considered very valuable, and some EU countries sell their citizenship for large amounts of money thanks to that.

In a recent referendum UK voters have decided that they want to get rid of their right of work and residence across the EU, because the deal was not to their sole benefit, as there was a reciprocal right of residence from the EU into the UK.

Blissex

As to "fat and lazy" my impression is that both our blogger and most commenters don't quite get what D David meant with that.

I think that D Davis was obviously referring to "Britannia Unchained", and that he meant that UK bosses are too soft to push down the wages and increase the workload of their employees and force them to be "competitive" with Bangladeshi or Vietnamese workers. Or too soft to replace their uppity, shirking UK workers with immigrants that cost a lot less and work a lot harder.

His point being that outside the cozy environment of the EU it will be both possible and necessary for UK bosses to make their workforces far more competitive with those of third world countries, either way.

Dipper

Blissex.

funnily enough, when I as a northerner got a job in London many years ago one of my colleagues did moan about "northerners coming down here and nicking our jobs".

But the fact is that mass migration from the north to Bristol is not a problem. Wages in Bristol are not being pushed down and house prices being pushed up (directly) by houses full of multiple occupancy geordies. If it was, then Bristol MPs and no doubt Northern MPs could hold the government to account to do something, If the people of the affected areas did not like the outcome, they can vote someone else in. This is how democratic politics works. In the EU non of this is possible. The EU couldn't care less about workers in the UK. There is no mechanism for holding anyone to account.

And yes the right of work and residence is mutual, but the people of the UK have decided that on balance it isn't in their favour so they have voted to end it. that's democratic politics. Again. As for the consequences, well the elected government can go and sort this out.

And on your final point, it was Liam Fox complaining the country had got fat and lazy. Frankly, in most places I've worked, being called fat and lazy was practically a compliment compared to the usual comments.

So maybe David Davis has a particular angle. Well, again, ultimately he will have to get his views through parliament, so it will be politics as usual.

I can't speak for others, but I voted for a process rather than any specific policy objectives. I didn't feel that post-referendum the citiizens of the UK would have any say in key decisions and we would end up getting completely and irreversibly screwed. I felt we would be better off with accountability for decision making in the UK sitting clearly with our elected representatives. Everything that has occurred since the referendum has strengthened my view.

Blissex

«But the fact is that mass migration from the north to Bristol is not a problem. Wages in Bristol are not being pushed down and house prices being pushed up (directly) by houses full of multiple occupancy geordies.»

Well, they used to, and things like the East London slums happened.

But more importantly things change over the decades; it was only in the 1990s that sad UK emigrants were cramming into flats in Germany or France or the Netherlands to find jobs.

Look at Ireland: until 2007 they "suffered" a large influx of immigrants, but since 2008 a lot of irish have had to emigrate to find jobs in countries that did not screw up their economies with ludicrous property bubbles. It would be simply very funny if invoking article 50 would coincide with a final burst of the UK property bubble, which is the only thing keeping employment up in the south east, and as a result many UK unemployed workers were no longer be able to find work in the EU27.

So decisions about whether to eliminate a RECIPROCAL right to live and work in many safe, rich, modern countries should be based not on what is happening now but on long term value. For now there are big flows both from UK to the EU and from the EU to the UK, and the latter for now is somewhat larger. Who knows about the future.

«If it was, then Bristol MPs and no doubt Northern MPs could hold the government to account to do something,»

But there are UK MEPs, and more importantly democratically elected UK ministers with a right of veto in every EU Council meeting.

«If the people of the affected areas did not like the outcome, they can vote someone else in. This is how democratic politics works. In the EU non of this is possible. The EU couldn't care less about workers in the UK. There is no mechanism for holding anyone to account.»

While the UK government has *always* had a no-questions-asked veto on every major EU policy, and the UK government is the democratic, held-to-account, representative of UK interests in the EU, they have very rarely exercised that veto.

In particular the UK governments of the past several decades have never used the veto to limit immigration from the EU (or anywhere else); they all went out of their way to increase that immigration to teach a lesson to "lazy, fat" UK workers. They have done so very democratically, because the affluent middle classes of the south *love* cheaper hired help as employees or servants.

Blissex

«But the fact is that mass migration from the north to Bristol is not a problem. Wages in Bristol are not being pushed down and house prices being pushed up (directly) by houses full of multiple occupancy geordies.»

As to another angle on this, that EU and even more so non-EU immigrants have been pushing down low-end wages and up house prices and rents in the UK has been a UK democratically chosen policy, not a EU policy.

It has been a plurality of tory (Conservative or New Labour) UK voters that have been very pleased with cheaper workers and higher rents. The EU never conspired to impose on the UK electorate a policy they hated; it was always the plurality of UK voters, turned into parliamentary majority by FPTP, that wanted that. For *decades*.

Dipper

Blissex - yes I'm aware of the argument that the UK had lots of powers that our politicians didn't use. But I had one vote and two choices, neither of which was to find politicians who stood up hard for UK interests in the EU. It was more of the same but without the threat of a referendum, or leave.

The EC prediction is for the UK population to increase by 16M between 2013 to 2050. That's a 25% increase, just a million under the population of the Netherlands. Two additional Londons. Once that happens you can't undo it. No point in having options for the future when by the time to get to use them the country is irrevocably screwed.

Blissex

«But the fact is that mass migration from the north to Bristol is not a problem. Wages in Bristol are not being pushed down and house prices being pushed up (directly) by houses full of multiple occupancy geordies.»

I take this as an allusion to the immigration of desperate workers from low income countries like eastern Europe, who have trying to beat UK workers in the race to the bottom organized by the UK upper and middle classes.

There have never been a risk of the well-paid, high-living-standards, hundreds of millions of workers of Germany, France, Italy, Netherlands, Finland all deciding to cram into the UK.

The problem has been the polish immigrants, from a big country, and the bulgarian and romanians, from quite small but very poor countries.

But again these have been actively encouraged to immigrated (UK consulates in Romania and Bulgaria were told to advertise jobs in the UK) because of the policy of the democratically elected UK government. In part to push down low-end wages and push-up property prices in the south, but in part for geopolitical reasons, here is a very revealing quote:

http://www.margaretthatcher.org/document/113883
20 January 1990
«President Mitterrand said that he shared the Prime Minister’s concerns about the Germans’ so-called mission in central Europe. The Germans seemed determined to use their influence to dominate Czechoslovakia, Poland and Hungary. That left only Rumania and Bulgaria for the rest of us. [ ... ] The Prime Minister said that we should not just accept the Germans had a particular hold over the countries of Eastern Europe but do everything possible to expand our own links.»

Clearer than this...

Blissex

«(UK consulates in Romania and Bulgaria were told to advertise jobs in the UK)»

All part of decades of government policy to boot the competitiveness, that is the profits, of UK-owned businesses, including this:

forums.theregister.co.uk/forum/containing/2895588
«I once saw a business spot on the BBC World News in Germany where they showed the British embassy in Vietnam hosting visits for UK business leaders to see how they could improve profitability by outsourcing to Vietnam»

Again, clearer than this...

Blissex

«the UK had lots of powers that our politicians didn't use.»

But your argument was that mass immigration from poor eastern european countries to the UK was the result of lack of democracy at the EU level, while instead it is the result of the democratic will of UK voters, or at least the southern UK voters that elect parliamentary majorities. It is in essence an argument about FPTP in the UK, not democracy and the EU.

That really makes a big difference as to the motivations of the "Leave" argument.

«But I had one vote and two choices, neither of which was to find politicians who stood up hard for UK interests in the EU.»

Again the politicians that represented democratically the UK in the EU did stand for the interests of the UK: the interests of those voters in the UK that benefit from EU membership and immigration, and those voters under FPTP elect parliamentary majorities, and the rules of the game are that majorities win (cheaper servants, higher rents) and minorities lose.

You used the referendum to try and vote under PR against the governments that had a parliamentary majority for the past 50 years, and that worked, but it was a vote against the UK governments, not the EU.

«The EC prediction is for the UK population to increase by 16M between 2013 to 2050.»

Again, that is the result of the policies to boost house prices and reduce wage inflation which are very popular with the voters who elect parliamentary majorities.

For example many of the 58% of Conservative voters who chose "Leave" do want more immigration for cheaper wages and bigger house prices, they just want the immigrants to be cheaper third world ones, as indentured servants, not EU citizens with rights:

http://www.bloomberg.com/news/articles/2016-08-04/quicktake-q-a-why-layoffs-are-dire-for-foreign-laborers-in-gulf

Bob

"But what about the free migration to Bristol of millions of funny-speaking geordies? Shouldn't migration to Bristol "done on a basis of benefit to Bristol"? Why are the rights of residents of Bristol to manage migration to Bristol trampled upon by a distant, federal entity like the UK?"

We have political control over those areas.

Bill Mitchell from today:

"the way the Left fell prey to what we call the globalisation myth and started to believe that the state had withered and was powerless"

Its not that it "withered"... many dont see it at all... this is another bias in this cohort against spatial cognition... this cohort has trouble seeing boundaries and interfaces...

They will then say the ones that do are the "xenophobia!" people...

Guano

It is true that Dr Fox can move very fast when he smells some money.

He was over in the USA very soon after the invasion of Iraq to try to raise money for his fake charity, by saying that the Tories voted for the invasion so could the Americans give him some money, please.

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