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July 04, 2016


Luis Enrique

I don't understand why you aren't giving underpants gnome leadership its proper name


Ralph Musgrave

There’s a simple solution to the allegedly “complex” post Brexit trade deal problem, and it’s roughly speaking the Patrick Minford solution. It goes like this.

As regards what can be imported to the UK, tell the entire world they can ship us anything they like. It’ll be tariff free, but must obey EU rules on technical specification etc. Obeying EU specification rules saves us a fortune in bureaucrat hours. As to the apparent harmful effect on our balance of payments, that’s not a problem: the pound just declines relative to other countries which makes UK exports more competitive. Swings and roundabouts.

As regards British exports to where-ever, don’t even bother turning up for “negotiations”. Just tell other countries to email us with details when they’ve decided what rules and tariffs we have to abide by. That again might at first blush seem to damage our balance of payments and hence damage the UK to the extent that tariffs and non-tariff barriers are imposed. But as it explains in the economics text books, when country A imposes tariffs on stuff coming from country B, country A actually harms itself as much as it does country B.


I see, so exiting a supranational government is more difficult than building and running one is it?

Is the picture you paint of Whitehall supposed to contrast with Brussels?


A veritable Gordian knot, we have created through our membership of the Euro. Hopefully we'll find someone with enough nous to just cut it.


We have a glut of underemployed or unemployed graduates and post-graduates. I am very skeptical that we lack the capacity.


@ Endrew - yes, Brussels is dysfunctional, as to some extent or other are all large organizations.
There is, however, a difference between running existing operations and setting up new ones: the latter is often much harder than merely keeping things ticking over. Strong evidence for this is the fact that corporate death rates are high for young firms, but lower for older ones.
@ Britonomist - trade negotiations is a sklled job, requiring years of experience.

Davis X. Machina

@ Chris - "...trade negotiations is a sklled job, requiring years of experience."

Ideology is a perfectly adequate substitute for experience.

We Yanks found that out trying to make a new Iraq...


Your last paragraph are my thoughts exactly. Surely any conservative sceptical about what government can achieve should say of Brexit that it's just too hard and not worth it?

Hans Suter

But doesn't former PM Blair make a lot of money selling "the art of effective government" ? http://www.africagovernance.org/insight


Chris, it might be a problem for the next couple of years. But it should be no problem to train and enroll some of the many graduates looking for a good job in a graduate scheme to train them, so I can't consider it a long term problem.


@ Chris - OK, but:

"the fact that corporate death rates are high for young firms, but lower for older ones."

This is largely to do with selection of successful business models (i.e. whether they are doing the right operations, rather than the difficulty of setting up those operations), and secondly to do with advantages of size and entrenchment.


FFS,we don't even have enough native people to run the NHS or the DWP (I have a friend who has just gone through the system. After nearly 15 months, his situation is still not sorted).


this has nothing to do with "government" competence as such. Competence in general is in short supply, particularly when we have generalist managers who lack essential technical knowledge.



I'm not sure how you separate selecting and implementing the 'right business model' and know that it's the selecting that's the main problem?


«But as it explains in the economics text books, when country A imposes tariffs on stuff coming from country B, country A actually harms itself as much as it does country B.»

Therefore the various GATT/WTO rounds were entirely pointless, like all reciprocal trade negotiations. :-)

Unfortunately the «economics text books» theorems are based on exceptionally narrow assumptions, in the particular the "free trade" argument, that never happen in practice, and the Second Best Theorem states that approximations to the assumptions don't result in approximations to the original results.

Most Economics theorems are not of the sort "we can prove that X holds in general, except maybe in some irrelevant special case Y", but "we can prove that there exists an irrelevant special case Y under which X holds, and then we will truthfully claim that X holds without adding (in some artfully chosen special case)".

The real skills in Economics are figuring what result the sponsors like and then finding a set of assumptions no matter how narrow or comical under which it can be "proven".


«Competence in general is in short supply»

That's a common myth pushed by the Ayn Rand worshippers of "wealth creators".

What the Web has shown us is that competence, while far from being universal, is in massive oversupply compared to the effective demand for it; there are "hobbyst" photogalleries, blogs on every subject, "3D printer" users, software projects, organizations that produce sometimes results up there with the best "professionals", but often of "just" pretty good quality even if not best.

The big deal is that "access" seems to trump "competence" in the awarding of well rewarded posts, or else there would not be so many political dynasties

Also, for an example that is often not reflected about enough, there are four to six "perfect score" applicants for every Oxford or Cambridge post.

If there were a short supply of competence then Oxford and Cambridge should have expanded their student numbers by four six times; but this has not even remotely happened, my guess is because the purpose of Oxford and Cambridge is, as before, to act an access filter to a limited number of plum posts for the "right people" plus some tokens from oik backgrounds like our blogger.


I suppose one approach is to re-engineer (or whatever the new word is) a government system that has evolved to work with the EU. Some will declare 'don't fix it, nuke it' and rip it all up and start again. Seldom worked back in the day and no chance with HMG. Allow a budget of 10 years and endless consultants soaking up £billions.

So we are stuck with modifying a system that barely works anyway, with interest groups keen to hang on to power at the expense of efficiency or effectiveness. All this from a corporate HQ planned to be rebuilt (at great expense) at a time when the cash flow may well slow down. Oh and the engineers are whining that the power stations are falling apart.

One of the few advantages of a revolution and piano wire is it does not take long and saves on consultancy fees.


The UK civil Service was once referred to as a Rolls Royce system. They employed highly educated and capable experts in areas that many would not even have heard of by the general public. Any national emergency or outbreak of war and the machine was adapted and up in action within days. The civil servants were employees of the Crown and protected the UK public against rogue politicians and stupidity. The Thatcher Government broke up that competence and public protection quite deliberately. Senior civil servants were set one against the other to close their colleague's department to keep theirs open. As soon as the colleague's department went then the tables were turned on the conspirator and their department went. The very best civil servants took fright and left in droves with pay-outs in the £ hundreds of thousands. The unemployable elsewhere rump was left and a raft of private sector contractors brought in as the workload grew and grew. Targets were brought in which were always passed as no one checked whether the work was done or not. Reorganisation after reorganisation came in with a total loss of knowledge, experience and even the files which gave some clues as to what had recently happened and why. Staff did not bother with the current reorganisation as they could catch up with the one 2 or 3 stages down the line.
PFI came in and clueless staff were negotiating contracts with commercial sharks and the UK paid 4-5 times what it cost before when employing the very same private sector designers and contractors. Regulated industry wrote the rules of regulation to suit themselves then passed it on to the civil service to be made into law.

The concept that the UK civil service despite being some 12-30 times bigger than their counterparts in "bureaucratic" Brussels has the slightest clue as what is involved in amending 40+ years of UK/EU law and negotiating hundreds of trade deals is absolutely ridiculous. They will not even know which foreign staff to employ to help them in the first place and the first thing a contractor asks is what do you want me to do.

I cannot see UK politicians devoting their careers to "overseeing" this total commitment to intense detail and never ending amendment, and regular change of Minister, that may take 15 years if they are lucky. Many think a single year in a post is far too long.


«PFI came in and clueless staff were negotiating contracts with commercial sharks and the UK paid 4-5 times»

4-5 times happens but usually it is 1.5-2 times more.

And quite deliberately I think: it looks like the secondary goal of PPI was to "spread the wealth" in favour of business rentiers and in particular finance rentiers. "wealth creators" that is :-). The primary goal of course was to create off-balance sheet vehicles to distort government accounting.


«trade negotiations is a sklled job, requiring years of experience.»

There are two types of negotiations that the English government needs to do after the vote, and they are very different:

#1 Negotiations with the EU27 after invocation of article 50.

#2 Negotiations with other countries that were previously done by the EU collectively.

As to #1 there is no need to negotiate: it will be a take-it-or-leave-it prepackaged "deal", like EEA membership, or EEA-minus-free-movement-plus-right-for-existing-emigrants. If the civil services of Ukraine, Gibraltar, Turkey, Iceland, etc. have been able to do such deals, the UK can do that too. At worst the 2 year period of the WTO expires, and then it is just WTO rules, like with say Brazil or Canada until recently.

What will *never* happen is that the EU27 will agree to a special deal for a big ex-member country like the EU, which would undermine the equality of still-member countries before the EU treaties, which is exactly what UK (and USA) policy has been trying to achieve for decades.


As to #2 there is a problem, but then there are still WTO rules with all the countries that matter.


«trade negotiations is a skilled job, requiring years of experience.»

BTW there are I think only four main areas to negotiate, and the outcome is politically determined, not technical:

* Rights of EU citizens in England: this is something that some Conservative politicians is a bargaining chip for the UK, but it is not, because a lot of tory voters are making directly or indirectly a lot of money from EU immigrants, and the last thing they want is for them to leave.

* Rights of English citizens in the EU: this is a strong card for the EU, because the free health care they get costs the spanish and french government a lot of money, far more than EU immigrants to England cost the NHS, and also they vote tory.

* The City's regulatory "passport" to the EU: this probably is something that the EU will never agree to. I can't imagine what England can offer the EU as a trade-off for that. The idea that the EU will want to have their financial capital in a country outside it, when there are Paris and Frankfurt, is quite unlikely. Also a large part of the City, those who funded "leave", don't care, because they want to serve dirty money flows from outside the EU, they don't care about commercial banking within the EU.

* The large trade surplus Germany has with England: WTO rules make it quite hard for the UK to threaten it.

* The ability of foreign companies to export from England to the EU: again WTO rules make it quite hard for the EU to threaten it, or to increase the physical distance between England and the EU shores. The UK government can also keep FDI companies incentivized to invest in the UK by pushing down further wages by expanding low-wage immigration, that will be called "temporary guest workers", from third-world countries, which is in the post-exist plans anyhow.

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