The opportunity cost of Brexit

There’s one possible effect of Brexit that I suspect hasn’t had the consideration it merits – the opportunity cost.

What I mean is that all of us – politicians, journalists and regular folk – have limited attention and mental resources. Attention devoted to Brexit is therefore attention that’s taken away from other matters. And given that state capacity is also limited, if our best civil servants are working on Brexit (which is an if) then they are not focusing on other policies. Brexit steals cognitive bandwidth.

For example, in a better world, we’d devote our political attention to overcoming secular stagnation, welfare reform, combating inequalities of power and income, improving workers’ rights and so on. As it is, attention is focused on trade deals, our relationship with the single market, countless treaty renegotiations and so on – all of which are efforts merely to avoid losses, something which could have been more simply achieved by a Remain vote. Rather than turn our attention to progress, we’re wearing ourselves out trying to avoid regress.

Brexit distorts the policy agenda in other ways. For example, industrial policy should be concerned with increasing productivity and innovation. But in fact, it’s focused upon limiting the damage of Brexit, perhaps by offering handouts to favoured big firms whilst letting smaller ones swivel in the wind.

And then there’s the question of the values promoted by the Brexit debate. Brexit fuels nativism and even perhaps mercantilism, whilst the policies it squeezes out would focus instead upon more enlightened ideals such as liberty and equality.

All this, however, poses the question: is there really an opportunity cost here at all? Might there instead be an opportunity benefit?

All the above assumes that we are on a kind of policy production possibility frontier, so that Brexit means less good policies or administration elsewhere. But what if we are in fact well inside the frontier? Then Brexit – far from being a barrier to good policy elsewhere – might actually help it.

For example, had we not had Brexit Cameron and Osborne would still be in office so we’d be stuck with fiscal austerity. As it is, their departure has created space for a “reset” of policy. If Johnson and Fox were not tied up with Brexit negotiations, they’d probably find some ways to damage our polity. And a government whose energies and political capital weren’t sapped by Brexit might well have even more ability to hurt the worst off.

Which brings me to a paradox. We lefties can be quite relaxed about the opportunity cost of Brexit. Yes, Brexit is regrettable, but it has the silver lining of distracting the Tories from doing damage elsewhere. Tory supporters, however, have no such comfort. They should regard Brexit as a distraction of government energy which could be well-employed elsewhere. In this sense, it is intelligent Tories who should most regret Brexit.  

Comments

[Chris S]

This is also the reason why the belief that the UK can carve out many trade deals is illusory at best.

Every potential trading partner has a limited number of experts in such negotiations who are booked up - often for a few years. They also have a limited amount of legislative time they can devote to trade negotiations.

[e]

I agree. Only it depresses me deeply to hear talk of even more ways to hurt the worst off. If the better alternative is a period of not doing more harm, does fixing the damage get a look in? Will it be counting bodies and wait?

[Rosscoe_peco]

Many Tory Types are suspicious of government action regardless of which party is in power- They don't all vote Tory to put a Cameron or May in power many are satisfied just to keep Labour out.

When I voted leave I thought that Parliament being tied up with Brexit for a decade or so and thus leaving other stuff well alone was a feature not a bug, and I haven't seen anything to change that opinion.

[Ralph Musgrave]

"Brexit fuels nativism and even perhaps mercantilism, whilst the policies it squeezes out would focus instead upon more enlightened ideals such as liberty and equality." Load of nonsense.

As to mercantilism, why on Earth is trading on the basis of WTO rules more "mercantile" than EU rules which suppress trade with the rest of the world in favour of trade inside the EU? If anything, I'd say EU rules are more mercantile.

As to "Liberty", do Brexiteers advocate constraints on free speech any more than remainers? At a guess I say it's remainers who are marginally more in favour of supressing free speech as remainers tend to left of centre, and lefties tend to oppose free speech.

Re "equality" it's news to me that remainers favour a more generous social security system than Brexiteers.

[Dave Timoney]

"Brexit is regrettable, but it has the silver lining of distracting the Tories from doing damage elsewhere".

In the short-term, yes. However, the risk is that Brexit might change the political landscape such that policies that were hitherto "out of bounds" become feasible. This is not just a case of exit from the EU meaning that a future government might abolish worker or consumer rights, but that the process itself might create precedents. For example, the likelihood of a referendum on the restoration of the death penalty will surely be higher after 2019.

Ultimately, Brexit does mean "taking back control", and that more concentrated power will be used.

[Churm Rincewind]

Ralph Musgrave - WTO rules are not a magic bullet, you know. Britain joined the WTO under the auspices of the EU and its terms of membership have been shaped by two decades of negotiations led by Brussels.

There is no reason to suppose that post-Brexit the UK could simply continue to trade on the same terms. That would depend on the agreement of the other 161 members of the WTO, which might or might not be forthcoming.

In a worst case scenario Britain would have to strike a deal on everything from the thousands of tariff lines covering its entire trade portfolio to quotas on agricultural exports, subsidies to British farmers and the access to other markets that banks and other UK services companies now enjoy. Which could take years. Or not. Who knows? Such a situation has never arisen before.

[Guano]

Is climate change adaptation and mitigation going to get a look-in?

[towerbridge]

Ralph - further to Churm's post...

WTO rules are very bad for us and whilst we had influence when we were part of the EU, we are a tiny nation which is up against 163 states in the WTO.

The WTO rules specifically forbid any form of subsidy for farming and any form of assistance by the state otherwise (so you can forget getting start-ups off the ground - they will be swallowed up by large unnaccountable corporate bodies). In the EU there were ways in which states could do this and you could change the EU's practice - especially if you allied yourself with states such as France. You should also know that the WTO fetters our tax powers through GATT and other trade agreements.

The WTO forced the US to repeal the "American Jobs Creation Act" and that's the US. But it's ok right - we're "taking back control"?

And as for your assertion that lefties are more likely than rightists to supress free speech. That's just total bollocks.

[Dave Hansell]

On the basis of Ralph's contributions so far it is difficult to find anything which cannot be considered simplistic and impractical in regard to the perception of trade and how it works.

Leaving aside the decades of time it will take to achieve trade deals with a plethora of other state entities which come anywhere near as close to the benefits of trading relationships and trading clout of being part of the largest single market on the planet - and in the meantime we still have to be able to afford to eat as well as heat and light our homes and businesses - lets consider, from a practical common sense perspective, the point of view of all those SME's trying to sell their products and services to different markets which each have differing quality standards and regulations for the product and services (current) UK SME's produce.

The total impracticality, as well as cost considerations, of setting up ones production processes to meet widely differing standards and regulations across different markets would be a nightmare. Whereas at present - until the two year divorce settlement has been concluded- there is at least the continuity of operating to a single set of criteria and regulations within the single EU market which lowers costs for SME's.

Of course, on the issue of quality standards the opposite should also be a concern, where quality standards from employment rights, consumer and environmental protection and financial regulation are more than likely to be lower in a UK outside the EU as our equally corrupt and undemocratic institutions, with their revolving door lobbying systems, eagerly join in a race to the bottom whilst the emotionally driven FU armchair democrat brigade pontificate endlessly about taking back control whilst sat on their backside doing absolutely nothing practical to attain the democratic control they claim to want whilst loudly telling everyone who points out the impracticality of their position to FO out of what they consider "their" country.

[David]

@Dave Hansell.... exactly.
I second that.
David.

[joe]

The delusional loonies are now speculating that Trump will put UK first in future trade deals. Trump has threatened to rip up the trade deals with Canada and Mexico let alone the EU. Why on earth would he think that a new deal with UK is the way to go? Anything we have to offer can easily be made at home in the USA.

If we make enough innovative and high quality products then trade deals are not relevant - we will export. UK's problem is that 25% of adults are officially not functionally literate and most of the rest have few skills that support innovative industries. There is a great market for art, crafts which UK in the past were great at, but with a Gradgrind 3 R's education for all, few can now change a light bulb themselves. So the opportunity cost is that we lose skilled migrants even applying to UK let alone stop new investment into skills, training and top products for several years.

I liked the idea that EU put in place high quality legislation and left Westminster to do the minor local council stuff they are best fitted for. It is painful watching how they simply cannot come up with a clue as how to implement Brexit. I can see them giving up completely in a year or two because there are no gains whatever over just staying in the EU and few leavers are all that bothered one way or the other.