Economics has been a major area for our critiques, which is why there will be at least two themes posts to cover it. It’s the area where Remainers make the most fuss, concerned about what the UK will lose through Brexit. Since they have little positive to say about the EU they are reduced to making threats about the damage they expect it to cause to our economy.
Our early posts on this theme were published before the Referendum and so were mostly to encourage people to vote Leave. We wanted to respond to “a leap in the dark”, which we did with “asleep in the dark”.
We pointed out the limitations of economics as a discipline and the problems with forecasting, especially over the longer term. Our favourite quote was, “An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.”
We challenged the ill-supported claims made in favour of economic and monetary union, the main, unstated, purpose of which remains ever closer union, rather than any supposed economic benefits it might bring (but hasn’t and probably couldn’t, given the diverse nature of the component economies).
Concerned about the poor quality of information that the public received, the BBC produced an entertaining and informative reality check for those who were confused by the bombardment of contradictory economic ‘facts’ with which we were assailed. For example, it asks how to know which reports to take seriously and if those who commissioned it had a preferred outcome is it necessarily wrong?
The link is still available: http://www.bbc.com/news/business-35862618
On Economic Models (14/05/2016)
We continued our critique of economic forecasting in the next post, also published before the Referendum. We wondered what sorts of forecasts would have been made if there had been a Leaver as chancellor of the exchequer.
We provided some links to websites that described the limitations of forecasting in complex fields and highlighted some of the questions that were raised. We pointed out that gloomy forecasts of the consequences of Brexit were invariably based on unstated assumptions which, if stated openly, would raise questions about the value of the models they lead to.
We concluded that none of this means that all models are totally useless. The best they can do is to flag up possible consequences that might happen and would otherwise have been overlooked.
Economic Forecasts are Wrong (14/05/2016)
In mid-2015 five presidents of EU institutions, led by Jean-Claude Juncker as President of the European Commission, the executive arm of the EU ‘government’, presented a major report on economic and monetary union (EMU) as the basis of the Union project. We took up three posts to offer a critique of their assumptions, conclusions and plans for the future.
We started from the idealistic (ideological?) vision of the benefits of EMU: “A complete EMU is not an end in itself. It is a means to create a better and fairer life for all citizens, to prepare the Union for future global challenges and to enable each of its members to prosper.” We noted the qualification of “complete EMU” and the frequent blame that the presidents put on the member states for not completing this aspect of union, since even they had noticed that the eurozone has not delivered on its promises.
We found that the report was filled with propaganda, specious claims and contradictions, though it gave indications of the true agenda, which remains the completion of the super-state overruling its member states. We concluded that the case was nowhere substantiated that such a union could deliver desirable outcomes better than individual nations.
Five Presidents Report (30/05/2016)
All the foregoing were published before the Referendum but after it we continued our analysis of economic matters, with a focus on EMU union. Here’s our opening to the next post in the series:
“We love economics. It’s a bit like driving a car at night without lights, peering at the road ahead, hoping that nothing unexpected emerges from a side road, all the time checking the mirrors to see whether anything behind looks familiar. There’s plenty of room too for back-seat drivers and innocent voices asking if we’re nearly there yet.”
After considering the disparity between the Greek and German economies, and some implications for the euro, we reviewed some more positive views of the UK’s prospects after Brexit than had been the norm in the run-up to the Referendum.
Going back to our metaphor, we concluded that the positive spin then being offered by many economists and institutions didn’t prove that we were on the right road at last but, though still in the dark, at least the rain had eased up, so we felt a bit safer.
Car Crash Economics (13/02/2017)
In the next post in the Economics series we looked at the European Commission’s budget proposals for the coming seven-year period (which we thought was an implausibly long period over which to give confident forecasts).
We noted, from a different theme, the deception the EU practises when it lists the Common Agriculture Policy as “sustainable growth: natural resources” and the cohesion funds for poorer regions as “smart and inclusive growth”, and other puffed-up euphemisms. In this case the deception may have been used to cover the proposed small reduction in these funds, which would surely have stimulated the ire of the French and of some of the smaller member states.
In the second part of our post we reviewed some of the early reactions to the budget proposals, which were mostly hostile, although that was perhaps to be expected as the opening shots in the forthcoming budget battle.
We concluded that perhaps the main point of our post was to point up, again, the fragility of the Union and the extraordinary tension between the federal ambitions of the EU and its institutions and the national demands of its members.
Budget Bazaar (11/05/2018)
In mid-2018 we reviewed a report from a group of Cambridge economists which challenged the models and assumptions used by others in the profession when they had forecast that the UK would find itself in dire straits as a result of Brexit. The report concluded, as we had done without their expertise, that “most estimates of the impact of Brexit in the UK, both short-term and long-term, have exaggerated the degree of potential damage to the UK economy.”
Part of the report asked our title question, whether membership of the EU had been beneficial for growth in the UK. We can’t know what would have happened had we not joined but we do now know this: “[UK] GDP per head clearly grew more slowly after accession than it had in pre-accession decades”.
We quoted liberally from the report (and provided a link to the website from which it could be downloaded – and still can). The authors concluded that “the impact of EU membership was much smaller for the UK than for other EU members.”
Did the EU Bring Us Growth? (26/07/2018)