Thursday, May 26, 2016

We face serious problems - 1

The Leave campaign has been depressingly bad: lacklustre, limited, too reliant on not very attractive and badly argued slogans and incompetent in its arrangements. On the other hand, the Remain campaign with its outstanding hyperbole (if we leave there will be another world war is not particularly rational) and reliance on such things as letters from ridiculous luvvies has been even worse so that cheers me up. Not for long. The accepted opinion on all sides is that we shall probably lose and I have to admit to having had a bad feeling about this referendum for some time.

It is, therefore, a great pleasure to read a rational and well-informed article on our side by Allister Heath (who else?) in the Telegraph. He attacks the outrageous, dishonest and hysterical pro-Remain reports, such as the one produced, quite against the rules by the Treasury and says:
As it happens, such studies are a farrago of nonsense, based on question-begging, unrealistic assumptions designed to lead to a pro-Remain conclusion. In some cases, especially the Treasury’s analysis of the short-term consequences of leaving, they are a scandalously unethical concoction of a kind eerily reminiscent of Tony Blair’s dodgy dossier prior to the Iraq War.

But the fact that they are flawed doesn’t mean that their arguments can be ignored. It is desperately important that the economic case for Brexit be made much more vigorously. It needs to be divided into two components: a takedown of the EU as an ultimately doomed, job-destroying, declining and mismanaged behemoth which stands no chance in an increasingly agile, globalised world; and the mapping out of a clear exit strategy, compatible with Leave’s objectives, that shows how we would maintain and enhance our openness to the world. The message must be clear: we would be better off out – in terms of jobs, wages and growth. The costs of leaving will be smaller than the benefits, and this would become evident within a few years of leaving.

The core assumption of the anti-Brexit economists is that leaving would erect damaging barriers to trade; the pro-Brexit side must take on and demolish these arguments. The good news is that it’s quite easy to do so. The Leave campaign’s long-term aim is to break away completely from the EU. But there is no doubt that, were we to vote Leave on June 23, the UK would seek to adopt, as an interim solution, a Norwegian-style relationship with the EU which ensures that we remain in the single market, giving us plenty of time to work out new arrangements with the rest of the world.

That is both the only realistic way we would quit the EU – the only model, that, plausibly, MPs would support as a cross-party compromise deal – and the best possible way for us to do it. The Norwegians would welcome us with open arms, as their own influence would be enhanced, and other EU nations would seek to join us. Such a deal would eliminate most of the costs of leaving, while delivering a hefty dose of benefits as a down payment.
The Adam Smith Institute has looked at the Treasury "report" from another angle.
The Treasury are playing a key role in the referendum campaign. They have published two reports which explicitly campaign for remain. The first looked at the long term impact. The second report published yesterday, looks at the immediate impact. Both reports are all doom and gloom. They claim our economy will quickly be pushed into a recession and we will be £4,300 poorer in the long term.

Like the Government’s referendum leaflet (which cost £9m to publish), this analysis isn’t balanced. It is openly designed to promote Project Fear. It also cost taxpayers’ money to produce. Civil service staff are being diverted to fight the remain campaign. These are vast resources which aren’t at the disposal of the other side, essentially circumventing the funding limits. A team of 20 treasury wonks would cost around £1m a year.
So how much did the Treasury spend on the exercise?
As a concerned taxpayer, I submitted an FOI request to the Treasury. We have a right to know how much this all costs. I asked them how much they are spending on the EU referendum and in particular for staffing numbers. Their (late) reply speaks for itself.

“It is not possible to identify full time equivalent staff numbers involved in the production of HM Treasury’s analysis because of the range of staff who contributed on an ad-hoc basis from across the Department. We have not yet received the publication invoice.” Information Rights Unit, HM Treasury.

It is not possible to count up the team involved. But it is possible to predict the next 30 years to the nearest pounds and pence, complete multivariate macroeconomic modelling, and work together as a pan department team to quickly turn this around into 290 pages of reports. Either they can't do basic arithmetic or they are hiding the amount they are throwing at the campaign.
This is not really surprising to many of us but is not as convincing to the electorate as one would like it. Sir Alan Sugar says we must stay in. Oh my gosh! He is a businessman, he must know whereof he speaks. Well, other businessmen say otherwise and, in any case, Sir Alan has just been appointed by David Cameron's "Enterprise Tsar", whatever that might be. In parenthesis let me say that I have never quite understood this obsession with naming people as tsars of something or other. Do they not know what happened to many if not most tsars, particularly the last one? The job will end badly - they all do. But in the meantime does this make Sir Alan an independent businessman to whom we must listen? I think not.

[As ever, I find that what was going to be a shortish posting has acquired a longish preface. So, I am making this part 1. To be continued. Part 2 is here.] 

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