Friday, 15 April 2016

EU: Why We Should Stay

 As the EU Referendum campaign officially begins today, Alex McKirgan and Ross Watkins 
 argue that we should vote to stay in the EU. 


Brexit - It's Not About the Numbers

The Yale academic, Dan Kahane, has done some really interesting work on the theory of Cultural Cognition. The theory proposes that people form perceptions of risk and related facts that cohere with their self-defining values. He shows that two people could look at the same set of data and come to completely different conclusions about what the data show. They are more likely to come to a conclusion based of their own values and a desire to identify with a group of people whose values they share. They will then use the data to justify this position.

The whole Brexit debate is a perfect example of this phenomenon. Oxford Economics recently published a study showing 9 scenarios for the economic consequences of Brexit. Campaigners on both sides have looked at the numbers and used them to justify their pre-existing positions. So if it's not the data, what really drives whether you are Remain or Leave? I believe it comes down to an emotional response. Do you like the idea of being part of a big pan-European trading bloc or do you recoil from the idea of a Euro-bureaucracy? Once you come to one of these positions, you look for the facts that justify your position.

I could leave it here and say the whole referendum will come down to this emotional gut reaction but at the risk of upsetting Prof Kahane, I believe the Brexiteers are stretching the facts beyond breaking point. Let's go back to the Oxford Economics scenarios. In the best case post-Brexit scenario, GDP would be lower by 0.1% and annual GDP per head would be £40 higher. The Brexit camp can use this data to show that there would be no economic collapse and no price to pay for 'escaping' from the deathly hand of Euro-regulation and 'getting control of our borders'. There are two problems with this. Firstly, this is the best case scenario (the worst case scenario shows GDP falling by 3.9%) and this scenario assumes no net reduction in EU migration...a key Brexit aim. Any significant reduction in migration would worsen government finances by around £30bn and require either offsetting tax rises or spending cuts.

Another common Brexit line is that if we leave the EU, we will be free to trade with faster-growing markets outside Europe. This assumes either that we don't do that today (we do) or that we would be able to do so on much better terms than we do today. If the Brexit camp think that Britain on its own would be able to negotiate a better trade deal with China than China already has with one of the largest markets in the world, they are suffering from Trumpesque levels of naivety. At the very best, Britain would eventually be able to have a similar trade deal with emerging market countries than we have today. There will be no Brexit export bonanza.

The next argument one hears is that the EU is a sinking ship and we should jump off before it sinks. Really? When pushed, people talk about the problems in the Eurozone. While the Financial Crisis showed the current design flaws of the Eurozone, it cannot be said that all Eurozone countries have suffered. Germany and the other northern Eurozone countries have benefitted massively from the Euro and work is being done to fix the design flaws by moving towards Eurozone fiscal integration. Whether or not you agree with my points on the Eurozone, they are Eurozone problems, not EU problems. We are not part of the Eurozone so it is not our problem.

Another general political problem is that often the benefits of any policy are widely dispersed but the costs are highly concentrated. People who benefit tend to take the benefit for granted while those who suffer complain very loudly. The single market is an example of this. We ALL benefit from the economic efficiency and economies of scale delivered by the single market but there are, undeniably, a much smaller group of people who suffer. We have three choices...1. pull out and throw away the benefits, 2. tell the people who have lost out that there is nothing we can do, or 3. provide resources to ensure that those who have lost out are provided with appropriate job opportunities, housing and public services. Option 1 will make us poorer, Option 2 will ultimately build pressure for Option 1 so Option 3 is the only real alternative.
The arguments for Brexit are based on a gut emotional reaction to 'get out' plus ridiculously naive economic arguments. If all the energy produced by the Brexit camp had been directed towards improving the EU, we would be much better off. For example, how about fully extending the Single Market to services rather than just goods?...a development that would be a huge boost to Britain's Services-dominated economy. How about recognising the reality of further Eurozone integration by formalising a two-tier EU structure?...the Eurozone at the centre and the wider group focusing on the Single Market and economic integration.

There is enough here to convince me to use my first vote to vote Remain without even talking about security, the threat to London as a financial centre and Britain's place in the world. The Brexit camp remind me of Stephen Colbert's concept of Truthiness. Truthiness is a quality characterising a "truth" that a person making an argument or assertion claims to know intuitively "from the gut" or because it "feels right" without regard to evidence, logic, intellectual examination, or facts.

The argument for Brexit is Truthiness in action. We are so much better than that.


Alex


It may not be about the numbers but here are a few facts….

Alas I have been driven into the debate over the United Kingdom’s referendum over its membership of the European Union and to write an article upon the matter due to the manner and stupidity of the argumentation coming out of the ‘No camp’. From the outset I should make it clear, I am the strongest advocate for the United Kingdom remaining in the European Union and I will not shy away from that fact. This article will be asking those, who have the opportunity to vote, to make a forward thinking, intelligent and international minded decision by deciding to remain in the EU.

Whilst browsing the, “Better Off Out” website I came across their ‘10 Reasons to leave’. Although I do not want this seem to be argumentation based on demeaning the point of view of the opposition. I think it is important to start off by making redundant the fanciful idea of a utopian Britannia leading the world once free from the heavy chains of the EU. The list's most prominent suggestion is that once we leave we will have the, “Freedom to make stronger trade deals with other nations”- highlighting a key argument for leaving that we will be economically better off upon leaving the EU. The United Kingdom has a Gross Domestic Product of $2988.89 billion (2014) with a population of 64.1 million (2014). The EU by comparison has a GDP of $18.5 trillion (2014) with a population of 508 million (2014), the EU is the single largest consumer market. As part of the EU we are therefore a member of a much stronger and larger economic community in a stronger position to negotiate trade deals. This means with emerging economies such as India, China, Indonesia, Mexico and Nigeria (all countries predicted to have larger economies than the UK by 2050), we can take a much stronger position on the negotiating table than if we were smaller and cut off economy.

The pro-leave campaigners would counteract this suggestion by highlighting the fact that as an ‘independent’ nation we have more choice and also make deals specific to UK needs and strike an amazing with a now desperate and heart-broken EU. Yes that will work…… in a world where world leaders travel to their meetings on fire breathing dragons.


Whilst not being a pessimist, I believe that the United Kingdom is no longer the great economic power that it once was and it has not been for half a century. Whilst we have a vital place in the world and we have a relatively large economy; we still cannot in any way guarantee that we will make trade deals that will place us in a stronger trade position.  More importantly, concerning the European Union, the government correctly believes that we will not be able to get a trade deal anywhere near as good as what we have now. Less than 8% of EU exports come to the UK while 44% of UK exports got to the EU. This shows that, on a trade basis, we seem to benefit from our current trade agreement- benefitting our country’s economy. Why would the EU therefore, especially after us putting two fingers up to them on the 23rd of June, agree to a trade deal which benefits us more than them? Furthermore, no other country has ever managed to secure significant access to the Single Market without having to: follow the rules laid down by the EU, pay into the EU and accept EU citizens living and working in their country. Why should we believe that we will get a, “special treatment”.
My honest opinion on this matter is that - we will lose out economically is we leave the EU. On top of this, we will most likely be forced to abide by the rules and regulation, payments and freedom of movement the anti-EU camp has so strongly fear mongered about. This will just place us in a trade agreement similarly to what we have now however without any political say in Brussels- even Daily Mail readers should realise that leaving the EU for any economic reason would be a foolish move.

Whilst I could get carried away with the economic arguments which support the continued membership of the United Kingdom to the EU, I believe it is important to use my limited word count to instead highlight the political importance of the EU. Firstly, the issue of collective security against threats highlights the importance of us remaining in the European Union.  As ‘The West’ we are facing very real threats from violent non-state political actors such as the so called Islamic State and also from countries such as Russia. As a member we can combat these threats to our collective security together. Standing alone we cannot benefit from the security of the EU. Whilst I could expand on the necessity of the EU in terms security and include a long winded analysis proving it to be so, I will instead look at the significance of what the EU holds.


Europe has been ravaged by infighting more much of its history. The only period of long lasting peace has come since the end of the Second World War and the creation of interdependence in Europe. Whilst it is wrong to claim that the EU has ended all possibility of conflict in Europe and is the sole reason for flourishing amicable relations in the region. What the EU does do is that it creates a positive dependency on one another. Creating an atmosphere where individual success breeds collective success allows countries to work together, develop together and raise the quality of life for all individuals involved. The political alliance is further necessary due to the evolving threats to our way of life, such as Global Warming, which need a collective response.

If we turn our back now we are dooming ourselves to isolationism, economic stagnation and a reduction in our political influence. To quote the IMF, “ (Brexit would cause) severe regional and global damage)”. We know the facts, they suggests that in no way will leaving be beneficial.
In general the young and better educated want to stay and the older and more poorly educated want to leave. I feel this suggests that the motivation to leave is one spawning from fear of migration and a wish for UK ‘independence’ (completely misconceived as migrants bring a net benefit and 3 million jobs are dependent on the EU). Consequently, let us not make a decision based on anger, fear and speculation. Make this generational decision on facts, a forward thinking attitude and a positive outlook on our current future.

Do not let fear condemn countless future generations by turning our back on our friends.



Ross

3 comments:

  1. Sorry Ross, but despite the numerous Icelandic volcanoes, I don't recall them flying over to China on 'fire breathing dragons' to strike their free trade deal!

    I would also like to challenge the 8% of EU exports that we supposedly take on. Unless you follow the Nick Clegg school of mathematics, I was aware that we in fact took on 16% of EU exports. More than the USA, more than Canada, more than Australia.

    I would also like to turn you to this. http://www.iea.org.uk/publications/research/the-eu-jobs-myth-0

    This is not an economic argument, in my opinion. We both need each other in a sense of trade. However, in terms of a political standpoint. Do you want to be a part of an EU army? Do you want ever closer Union? We have never been a comfortable member of the EU and never will be.

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    Replies
    1. Firstly you missed understood my use of the metaphor.
      Secondly, you can challenge the statistic of 8% and look like an fool, I will print out the ONS report for you if needs be...

      IEA is a right wing agenda think thank. If you use any unbiased source the view point of the IEA is redundant.

      Lastly you say it is not an argument about economics. Well it is you just don't want it to be because you economic argument in support of leaving is non-existent.

      Finally, just to place the final nail in your coffin. We are not forced into ever closer Union- that had been agreed. The EU army is not in writing anywhere and us purely right wing fear mongering. Furthermore, is the idead of a limited EU army a bad idea? Collective security, lower costs on military spending on metal interests, we can train together.

      Look I would say I was hard to counteract you argument but in all honesty.... It wasn't.

      P.s. Just to reiterate it is an argument about economics. If we leave we will lose jobs, reduce economic performance, reduce living standards... I'm not going to type them all out just look on the BBC..

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  2. Sorry for the spelling mistakes it was quite late at night

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