Why I voted out and for relatively unheard reasons…

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We have seen a pretty revolutionary moment in our history. This is the first time that a country has voted to leave the European Union… and I am quite pleased.Let me make myself clear. Whether we left the EU or remained, the key issue is that we need to make the most of the situation that arose. If we had remained, we would have had to be proactive in assuring that we were in a position to enact reform. Now that we have left, we must be proactive in achieving the best terms that we can. In my opinion, we would have accepted the status quo had we remained and we would have been a part of a ‘sick’ organisation had we remained, not just because of EU bureaucracy, but also because of the nature of the relationship between the EU and the Eurozone.

Look, you cannot be a part of an organisation whose vested interests are tied closer with countries within the currency union and not with those outside of it. It simply cannot work. Take a look at the peripheral countries.

Italy:

  • Debt:GDP = 133%.
  • 11.7% Unemployment
  • -0.3% Inflation (MoM)
  • 36% Youth Unemployment

Spain:

  • Debt:GDP 99%
  • 26% Unemployment
  • -1% Inflation (MoM)
  • 45% Youth Unemployment

Greece:

  • Debt:GDP 177%
  • 25% Unemployment
  • -0.9% Inflation
  • 50% Youth Unemployment

To have a comparison, let’s fix for Germany and the Eurozone as whole:

Germany:

  • Debt:GDP 77%
  • 4.2% Unemployment
  • 0.1% Inflation
  • 7% Youth Unemployment

Eurozone:

  • Debt:GDP 90%
  • 10.1% Unemployment
  • -0.1% Inflation
  • 21.1% Youth Unemployment.

Look at the data. The point I am trying to make here is how can you have so many varying economies within the Eurozone, firstly with the same monetary policy being attributed by the ECB, but secondly, invoking the same laws from Brussels (which also have a heavy impact on the economy; trade deals, free movement of labour etc)? It cannot work, and it has been proven to be ‘sick’. You need to have fiscal AND monetary policy mobility to truly be able to efficiently run government budgets, otherwise you create huge deadweight loss if policies are counter effective.

What I find ironic is that Germany is the best performing country. They also have a massive trade surplus. I wonder why Merkel wants to keep the UK in the EU, as well as all other states (800,000 cars are exported to the UK per year…). Contrast this with the Eurozone as a whole and you can see that Germany are way above the average, while the peripheral countries are well below it.

Jean Jacques Rosa wrote a book called Euro Error which predicted this conservative austerity and far right uprising due to unemployment. What have we seen? Far right uprising in the Netherlands, Poland, France, Greece and Austria. They hide behind the veil of being racist, which they are, but the true problem always comes down to a group of individuals’ economic positioning within a country. The Eurozone has failed these people. It was doomed from the start in my opinion.

As a side note, immigration is not an issue for me. Immigrants since 2000-2011 have contributed a net surplus of £20bn to UK finances. Indigenous British people have a net deficit of £150bn to the welfare system.

What has really been made apparent as well, is the political fragility we have faced since 2008. We’ve had David Cameron resign, a huge split in the Tory Party with no real strong candidate for leadership being made apparent, 14 Labour Cabinet ministers resignations after Hilary Benn’s sacking and a call for Corbyn to step down, something which I feel he has to do firstly because he really didn’t argue his side during the campaign for remain and furthermore, was remain really his true feelings on the Brexit issue? I don’t think so, and this is why a vote of no confidence has been made. In terms of this, I feel that Brexit would allow for a new swathe of sovereign thinking to enter the House of Commons. We wouldn’t have Eurocentric opinion on trade and laws. What we would have is the independence to strike deals with China, India, South America, the US and Canada… which won’t take 7 years to complete…

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8 thoughts on “Why I voted out and for relatively unheard reasons…

  1. Perhaps your conclusion is right but your arguments are wrong:

    1. If the discrepancies in per-capita GDP, debt levels and unemployment are deemed unsustainable in the Eurozone, please explain why the US, Brazil, Italy, China and a few others haven’t fallen apart yet – all countries that show huge disparities between their richest and their poorest states. The US, just for example, shows DC with a per-capita income of some 190k, Mississippi with 35k/annum. The same goes for unemployment, debts and other metrics.

    2. The rise of the far-right started much earlier in the US than in the EU, perhaps because the income disparity in the US is greater than in most parts of the EU. All statistics support that view.

    3. These “Eurocentric opinion on trade and laws” that you claim has held back the UK from rising to former glory was apparently not a stumbling block for Holland, Poland, Germany and other EU countries that are doing pretty well. Take the EURGBP exchange rate as an (imperfect) gauge: The GBP dropped, according to the BoE, by almost 75% against the EUR (and its synthetic predecessor before 1999) in the past 40 years. Thus, one could conclude that the economic downturn in the UK (deindustrialisation, finance as almost the sole “breadwinner”, gigantic trade and account deficit etc) set in a few decades ago, well before the EU was conceived.

    4. You mention the economic strength of Germany against the rest-EU while you don’t mention the City, a 2.9 sq km area, that generates 22% of the entire UK GDP and London probably close to 50%, if not more (I haven’t looked up the numbers). So if Germany is “too strong” for the rest-EU and thus the Union is supposed to break up, can we expect London and/or The City to leave the UK soon?

    5. With all due respect, now having the “independence to strike deals with China, India, South America, the US and Canada” is hopefully meant to be sarcastic? Who exactly held back the UK in the past 200 years from making such trade deals? Why are Germany, Switzerland, Holland and others such great exporters while they surely were subject to the same laws and regulations as the UK? The UK once controlled some 70% of the world’s GDP, now it is down to some 3 or 4% – mismanagement at its finest. If you seriously believe that the UK will return to former glory now that the EU is not “holding it back” any longer, I have the proverbal bridge to sell to you.

    6. Good luck with your hope that “it won’t take 7 years” to strike trade deals with the largest economies. Actually, it took China 13 years (if I remember correctly) to negotiate its WTO membership, TTIP was in the making for a decade. I’ve been running 14 companies in a less-than-liberal part of the world for almost two decades and we did very well. I’ve been selling stuff for a large European conglomerate to 43 nations and not once in my 20 years of doing so have I nor anyone else ever asked whether there was a free trade agreement between our countries – not a single time. It doesn’t matter: If you have a good, competitive product, you just go out and sell it. The UK simply lacks the products and the expertise.

    Perhaps the UK as a nation should stop whining and fix what is broken in order to make its economy more competitive and change a few things in its social system to discourage right-wing parties:

    – Quality of Nationality Index – Rank #11 (nationalityindex.com)
    – GDP (PPP) per capita – # 25 (https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita)
    – Freedom of Press Index – #38 (rsf.org/en/ranking)
    – Labour productivity – #44 (http://www.tradingeconomics.com/country-list/productivity)
    – Health system – #18 (http://thepatientfactor.com/canadian-health-care-information/world-health-organizations-ranking-of-the-worlds-health-systems/)
    – Education index ranking – #16 (https://en.wikipedia.org/wiki/Education_Index#Ranking)
    – Housing affordability ranking (London) – #217 (out of 225) https://en.wikipedia.org/wiki/Education_Index#Ranking

    Low productivity, unaffordable housing, an expensive and inefficient health care system and horrendous snooping laws are all home-made, have been in the making for half a century and surely not the EU’s fault.

    Good luck, you need it.

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    • Thanks for the comment.

      As I said these were my reasons for voting out, whether right or wrong.

      With point 1, I did not say that there was anything wrong, I was merely pointing out the discrepancies between the data of the countries that are under duress and Germany, and the rest of the EZ.

      Point 2, I did not mention anything to do with the US, not sure why that has been brought up.

      Point 3, I claimed nothing of the sort. I merely said there was Eurocentric parliamentary opinion.

      Point 4, it’s not so much that Germany is too strong, it’s that countries facing the same monetary policy conditions do not have the ability to accommodate and constrict, which then affects them fiscally.

      Point 5, you can trade with non member states, but you cannot have preferential deals.

      ‘The UK once controlled some 70% of the world’s GDP, now it is down to some 3 or 4% – mismanagement at its finest. If you seriously believe that the UK will return to former glory now that the EU is not “holding it back” any longer, I have the proverbal bridge to sell to you.’ Again, putting words into my mouth. I did not once mention this.

      Point 6, you are right, the UK doesn’t have the manufacturing base, since we moved to a services based economy. This won’t be rekindled you are right.

      A lot of what you have written is true, but not exactly fair in my opinion, since I did not mention some of what you have brought up. Low productivity I mentioned here. Yes we have rentier feudalism, which needs to be absolved. The NHS is one of the greatest institutions on this planet. It can be improved, but I would rather have free healthcare via taxes than the US system where the poor die due to having no cover.

      Again, if you actually read the reasons as to why I want to get out of the EU, it doesn’t particularly have anything to do with the EU. It is purely to do with the Eurozone being a toxic entity and being doomed to failure.

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      • Thanks.

        1) Well, you went to great length to point out the vastly different metrics between some of the EU countries and you stated that “It simply cannot work”. You also said that “how can you have so many varying economies within the Eurozone, firstly with the same monetary policy being attributed by the ECB, but secondly, invoking the same laws from Brussels (which also have a heavy impact on the economy; trade deals, free movement of labour etc)? It cannot work, and it has been proven to be ‘sick’. ” Now you say there isn’t “anything wrong”. Which one is it?

        2) Indeed, you didn’t mention the US, I did – simply because you pointed at the “Far right uprising in the Netherlands, Poland, France, Greece and Austria” because of unemployment so I thought I should mention the US where the far-right movement has been rising for much longer, despite a lower unemployment. If the US is anything to go by, unemployment is not correlated to the rise of right-wing parties, no?

        3) Err, you stated that “…We wouldn’t have Eurocentric opinion on trade and laws…” so I concluded that you imply that the UK will be economically better off without the EU. I quoted Germany and other countries that are doing just fine economically within the EU.

        4) You stated that “Contrast this with the Eurozone as a whole and you can see that Germany are way above the average, while the peripheral countries are well below it.” so, yes, you did imply that Germany is too strong (or the others are too weak). I tried to highlight that though Germany is the economic locomotive, the UK faces a similar “phenomen” where the City/London are the major economic drivers and a Brexit won’t change anything.

        5.) You don’t need preferential deals to do business with other countries. I tried to explain that. Perhaps import duties come down a bit or red tape is being reduced but generally, nothing much changes, with or without those famous trade deals. Try to sell products into Russia, Indonesia, India, Saudi Arabia, Nigeria – I’ve never seen a custom official looking up the trade deals his country has before he decided whether or not to let that container go through customs.

        6) So, if you don’t have a manufacturing base left and only a few export-able services to sell abroad, how will the newly-won “independence to strike deals with China, India, South America, the US and Canada” benefit the UK post-Brexit? You lost me here.

        7) With all due respect and I really don’t mean to be rude, but: On one hand, you (very rightfully so) critize the “EU bureaucracy” and “sick organisation” which is, if I understand correctly, one of the reasons why the UK voted “no”, on the other hand you as a nation haven’t been able to modernize and fix a much smaller entity such as the NHS which, arguably, is one of the most cost-inefficient health care systems in the developed world.

        You lost me when you say that Brexit “doesn’t particularly have anything to do with the EU”, yet in very the next sentence you say that “it is purely to do with the Eurozone being a toxic entity and being doomed to failure.” Which one is it?

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      • Sorry, I meant there was nothing inherently wrong with having high levels of debt:GDP as long as it is serviceable.

        If you look at the labour participation rate of the US, that has been steadily decreasing over the last 8 years. The unemployment metric doesn’t factor this in. So while unemployment as a metric has been decreasing, labour participation has also been decreasing.

        Eurocentric opinion on trade and laws as in we would not need to be affected by EU legislation as much. Parliamentary sovereignty is kind of a weak argument in my opinion, but there is still some validity.

        Yes but you are ignoring monetary policy here I feel, correct me if wrong – re London. You are right, the same comparisons *could* be made.

        Having preferential deals in terms of tariffs. Not a big issue, but still an issue.

        Fair enough, point may be invalid re trade deals.

        Re: being sick organisation – it is due to the link with the Eurozone that makes it truly sick. Look at systematic risk in the EU banking sector with Italy and Germany.

        I wasn’t referring to Brexit having anything to do with the EU, I was referring to the main reasons for me voting out being reliant on the condition of the Eurozone, which has implications for the EU.

        Thanks for the reply!

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  2. Theres a reason why the indigenous population run so much welfare, the immigrants will live 10 per household and work for the minimum wage, those jobs should be paid better and welfare should never be more than those kind of jobs.

    Our government does too little to fund training and education, its too easy to keep shipping in people from abroad and that creates discontent……ala brexit.

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    • You will be interested in this post on why Trump prevailed. I think when immigration enters the question, there are in fact other elements which are affecting people’s situtations but they scapegoat immigrants because they feel hopeless. I am in agreement with both of what you said – labour should be awarded better and welfare should be cut. I think there needs to be more emphasis put on vocational education as well – not everyone is made for academia.

      Thanks for the comment!

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    • It’s always a bit heart-breaking to see the same argument being repeated over and over again. Trump and Brexit fans seem to be unable to at least attempt to see the bigger picture.

      In short:

      – Why immigrant is an issue of economic relevance in the UK while it isn’t in countries with much higher immigration (Switzerland, Germany, Sweden, Singapore, UAE, Australia, Belgium, Spain, Norway) will forever remain a mystery to me.

      – 50% of migrants are from non-EU countries (says the ONS) which the UK was always entirely free to restrict at her will. Many of those (I didn’t look up the exact percentage) are students to pay the exorbitant study fees and thus contribute economically.

      – The economic downturn of the UK started more than half a century ago at a time when immigration wasn’t an issue – the pound devalued by 75% over the past 40 years, the trade account was negative the first time in the 1970s, the (according to the IMF “unsustainable”) account deficit kicked in in the 1980s and has been rising ever since; the deindustrialisation and the disappearance of entire industries and the rise of the “sole breadwinner”, the financial industry, was a result of Thatcher policies of the 1980s.

      – The UK is burning some 20 bil on an aircraft carrier without aircrafts and spent 100 or 200 bil bailing out its bankrupt banks while you are going to tell me that the miniscule amount that immigrants eat into the NHS budget will make a difference?

      – Wages cannot rise and will not rise because wage levels must correlate with productivity. Productivity in the UK is 35% below Germany’s and 30% below the US’ while the UK manufactures or offers barely any products or services than can compete in the world market (else, it wouldn’t record such a huge deficit and industries such as British-owned automotive, elecontrics, coal, steel, railway etc wouldn’t have disappeared a long time ago). If wages rose, your economy would become even more uncompetitive! So, the only way to higher incomes is higher productivity. It is that simple.

      I somewhere read (but don’t have the source available) that more lawyers work in the UK than in the other 27 EU countries combined. Perhaps you should start producing real stuff that can be sold at profitable prices in the world market rather than feeding hordes of lawyers and bankers.

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  3. Pingback: Why do I dislike the Eurozone so much? | David Belle FX

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