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I agree with pretty much everything you just said, but I don't think your conclusions are supported by your argument. The problem is that you're implicitly ass

by moomin 9y ago

I agree with pretty much everything you just said, but I don't think your conclusions are supported by your argument. The problem is that you're implicitly assuming that Britain will be no worse off and then concluding that businesses will spot that so that we're no worse off. Let's be realistic: the pound is worth 80% (give or take) what it was before the referendum. That isn't felt in your pocket immediately, but the effects works their way through the economy. Sure, purchasing power parity and the economy rebalancing will ameliorate that, but it's in no ways going to eliminate it. Now, there's a problem with this analysis, which is that Brexit hasn't happened yet. This cuts both ways: the final state hasn't been reached, but also the economy's a lot more resilient inside the EU than outside, because the lack of tariff and non-tariff barriers helps with the rebalancing you describe. So, for the future, a good question is: how are our preparations going? Well, the NAO says that they're barely going at all, the repeal bill says we're basically going to have to put up with direct monarchial rule to survive and to date we seem to be capitulating on every point of contention. What's worse is the points we're not capitulating on, because we're an 1/8th of the way through the process and haven't even got the status of EU citizens sorted out. Even if the negotiations go well, we're talking about ripping up 40 years of settled U.K. law and replacing it with... well, ministers haven't decided yet, but they don't want parliament to have a vote when they do. So, as I see it there's basically two possible outcomes here: 1) the EU retains most of the benefits of U.K. membership 2) hard Brexit. Die-hard Leavers have long argued that the EU is too complex, and the EU shows no inclination to make it more complex to suit Britain. Either way, we will be worse placed to trade with the rest of the world. You're right, even in the case of hard Brexit the economy would eventually grow again. Would it grow as fast as it would within the EU? There's no reason to believe so. So we're looking at a huge one off hit and permanent reduced growth. Sorry, this is quite long and probably not as clear as I'd hoped. I've also probably missed a fair number of important points. I haven't even touched on the _non_economic problems with leaving the EU. But I think it's clear that, while there are always ways to make money, Brexit is likely to be a negative sum game.

ZenoArrow 9y ago
Thank you for your considered reply. I did read all of it, but I'd like to focus on the following first: > "The problem is that you're implicitly assuming that Britain will be no worse off and then concluding that businesses will spot that so that we're no worse off. Let's be realistic: the pound is worth 80% (give or take) what it was before the referendum. That isn't felt in your pocket immediately, but the effects works their way through the economy. Sure, purchasing power parity and the economy rebalancing will ameliorate that, but it's in no ways going to eliminate it." The following distinctions are slightly crude, but hopefully they serve a purpose. There's a difference between the productive economy and the speculative economy. The productive economy is based around changes in the material world. The speculative economy is based around opinions. Stock markets are effectively opinion poll trackers (opinions either baked into mathematical models or in the heads of traders). It's no surprise that the pound dropped after the Brexit result, because we're looking at a period of uncertainty, which makes predictions harder and traders more risk averse. However, in the productive economy in the same time period, there hasn't been an 80% drop in the output of the real economy. The jobs market is still strong, people still produce roughly the same level of goods and services as they did a year ago, etc... What I predict will happen after the period of uncertainty ends is that opinions will catch up to reality and traders will realise their models of economic output were out, leading to a readjustment in the stock markets. The problem is, as people have gotten so hysterical about Brexit, the period of uncertainty will probably last longer than it should, and this loss of confidence can have an impact on the productive economy over time. That's my main concern over Brexit, that it'll be the reaction to it that causes a longer economic downturn than is necessary. My only hope with this is linked to more people becoming adept at seeing through the mechanisms of the UK's toxic media institutions.

by moomin 9y ago

ZenoArrow 9y ago

Thank you for your considered reply. I did read all of it, but I'd like to focus on the following first: > "The problem is that you're implicitly assuming that Britain will be no worse off and then concluding that businesses will spot that so that we're no worse off. Let's be realistic: the pound is worth 80% (give or take) what it was before the referendum. That isn't felt in your pocket immediately, but the effects works their way through the economy. Sure, purchasing power parity and the economy rebalancing will ameliorate that, but it's in no ways going to eliminate it." The following distinctions are slightly crude, but hopefully they serve a purpose. There's a difference between the productive economy and the speculative economy. The productive economy is based around changes in the material world. The speculative economy is based around opinions. Stock markets are effectively opinion poll trackers (opinions either baked into mathematical models or in the heads of traders). It's no surprise that the pound dropped after the Brexit result, because we're looking at a period of uncertainty, which makes predictions harder and traders more risk averse. However, in the productive economy in the same time period, there hasn't been an 80% drop in the output of the real economy. The jobs market is still strong, people still produce roughly the same level of goods and services as they did a year ago, etc... What I predict will happen after the period of uncertainty ends is that opinions will catch up to reality and traders will realise their models of economic output were out, leading to a readjustment in the stock markets. The problem is, as people have gotten so hysterical about Brexit, the period of uncertainty will probably last longer than it should, and this loss of confidence can have an impact on the productive economy over time. That's my main concern over Brexit, that it'll be the reaction to it that causes a longer economic downturn than is necessary. My only hope with this is linked to more people becoming adept at seeing through the mechanisms of the UK's toxic media institutions.