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Theresa May’s Centrist Conspiracy to Undermine Brexit

Britain’s Prime Minister Theresa May in Builth Wells, Wales, November 27, 2018. (Rebecca Naden/REUTERS)

With every twist of the news cycle, reports from London on the evolution of the Brexit negotiations between Theresa May’s government and the European Union get odder and odder.

Consider, first, the essential choice on Brexit facing the Brits and how it’s being presented to them. Britain voted two years ago to leave the European Union. Both parties then fought a general election on manifestos that promised to implement that decision. That’s not what’s happening now. Instead, May, supported and imitated by most of her ministers, is engaged in a vast centrist conspiracy to keep Britain inside the European Union while pretending to expedite its departure.

Demonstrating how the trick is done, however, is not easy for two reasons:

First, it’s what used to be called an open conspiracy. It conducts its debates in public and its membership includes most of the media, especially the BBC, who seek either to obscure what is happening or to assert that it’s happening because, well, it’s inevitable. Their task is to play down the risks of remaining and to play up the risks of leaving, not in opinion pieces but in plain reports.

Second, May’s short-term aims shift confusingly in response to events. Thus, until the last week, May’s constant line was that the only responsible choice for Britain was between her Compromise Brexit and No Brexit at all, to keep the Brexiteer Tories in line. But as it became clear that her compromise was much worse than Remain — namely, it meant being controlled by the European Union with no votes in its councils and no right of exit — she shifted to the argument that the only responsible choice was between her Compromise Brexit and a No Deal Brexit, to keep the Tory Leavers in line. And that’s her position for the moment.

Here, alas, still more explanation is required. A No Deal Brexit means that Britain would leave the EU on March 29 without having reached a long-term EU–U.K. free-trade deal or even a deal on how Britain and Europe would trade in the transition between March and the eventual signing of such a deal.

Strictly speaking, that’s what the British voted for two years ago, and besides, No Deal is a misnomer. Britain would trade with Europe on terms supervised internationally by the World Trade Organization. And the WTO is a very big deal indeed. The rest of the world (RoW for short), including the U.S., trades with the EU on WTO terms. Not incidentally, 56 percent of Britain’s trade today is with the RoW on WTO terms. And that trade is rising 16 times faster than the U.K.’s trade with the EU. One might reasonably suppose that a Brexit on WTO terms, maybe after a short period of disruption as the rules changed, would be a confidence-building solution.

Oddly enough, however, though Leavers like to think of themselves as globally minded cosmopolitans friendly to international regulators, the WTO seems to be one global body that they have absolutely no time for. They refer to a Brexit on WTO terms as “crashing out” or as a “cliff-edge” measure, and they predict that all manner of disasters will descend on the U.K. if it is so reckless as to rely on the protection of international law or global civil servants when facing cut-throats such as France and Germany, who are our — in the next breath — European partners.

As a result, the more May’s Brexit in Name Only seems likely to be rejected by MPs — which the London headlines currently predict — the more that a No Deal Brexit seems be the most likely alternative outcome of the parliamentary vote, and thus the more it has to be discredited and stopped. So scare stories rain down on the British public from temples of the gods like H. M. Treasury and the Bank of England to warn the Brits against it.

Their two estimates of the costs of a No Deal Brexit, issued on successive days last week, were like the threats of a James Bond villain as to how he would shortly destroy civilization with deadly laser beams from his secret colony on Mars — except that they were more fanciful than anything deamed up by Ian Fleming and Hollywood.

As the former secretary of state for Brexit, David Davis, pointed out in response, the Treasury forecasts of the impact of the Brexit referendum result in 2016 (a far easier task in principle than forecasting the results of Brexit itself) had been dramatically wrong: “They said that in the 18 months after the referendum the economy would contract by at best 0.1 per cent and at worst 2.1 per cent. Instead, it GREW by 2.8 per cent. This is an error of 4.9% — up to £100 billion.”

And last week’s Treasury forecast? Well, you know how it is with blockbusters; the sequel never seems to live up to the original.

If the Treasury forecast was a bust, though, it was as nothing to the failure of the Bank of England forecast, which turned off old fans in droves, one in particular. Paul Krugman, a doughty opponent of Brexit, sent out a series of tweets that expressed alarm at the economic assumptions underlying what struck him as an exaggerated set of predictions:

1. As best I can tell, the big results depend on assumed relations between trade/FDI flows and productivity. It’s really important to understand that this channel does not follow from basic trade theory and comparative advantage; it’s a black-box story. And

2. What we have are correlations between trade and investment flows and productivity that don’t really follow from standard models. Are these causal? There is surely room for skepticism . . . So I’m worried. And

3. Again, I’m anti-Brexit, and have no doubt that it will make Britain poorer. And the BoE could be right about the magnitude. But they’ve really gone pretty far out on a limb here.

Remember Krugman is here criticizing what are supposed to be sober official forecasts to help the British public make up its mind on a major issue. But this kind of thing makes card sharps look prudent.

What was worse than these actual forecasts of economic decline and collapse, however, was how they were all reported. They were alleged to find that a No Deal Brexit would make Britain “poorer” when they did nothing of the sort. Go beyond the headlines and you will discover that they all predicted large rises in the U.K.’s GDP or household income or whatever between now and 2030 but they added the qualification that these indicators would rise less quickly than if Britain remained in the EU.

The reason for this is not hard to divine. If you want to make people afraid — and we are living through Project Fear Mark Two in Britain at present — then the argument “OMG, you’ll be much richer in 2030 than now (but not quite as rich as you might have been otherwise)” doesn’t really make the flesh creep. It’s sounds even less scarifying when you know that in a number of opinion polls, pro-Leave Brits have said that they would still choose to be a free and sovereign independent nation even if it meant being actually poorer.

In short, the Brexiteers (who are proportionately more numerous nationally than in Parliament) have factored possible economic disruption and slower growth into the calculations that led them to vote for Brexit. My own view is that this economic pessimism on the part of Leavers is mistaken. In the longer run the U.K. economy will benefit from being able to run trade, fiscal, and financial policies that aren’t distorted by the need to accommodate 27 other countries whose economic interests are misaligned with the U.K.’s. The recent economic history of Greece, Italy, Spain, and Portugal certainly seems to support this thesis. But that’s beside the main point which is that the British people took all these things into account when they voted to leave the EU in 2016 and their decision is being overridden by Remainer politicians who have to resort to the worst kind of statistical legerdemain to make any kind of a case. Quite simply, it’s a bloody disgrace.

What explains this Remainer preference to be a province in an undemocratic Euro-polity? It tells us, first, that they place zero or little value on democracy and national independence — and that’s worth knowing about them. Second, they are living in a dream that their greater power and prosperity is guaranteed by the U.K.’s membership in a European federation simply because it’s bigger. Third, many or most of them have already made a psychological switch from a British allegiance to a new “European” patriotism that justifies their overriding the democratic decision of those who are still their fellow citizens. And, fourth, they haven’t been paying much attention to what is happening in the European Union lately.

France is in the throes of violent riots that could mutate into a revolution and bring down President Macron, yesterday’s European Man of Destiny. Germany is suffering a leadership crisis brought on by Merkel’s reckless decision to invite the Middle East into the continent. Italy is engaged in a bitter struggle between its populist government and the increasingly autocratic European Commission over an economic policy that has repressed Italy’s growth for 20 years. Hungary and Poland are also at odds with Brussels. And half the continent is dragged down by the weight of a falling Euro.

Today’s EU bears little or no similarity to the new European superpower that has been glimpsed fitfully in our dreams of the future since 1989. It is extraordinary that May should be pressing her reluctant nation to remain inside a crumbling undemocratic polity as a vassal state with no right of exit.

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