Economics or politics? The arguments the élite tries to sell us (2012), by D.J. Webb

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Economics or politics? The arguments the élite tries to sell us
by David J. Webb
Published on the LA Blog, 4th November 2012

The real key to understanding politics in a country like the UK is that the élite long ago tired of the nation-state. It is not that the concept of a self-governing nation lacked support among the wider population—after all, the opinions of the wider population are heavily influenced by the “opinion-formers”—no, it is that the élite themselves no longer believed in the concept, and so set about trying to move on to more cosmopolitan territory. I would argue that the real reasons for our membership of the EU, our promotion of multiculturalism and our encouragement of mass immigration are political or cultural—our élite wants to change the look and feel of the country—and not economic. Yet these policies are “sold” to us in economic terms, as if dropping these policies would lead to a collapse of the economy. Even people who are opposed to the EU and immigration on political/cultural grounds have to pause for breath while considering the economic impact of a policy change, as we all depend on the economy for our livelihoods. Most people simply don’t know whether the economic arguments are true or not, and so a large section of the population is hoodwinked by bogus economic arguments.

Let us say, for the sake of argument, that these policies have good political and cultural justification. Why then does the élite not make the case for these policies in the terms in which they privately support them? If they think the nation-state belongs in the past and that a new globalised world requires all countries to be multicultural and to submit large chunks of the policy agenda to international organisations, why don’t they emphasise the fact that there is no economic benefit from these policies, and that doing these things is aimed at embracing a more united world and, incidently, in finding a route round petty, smallminded voters and their concerns in the form of globalised governance? Why not say that these policies are part of a cultural modernisation, although contributing nothing to economic growth? The only reason I can see is that they would fail to convince the public that way. Most people are wary of the cultural revolution, and would only support elements of this agenda if it could be shown—or asserted—that economic growth depends on it.

Let us take the EU, for instance. It is argued that “we need to be in the EU, gaining influence and making the case for policies that dovetail with our national priorities”. But in a free market, there would be no need for an international organisation to set economic policies in the first place, and so if each of the 27 member states justifies its membership of the EU in these terms, they must know that by dissolving the EU they would gain the ability to manage their own policy agendas. Does economic policy need to be coordinated across Europe? There might be some benefit to some railway projects and other infrastructure links across Europe, and mutual recognition of standards and qualifications is good too, but nearly none of the EU’s work is required to allow the European states to trade with each other. Take the working time directive: trade between European states is just the import and export of goods required; there is no need for each country to examine its trade counterparts’ labour laws. The only lame “justification” for this policy is that by requiring all other countries in Europe to adopt the same restrictive labour laws, the more interventionist states are thereby able to prevent their goods from becoming less competitive as a result. However, with the EU accounting for an ever-smaller proportion of the global economy, this consideration is of declining merit, as China, India and other economies will simply grab market share from the EU by adhering to less restrictive standards.

In the end, it seems that politicians like the employment opportunities and the excuses for non-action provided by the EU. Whatever way you look at it, almost nothing done by the EU is of value, as free trade was already being promoted by EFTA before countries like the UK chose to join the EU instead. If the goal were just free trade, we should have called for the core EU countries to abandon what was then the Common Market and join EFTA. There are advantages to the Single Market, for example, the same size of soap powder boxes can be marketed across Europe, but these sorts of things can be arranged under an EFTA-style framework and do not require “ever-closer union” of the states of Europe. Consequently, the argument the EU is vital to our economic prospects has to be bogus. Sure, tariffs have been eliminated across Europe and industrial standards harmonised, but beyond this there has been absurd regulation of things that have no conceivable connection to intra-European trade, together with the expense of the Common Agricultural Policy (which restricts trade with the developing world and pushes up our food prices—both goals I don’t support) and the various funds to help European regions (regions that only need free trade and less regulation in order to prosper). The European Parliament, the European Court of Justice, the Common Fisheries Policy, most of the environmental regulations, the architecture of European Monetary Union—all these things have rendered intra-European trade more expensive, not forgetting the fact that member states like the UK are not permitted to negotiate free trade with countries outside the EU, as such negotiations are reserved for Brussels (which isn’t interested in fully free trade with non-member states).

It is true that services trade with Europe—which is important to the UK and its financial services sector—could be subject to spiteful reprisals from the French if the UK left the EU. But then again, the UK has a deficit on goods trade, and if our services were affected, we would be free to deal with French restrictions on services in whatever way we chose. Be that as it may, the sudden removal of the burden of the large “membership fee” of the EU would fund a hefty tax cut, and the ability to pare back regulation would, in and of itself, counteract any negative affects of a less cooperative stance from our so-called European partners.

For these reasons, our membership of the EU is at best a neutral factor in the economy, and is certainly not a net positive factor. It is difficult to quantify the impact of regulation on the economy, but one could make the argument the EU is a net economic negative. The Institute of Economic Affairs has surveyed both sides of the question in its study, Better Off Out? Clearly, a mixed picture where economic advantages of membership are offset by many economic disadvantages is not how the EU is presented by the BBC and by our leading political parties to the British public, who are informed that leaving the EU would result in a large shock to the economy. It seems clear to me that the British establishment have internal reasons to prefer EU membership, none of which are economic: such reasons are largely to do with the élite’s perception of itself as more enlightened as they forge our way into cooperation on a regional scale.

The same thing is seen with immigration. It is asserted that immigration is vital to the economy—indeed, The Economist magazine recently claimed that the Cameron government was foolishly restricting immigration that would benefit the economy. It is difficult to understand such claims when immigration is still running at an extremely high level, against the background of a situation where the UK has no immigration controls at all on the 500m or so citizens of the EU, and a lax policy on “family unification” for many millions of people in Africa and Asia. I think we can interpret The Economist’s ramping of its anti-British agenda as just another example of an élite group that sees itself as more enlightened than the British population by virtue of its support for cultural change, which is what The Economist would really like to see.

Take unskilled labour, for instance. We are drowning in it. There are many millions of unskilled people in this country living on social security. It may be that they don’t wish to take up employment, or that employers don’t wish to pay a living wage, or that employers don’t wish to take on the feckless long-term jobless—or, most probably, a combination of all these factors. But that does not mean that it is a sensible national policy to allow the millions on unemployment and “disability” benefits to remain out of work. We don’t need any unskilled immigrants into the UK. I’m sure employers like the way that immigration helps to keep low-end wages down, but this is a case of privatising the gains of foolish policies like immigration and nationalising the costs: the benefits bill has to be paid for the millions who are maintained on social security, and immigration encourages crime and increases the expenditure associated with multiculturalism, costs that have to be borne by the public. From the point of view of a care home seeking people who will work for the minimum wage, the immigration of Filipinos may be a good idea. But from the point of view of the UK economy as a whole, it is not, and if the care home can’t entice people from the dole queues to work in care homes, they should raise the offered wage. (The financing of long-term care is another, interesting topic: I do not support public provision, especially when the old person in receipt of care has expensive property assets, as this is purely done in order to prevent the sale of his property and allow his heirs to inherit the property, but this is another issue. In general, family members should meet the bill of their parents’ nursing care, or invite their parents into their homes and care for them themselves.)

Do we need mass immigration of graduates? I mean the sort of graduates with general university degrees that are not specifically geared to employment. We are also drowning in graduates, with around half of young people going to unversity and many graduates taking up work stacking shelves in supermarkets. Consequently, there is no valid argument that such immigration should be welcomed either. There is a class of qualified workers, such as doctors and nurses, whose qualifications are more specific than a general university education, and where lacunae in the workforce may have be filled from abroad. If so, we should aim to find such workers in European economies, or from other states that are culturally similar to us. However, once again, we need to ask why there are such lacunae in the workforce when so much money is spent on higher education. Maybe there are too many people studying for media studies degrees, and not enough people studying medicine. A correct educational policy would ensure that these workers with highly job-specific qualifications did not need to be hired from abroad either, and we should aim to rejig the higher education system in such a way as to eliminate the need for such immigrants within ten years.

This leaves us with only one category of employment that may genuinely need to be filled by immigrants: truly highly qualified staff of a kind that is hard to replicate or replace. I mean, for example, international footballers, or investment bankers, or CEOs of FTSE companies. This is a very high category of skilled personnel where the people cannot really be replaced by anyone else doing the same job. However, the numbers involved are tiny. You could require such immigrants to be given jobs earning £200,000 a year at a minimum (or, say, eight times the UK average wage on an ongoing basis). Our national policy should therefore be to prevent any immigration from people filling jobs earning less than £200,000 a year.

Although deceitful articles in The Economist claim that the UK needs immigrants, it only really needs the very final category of immigrants—and I would argue that even they should apply for five-yearly visas and should not be allowed to become naturalised citizens, being required to return home when their visas run out. This is, after all, the policy in countries like China. Immigration has pushed up our benefits bill; added to the general population and required spending on schools and hospitals to cope with a growing population; added to crime and required greater spending on the police, the courts, prisons and insurance; added to business costs through anti-discrimination policies and their related tribunals; taken up our social housing and pushed up property prices for the native population; and created a cultural backdrop that is fractious and negative, where immigrants and their descendants constantly allege the British are maltreating them.

Isn’t it clear that immigration isn’t a policy designed to promote economic growth either? The House of Lords determined in a report (The Economic Impact of Immigration) that immigration did not promote economic growth (it had “little or no impact”—see page 24 of the report), and yet it is constantly asserted that this is the case, as the authorities try to pretend that a policy they favour for political and cultural reasons is really a necessity, for economic reasons. It is rather disconcerting that the Establishment has the propaganda resources to assert these lies—if they wish to have these policies for political reasons, let them make their arguments in political terms—as most people are unsure of whether they are really true or not. I would close down The Economist magazine if I were in power, simply due to the rag’s constant mendacious propaganda in favour of an unfree, bureaucratically-dominated economy and society. Libertarians are trying to argue back in a context where the dice are loaded against us: if we got our grubby hands on the levers of power, we ought not to fight back with one hand behind our backs. Any notion that “liberty” means we ought not to hold our opponents to account should be rejected. Power is power, and if we get any, we should use it.