Originally Posted by
Getintaethem
Great post. With regards to the rhetoric of doom you mention...there has been a lot of talk about all the "experts" stating that the economy would reduce if we exited the EU. Some of these experts also predicted that the economy would reduce if we did not take up the Euro (hmm), others like the IMF said that we would have mass unemployment given the reduced public spending by Osbourne (hmm)... so I thought I would take a look at the assumptions of these "experts".
There are some issues with the models used by these experts, however, it is not the models that are the major problem. It is the starting assumptions. As with all modelling, what you put in as the start (your assumptions) has a major impact on what you get out at the end. Looking at the assumptions these "independent" experts have done something rather interesting. They have assumed that the UK would choose to put protectionist tariffs against trade from all countries around the world, including the EU. The assumption was that the protectionist tariffs would be in line with the general tariffs that countries adopted prior to joining the EU.
In short the decision of the "experts" to assume that the UK instead of using Brexit as an opportunity to move to general free trade pursues general protectionism which in effect reduces the extent of free trade is important in obtaining its negative results for output.
My big issue with this is that tariffs are on the whole going down around the world. The EU would not put tariffs on our goods (it is against their own economies interests). In fact, if they did we could still run a non protectionist agenda. New Zealand implemented a global zero tariff policy in the 1980's.
If these models changed their original assumptions and instead did (as David Cameron said during the general election) that "Britain was open for business", we can look at a scenario where we do not introduce protectionism. In that scenario, instead of Brexit being bad for GDP, we get positive growth figures. (analysis performed by Prof. Patrick Minford). This analysis is based on WTO rules and no protectionism policies. Oh and by the way, if we went with a non protectionist policy prices of everything you buy would go down. Given that only 15% of companies actually sell stuff abroad this would be a huge boost to consumers and by definition have greatest relative impact for benefit for the poorest in our society.
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). Don't worry about it, theres no shame in wanting to sh@g a weird Thatcher/May hybrid....well maybe a wee bit of shame.
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