January 27th, 2017
(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: email@example.com
I’ve largely given up having conversations with people on the political right, mostly on the same grounds that I no longer try to debate religion with people. We all must take certain assumptions about reality as a starting point for our understanding of the world, and if someone’s most fundamental assumptions are sufficiently different from mine, we simply don’t have enough common ground to have a meaningful conversation. If someone believes that Jesus is their personal Savior, I won’t try to convince them they are wrong, and I hope they won’t waste any time trying to convince me of their beliefs. The best option for both of us is to simply ignore each other and instead focus on those people with whom we can have an actual conversation. And likewise, with those on the Right, they make assertions about The Market that amount “These circumstances were ordained, therefore the results were ordained.” It is fundamentally a religious view of things. The fact that they use modern economic words such as “market” and “capital” gives their ideas a thin veneer of secularism, but none of us should be fooled. These conversations are not secular.
Which brings me to the right’s consistent error. It has long over-estimated the dynamism and flexibility of the economy, and has assumed that if only the right legal framework can be put in place, capitalism’s dynamism would be unleashed. Such a view under-estimates the non-policy factors that stop resources shifting as quickly as basic textbook economics predicts. As Nick says, “goods don’t just export themselves.”
What we see in Brexit optimism is an echo of Britannia Unchained’s call for labour market deregulation. Such calls ignored the empirical evidence that deregulated labour markets don’t necessarily increase employment or competitiveness and can be associated with high and volatile joblessness.
Just as Brexiters assume that free trade laws will greatly boost UK exports, so deregulators assume that free labour markets will greatly boost employment. It’s no accident that the same people are generally in both camps. Both, however, under-estimate the amount of sand that’s in the wheels of the market mechanism. And just as the UK economy isn’t prospering greatly because of deregulation, so it might not do so because of free trade deals.
I’m old enough to remember the same assumption in the 1980s. Back then Patrick Minford – now a leading Brexiter – supported pit closures on the grounds that the redundant miners would find work elsewhere. He was, to a large extent, wrong*. He made the same mistake then he might be making now: he’s over-estimating how flexible the economy is.