Quotulatiousness

December 24, 2017

Post-Brexit Britain as “a Venezuela without the oil or the tropical climate”

Filed under: Britain, Economics, Europe, Politics — Tags: , , — Nicholas @ 04:00

Theodore Dalrymple on the possible downsides of a hard Brexit:

Important (for good or evil) as Brexit may be to the future of Britain, it is not without its importance for the European Union. Indeed, it was always essential for the Union that Britain’s departure should be an economic disaster for Britain: for if it were not, why have a union at all?

It was therefore entirely predictable that the Union should drive a hard bargain with Britain, even a bargain economically harmful to itself, provided only that it was worse for Britain: for the self-preservation of the European political class is at stake. In the European Union politics always trumps economics.

In Britain too, political considerations were uppermost in the minds of those who voted for Brexit. They saw in the European Union a Yugoslavia in the making, led by a megalomaniac class without effective checks or balances. But now they are increasingly apprehensive of the economic costs of Brexit.

And the economic auguries for Britain are indeed poor, though not only, or even principally, because of the European Union’s hostility. The fact is that Britain is unlikely to be able to take any advantage of life outside the European straitjacket because its own political class is itself in favour of straitjackets that are no better, and quite possibly worse than, the European ones. The present Prime Minister, Theresa May, is very much a statist, indistinguishable from European social democrats, and the leader of the opposition, Mr Corbyn, who might well be the next Prime Minister, is an unapologetic admirer of Hugo Chavez. It is hardly to be expected that foreign investors will place much trust or confidence in an isolated country whose next government might very well weaken property rights, impose capital controls and increase corporate taxation in favour of supposed social justice. It would not take very long to turn Britain into a northern Venezuela: a Venezuela without the oil or the tropical climate.

Moreover, Britain already has many weaknesses and few strengths. It has a huge and persistent trade imbalance, because it does not produce enough of what the world wants and cannot easily be made to do so; it has a large national debt, about the same size as that of France, but without a highly functioning infrastructure such as France’s to show for it; its household debt is among the highest in the world. For many years, its economic policy might as well have been presided over by Mr Madoff; its social policy has been to smash up all forms of social solidarity or support for the vulnerable that do not pass through the state. The destruction of the little platoons has been very thorough: most large ‘charities’ in Britain are now dependent on government rather than on private funding, and hence are in effect departments of state.

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