Sunday , September 15 2019
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Why did the UK become a failed state?

Summary:
‘I should be the leader of a government of national unity’. ‘No you shouldn’t, someone else should’. I’m afraid if you were hoping I would write about this nonsense you will be disappointed. It seems to me right now nothing more than just another way for those who really dislike Corbyn to attack him and those who support Labour to attack everyone else. Rebel Tories will be hoping a crash out Brexit can be stopped another way, and if that fails or in the unlikely event that Johnson ignores parliament, who has the relatively unimportant job of leading a caretaker government will be decided days before it needs to be decided, and not before. The discussion is one illustration that the UK has become a failed state, where a government about to do great harm to those it governs draws comfort

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‘I should be the leader of a government of national unity’. ‘No you shouldn’t, someone else should’. I’m afraid if you were hoping I would write about this nonsense you will be disappointed. It seems to me right now nothing more than just another way for those who really dislike Corbyn to attack him and those who support Labour to attack everyone else. Rebel Tories will be hoping a crash out Brexit can be stopped another way, and if that fails or in the unlikely event that Johnson ignores parliament, who has the relatively unimportant job of leading a caretaker government will be decided days before it needs to be decided, and not before.

The discussion is one illustration that the UK has become a failed state, where a government about to do great harm to those it governs draws comfort from opposition parties arguingwith each other. This post is about how a policy (crashing out of the EU) that will do nearly everyone harm and some great harm seems to have considerable, albeit still minority, support. I wrotein January about how the rest of the world thinks Brexit is utterly stupid, and leaving without any deal looks beyond stupid. When a country does something as idiotic as this, and it has popular support, there is something deeply wrong with that country.

Arguments that people really believe they will gain something worth the cost of the pain and suffering of crashing out merely shifts the question, because we will gain nothing that comes near compensating for the costs. Most supporters of Brexit cannot name an EU based law that has a significant negative impact on their lives, let alone a law that the UK opposed at the time, let alone compare that to the many EU laws that have brought benefits. Nationalism alone is not an answer: few think football fans would be better off if our teams stopped playing in the Champions League, or if our national teams could no longer buy overseas players.

What we have is an information failure, where warnings of the dire consequences of crashing out are not believed but fanciful stories that being outside the EU will allow us to improve ourselves are believed. It is no surprise that the government is furiousabout the leak of the Operation Yellowhammer (predicting immediate shortages of medicines, food and fuel after we crash out), but what is more surprising is that a third of the population believes politicians that say these worries, documented by the government's own civil service, are unfounded. Politicians that are normally quick to assert that the machinery of government is incapable of organising anything well on this occasion are pretending that same machinery can work wonders.

One of the lessons I learntfrom working on the economic impact of a different kind of disaster is that consumer reaction can seriously magnify its impact. In this case as soon as stories of shortages occur people start ‘panic buying’ and those shortages are magnified tenfold or more. It is this reason that the leaked documents talk of dealing with law and order problems, including riots.

That no government minister will guarantee that no one will die as a result of crashing out is revealing. That the NHS is preventedfrom voicing its fears tells you even more. Yet many of those who believe it is right for us to crash out of the EU are also older and depend the most on the NHS. Again this makes no sense unless you see this as an information failure where these connections are just not being made.

The broadcast media is obsessed by recessions (and in particular the technical definition of a recession), but those freely predicting one should learn from what happened after the 2016 referendum. On that occasion many consumers responded to higher inflation cutting their real wages by saving less, and the same could happen again. We also saw in 2016 that predicting a recession that does not happen can distract from the real cost of Brexit. What we have seen instead since 2016 has been a steady gap emergingbetween UK growth and growth elsewhere, together with a collapse in investment. 

Too often short term shortages are presented in war like terms: we will get through it and it will be worth it once it is over. The truth is that by making trade with our biggest trading partner much more difficult will ensure that the UK grows more slowly. We will be permanently and substantially worse off as a result of crashing out. The bumpy road is going downhill. Those who tell you this is just another forecast do not know what they are talking about. One of the basic ideas in economics is that trade makes people better off, because if it didn’t why would people trade? Making it harder to trade with the EU means less trade with the EU. There are no sunlit uplands when it comes to crashing out of the EU, which is why of course other countries think we are utterly stupid to try. With less income comes less public services: a worse health service, higher taxes or both of these. There will be thousands of firms like this one, strangled not just by tariffs but the greater bureaucracy that comes with Brexit.

Leave politicians understand this, which is why they talk about all the marvelous trade deals we will get now that we are free from the EU. The reality is once again the opposite of this. The EU is in fact very good, and very experienced, at doing trade deals with other countries, and we will lose nearly all those when we crash out. Once that happens politicians will be desperate to do two things: sign a trade deal with the EU and with the US. Negotiations about a trade deal with the EU will not even start for some time, because the EU will insist on the backstop staying in place along with a level playing field in terms of competition, neither of which a Tory government will accept until they have to. The compromises that our current government thinks it can avoid by crashing out will be made at some point, and so all the pain of crashing out will be completely pointless.

Donald Trump supports Brexit because he knows the UK will be desperate to do a trade deal with the US when it leaves, and he knows people desperate to do a deal are vulnerable to exploitation. In this case no deal may well be better than a bad deal, but the government will sign it anyway because it will look good at the time, and the harm it does can be delayed or fudged. [1] This illustrates a basic political point. Countries are much stronger as part of a group than they are on their own. We have already seen how the EU has backed the Irish government in trying to keep to the Good Friday Agreement alive, and when the UK crashes out just watch the EU’s efforts to diminish the economic costs on the Irish economy.

What the EU cannot prevent is the creation of a hard border on mainland Ireland when we crash out. Pretending otherwise is another Brexit fantasy. That will see the end of the peace process that was so painstakingly won decades ago. Along with the kinds of terrorism we are already used to, we can add a revival of Irish terrorism. A belief that crashing out represents political gains at the expense of economic pain is nonsense, because the political costs of a No Deal Brexit are just as serious as the economic costs.

Are people really aware of this when the say they are in favour of crashing out? You either have to assume that a third of the population has gone mad, or instead see this as a fundamental failure of information. The UK is a failed state because the producers of information have made it fail. 

All the information on No Deal outlined above is readily available for anyone who wants to find itBut so is ‘information’ suggesting exactly the opposite: that all these warnings are Project Fear and our lives have been made much worse because of the EU. Only people like those who are reading this are likely to be able to sort out which are the more reliable sources. Many more people will not have the time or inclination to even look. They will rely on the mainstream media: newspapers and broadcasters.

Over halfof newspapers read (hard copy or online) are pro-Brexit, and their combined print and online reach is huge, with a monthly reach of 29 million for the Sun. (Figures for daily newspapers based on circulation only are much smaller and more pro-Brexit.) But there is a key difference between the coverage of the pro and anti Brexit press. Just compare the coverage of the Sunor Mailon the Operation Yellowhammer leak with those in most other newspapers. Their headlines talks of the document being scaremongering, rather than focusing on the content of the leak itself. On Brexit at least half the press are acting at the moment as if under the control of the state, or you could equally say that the state is following a policy pushed by that section of the press.

This could be offset if the broadcast media was fact based, but normally it is not. Their model is not to tell the truth and expose lies, but instead to present balance, which in the case of Brexit involves balancing lies with truth. So those consuming Brexit propaganda from their newspapers will not find this corrected by the broadcast media.

Once you combine this with how importantthe media is in influencing opinion, then the key role of the media in explaining the information problem revealed by widespread support for crashing out is obvious. A large part of the consumers of information are reading propaganda which is not contradicted by broadcasters.

But there is another route where media coverage is important, and that is the media’s influence on party membership. Party membership is by definition partisan, and so will look at sources of information that are also partisan. The overlap of the Brexit press and the right wing press is very large. As a result, Conservative party members are likely to be even more influenced by the Brexit press. If I am right about the pivotal role played by the media, then we should expect the proportion of party members to be more in favour of crashing out than the population at large, as indeed they are.

The relationship between the press and politicians is not straightforward. Both are influenced by each other. The ring wing press was much more pro-Brexit than Conservative MPs as a whole, and through both routes (the population as a whole and through party members) this has influenced MPs. The 2016 referendum accelerated this process, as did the 2019 Tory leadership contest, because in both cases it strengthened the role of the Brexit media.

Ideas and policies normally come from politicians, and the partisan press will normally go with that. But occasionally ideas are initiated by the press, and politicians find it difficult not to run with them, as we have seen with Brexit. As the line newspapers take on major issues is normally decided by their owner, this is obviously undemocratic. But more generally it does not seem right that any major player involved in the means of information should turn their information provider into a propaganda vehicle. When that happens, you can end up with policies that suit the newspaper owner but for nearly everyone else are utterly stupid.

Stopping Brexit is only half the story, if we want the UK to stop being a failed state. We also need to tackle the causes of Brexit. Normally politicians dare not talk about reform of the media, because they fear the consequences. (Since Thatcher every leader of the Labour party except one has been unpopular with the public, and that one did a deal with Rupert Murdoch!) Corbyn’s Labour party has reform of the media as a key part of its manifesto. The proposals are modest, but by making the BBC more independent they may represent a start at ending the power of a large section of the press to misinform.


[1] The deal may not be signed by the US anyway, becauseCongress will require a backstop



Simon Wren-lewis
Professor of Economic Policy at the Blavatnik School of Government, Oxford University, and a fellow of Merton College. This blog is written for both economists and non-economists.

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