Tobold's Blog
Friday, June 24, 2016

Redistribution as a term in the political dictionary has a bad reputation. People usually think it means taking their money away and giving it to somebody else in the form of welfare. But in reality *any* action a government takes is redistribution. Whether they build a road, a school, or invest in military, anything they do benefits some people more than others, while the money is taxed not in proportion to that benefit.

When the United Kingdom of Great Britain decided yesterday to leave the European Union (and now risk to end up less united and less great as Scotland and Northern Ireland are likely to leave), they didn't think of redistribution. They argued about net contribution. "Net contribution", the idea that overall you pay more than you get back, is the same idea as progressive income tax: The rich pay more than the poor, so the UK being among the top 5 richest European countries is also among the top 5 net contributors. So some people in the UK think that Brexit is like a legal way to stop paying your taxes, which seems like a clear win. In reality the matter is a lot more complicated than that.

Net contribution only ever calculated the money Britain is paying directly to the EU and the money that the EU was paying out in the UK. The other benefits of being part of the EU weren't part of the calculation, and those sums are a lot bigger. Today the financial markets of the world are in shock, and London is the epicenter. Nobody knows exactly how much the Brexit will cost London as a financial center, but everybody knows that the net effect is negative and much bigger than the EU budget, which is why the pound is tumbling today.

But to come back to the theme of redistribution, it has also to be remarked that as everywhere else the contribution of Britain to the EU budget is also an internal redistribution: The people that the EU gave money to weren't the same as those who paid the money in. Some parts of the British economy were net benefactors of the EU, for example research and agriculture. It is unlikely that the British government is going to spend the money they don't pay to the EU any more to compensate those who benefited from the EU. Ultimately the Brexit itself is an act of redistribution: Even if you don't agree with the economists who predict that the overall net effect is negative, the money sure will be in a different set of pockets than before. And as every big project by politicians there is a significant danger that the money will end up not in the most deserving pockets, but in the pockets of the powerful and special interests. Some people will profit from the Brexit, but many will be less well off.

I don't pay as much attention to european politics as I probably should, but damn, I honestly though brexit didn't have a strong chance to succeed. I saw it basically as the equivalent of the trump presidential run here in the US. I'm really, really shocked. This seems so incredibly negative for the UK I can't imagine why it succeeded.
Scotland may well leave the UK but I cannot see Northern Ireland opting to do so. There is still a Unionist majority in the province and their deep affiliation to the UK would quickly trump any economic incentive to try and remain within the EU.

Here in the Republic of Ireland we are in shock following the Brexit result. We are totally committed to remaining within the EU as an open economy but we have extremely close ties with the UK both economic and cultural. The most benign outcome I can see is if Britain adopts a kind of Norway role which maintains free trade and open borders while nominally calling themselves independent. On the other hand if Britain goes for hard exit with trade barriers and border controls then Ireland is going to find itself pulled in two very different directions. Perhaps we could capitalise on this and become a free trading zone at the border between Britain and the EU. We may also get some benefit from financial institutions departing London but they are more likely to go to Frankfurt than Dublin I think. Scary times.
I'm shocked, even though I shouldn't be, that propaganda that was blatantly lying was able to swing uninformed voters to stupid, ill-thought reactionary decisions.

We see Tory leader, Cameron, whom I never liked, pack up and go home, because crap is about to get real ugly. This is typical of right-wing leaders, they have no backbone or conviction.

United Kingdom will surely see itself breaking up, no way Scotland wants to remain on this train driving off the rails, and Ireland is sure to follow.

Britain is going to take an economic hit like nothing they've seen before. It's going to be really bad, and going to continue to get worse.

Somewhere behind the curtain there are some corrupt wealthy people who will get richer off this, but overall, it's going to be some huge long-term damage to both Britain, and the EU.

Stupidity has won, once again. Next up, again, America.
I honestly though brexit didn't have a strong chance to succeed. I saw it basically as the equivalent of the trump presidential run here in the US.

So does Donald Trump, hoping for the equivalent outcome of his bid. :)

But you aren't alone in the "oops, we didn't see that coming" camp. The bankers had bet on the Brexit not happening either. I mentioned that the effect would be bigger than the British net contribution of £8.5 billion: This morning the London stock exchange wiped out £100 billion of wealth. Not to mention that everybody who owns British pounds just lost over 10% of that.

Can you imagine the financial panic when Donald Trump becomes president?
Not sure about the reasons UK quit EU. Too many migrants from Syria and other countries bombed by USA trying to get into developed countries like France, Germany, and UK and draining their resources? The vote was a close call.

The flood of migrants is really scary. But then not many of them want to settle down in the barren wastes of ex-USSR so I am safe for the moment. :)

Some good story about the Arab spring here. Safe for work.
It might be fake but brought tears to my eyes.

PS: I'd love Trump to become the president because he said he would be able to come to terms with Putin. Maybe the deployment of more and more NATO bases so close to Russian borders will stop that way. Once he is the president, Trump may turn out to be as arrogant and high-handed as the rest of the U.S. presidents but at least we will live in interesting times.
But sticking with the EU and moving along the route towards greater integration would have been perfectly safe, and would never have redistributed goods to more of the wrong people?

Nobody should be too surprised by the result. When the bulk of the media - and particularly what used to be called the 'quality' media, even though it's currently evolving more into clickbait websites - push the line that everyone opposed to the policies of the unelected government elites is a fascist, the ballots will show what people don't want to risk telling the pollsters.
For the leavers I know, it was less about the money and more about "control"
Yeah well, gonna be some fun negotiating trade deals alone with everyone else, I'm sure the "control" will help with that ;). If the UK wants to stay part of the European Single Market it still has to abide all the Euro rules without having any say in what those rules are.

I thought the votes would be comparable to the Scottish Independence in 2014. It's depressing really. I hoped to see the Earth Union in my lifetime, I want to be an Earthican dammit.
I think a Brexit gives Britain only very little control back. The large majority of EU regulations are rules about stuff that can be sold in the EU, in mind-numbing detail. Guess what? If you leave the EU you still need to apply all those regulations if you want to export into the EU. And because Britain is leaving the EU, they are in the future going to have *less* control over those regulations.

Britain could gain some control back, for example on immigration. But there is a problem with that as well: There are 300,000 British people emigrating from Britain every year, many to European countries like Spain. Whatever barriers to entry of Europeans Britain erects will be met with reciprocal barriers to Britons in Europe. And it is still very much possible that in the negotiations Britain has to do in order to get access for example to the EU financial market, Europe will ask for free movement of labor from Europe to the UK in return.
Putting the ridiculous scare stories on both sides of the Brexit debate aside, there were three main things that moved the 'Out' vote:

1) immigration. Which, let's face it, is not popular with a lot of people anywhere, so the British aren't alone in having it be a worry, but there's a perception that Britain is one of the more popular destinations for migrants and that the EU is an enabler. There's a lot of Fear, Uncertainty and Doubt on this topic and people tend to conflate free movement of labour in the EU (Polish plumbers) with refugees (Syrians trying to escape being bombed), economic migrants from outside the EU (guys from just about anywhere looking for a better life) and 'benefit tourists'((possibly mythical bogeymen that want to come and sponge off our supposedly over-generous benefits system, which is supposed to be a privilege reserved for native-born chavs).

2) Control. There's long been a perception that EU regulation is over-bearing and driven by career bureaucrats working towards a United States of Europe run along continental social democratic lines (i.e. somewhat to the left and more statist than the British political centre of balance). There's also a sense that this isn't what we signed up for - I'm old enough to remember the EEC as was being referred to as the 'common market' and was sold to the British public as a free trade area, not a grand political experiment. I think it's telling that the 'Out' vote was especially high amongst those old enough to remember this.

3) Redistribution. Yes, Britain pays more in than it receives out (directly). While there was a rebate arrangement to reduce some of that imbalance, recent attempts to eliminate or reduce that rebate haven't exactly warmed the hearts of the British public. Plus, there's an argument that the reason the UK is one of the richer countries (currently) in Europe is because we have a more free-market economy than the sluggish, statist continental model so maybe they should try reforming their economies instead of expecting us to subsidise them?

Anyone who thinks that the 'out' vote was nothing but the spite of xenophobic idiots hasn't looked carefully enough at the perceptions of the EU in the UK. Ill-advised interventions, such as Barack Obama's attempt to put Britain on the naughty step by telling us we would 'go to the back of the queue' for a trade deal did more harm than good because people weren't nearly bothered about the financial consequences as they were about the control issue. You might want to go and look at Richard Bartle's blog, he had a couple of posts that suggest why an intelligent individual, looking a bit further ahead, would consider leaving the EU.
Capitalism is the privatization of wealth/benefits and communization of debt/costs. :) Tax cuts are the greatest example of this at work which is why center-right establishment loves selling tax cuts to the common people. It is literally redistribution in their favor.
And nationalism is only a front for capitalism; its how you get the masses on board. Brexit is the anti-social outcome, as in people literally voting against their own interests.
There's also a sense that this isn't what we signed up for - I'm old enough to remember the EEC as was being referred to as the 'common market' and was sold to the British public as a free trade area, not a grand political experiment.

I think there was some deliberate mis-selling going on at that time. To most of the rest of Europe the EU was sold as the union which would end centuries of European wars. It started with a French-German coal and steel union, because "you can't fight wars without steel". And the more the European countries would work together and depend on each other, the less likely another European war would become.

Of course Britain has unusually rosy memories of the last European war, so maybe prevention of war wasn't a good selling argument for them.

Of course Britain has unusually rosy memories of the last European war, so maybe prevention of war wasn't a good selling argument for them.

When something like this happens, you can sure bet that other member Nations will look to protect their own citizens and self interests. Merkel is taking the lead with some especially strong language in that regard. Spain has hinted that they would take back the Rock of Gilbraltar. Meanwhile NATO could be in crisis. The next few months are worth watching - for everyone.
I don't see any suggestion NATO is in crisis - or any reason it should be. NATO is not the EU, and doesn't seem to have suffered from the fact that the USA isn't a member of the EU and never has been...

What IS more likely to be in crisis is the EU's foreign policy, which is going to take a bit of a hit because it has been backed up mostly by the power of France, the UK and Germany (the last mostly soft/economic power rather than military). One leg of that tripod will now be gone, and the EU will have to deal with the UK as an ally with similar but not identical interests rather than expecting the UK's UN Security Council vote, military and soft power (e.g. the relatively large foreign aid spend) to automatically be at the service of EU policy.
The weekend was an orgy of fire and brimstone predictions from angry Remainers. Scientists had 99% consensus that it was the End of Nature. Economists cried in horror when the Sterling-Dollar exchange rate fell to the level of... four months ago. An increase in those googling Brexit and the EU was stated - with zero evidence - to be entirely composed of Leave voters aghast at what they'd done. Over the next few days we'll see a bit of sanity start to prevail.
I find it funny that now the "Bregret" movement is citing a lie about redistribution of funds to the NHS as one of the prime reasons why they would like the referendum repeated.
Everyone could have seen through that lie a week earlier and voted accordingly.

I really hope that all the people here in Germany who want to "protest vote" for our new nationalist party listen very carefully. Actions have consequences and I really don't want a bunch of Nazis in my city parliament this year.
Across the Atlantic, in the short term, this impacts my stock portfolio more than me.

One of my sayings is just because something is a bad idea, does not mean it is not the best idea. Dr. Bartle, of MMO history and Bartle Archetypes, did have an interesting post on it. If you think the EU is not going to survive, (which Greece and immigration make at least somewhat arguable) then this mistake perhaps seems not as bad.

EVE Online/CCP/Iceland football led me to the Guardian: For the second time in a week, England suffer an ignominious exit from Europe
A politician with no government office suggesting that money should be spent on a particular thing hardly constitutes a "pledge".
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