Because Brexit

Funny how all good things are ‘despite Brexit’ but all bad ones ‘because Brexit.’ Is a shortage of HGV drivers making supply problems worse? Because Brexit. Job vacancies at an all-time high, especially in hotels, pubs and restaurants? Because Brexit. Not enough tradespeople? Because Brexit. 

White-collar whingers don’t recognise success when it’s staring them in the face. That’s because it’s not their success.

At last, all the workers mentioned above are going to get a boost to their pay rates, after decades of being undermined by cheap foreign labour. Eventually we’ll get an equilibrium, once training and recruitment have filled the gaps, but it will be a balance at a permanently higher level. Just imagine: instead of touring drama groups nostalgically recreating the life of canalboat carriers, we’ll see lorry drivers earning a decent screw today!

Provided, that is, we understand the game the elites have been playing for so long, to the disadvantage of the British working class.

Free trade benefits the free trader, who will say that it benefits everybody, harking back just over 200 years to David Ricardo’s theory of ‘comparative advantage.’ His famous example compares the production of two goods, cloth and wine, in two countries, England and Portugal. The nations differ in how efficiently they can produce each type of item, and so by each putting more emphasis on what it does better there is an overall increase in productivity, the excess of which can be consumed or traded.

The flaw in the argument is that Ricardo expresses productivity in hours worked per unit of output. A balance can be reached if the two nations do not differ too widely. If…

Enter the Dragon. The average UK factory worker earns c. £11 per hour ; in China, c. £2.60, and that’s after huge improvements in wages in the Middle Kingdom as it has prospered through world trade since joining the WTO twenty years ago. The exchange rate between the renminbi and pound or dollar – long held down by the Chinese administration – means that while Chinese workers get a lot more locally for their overseas-earned money, it also means that many of our goods cannot possibly compete with theirs on price. 

This structural imbalance has hollowed out UK/US  industry and been paid for first by borrowing (in part from the Chinese themselves) but later also by the sale of assets to (among others) China: $120 billion-plus in the US, £143 billion-plus in the UK (representing a much bigger proportion of our GDP than in America’s case.)

One can entirely understand the hard-working Chinese seizing the opportunity to pull themselves out of the mire and join the advanced nations of the world; but one can deplore the failure of Western politicians to control the rate of change and its impact on our society and economy. 

This may have something to do with our leaders’ education – in Britain we have suffered from a tradition of public school/Oxbridge types brought up to leave practical matters to ‘the little men’ while they rode the escalator to higher things. In France, though, they have the elitist governance-training Ecole Nationale d'Administration – ‘a degree from the ENA has been the passport to the upper echelons of French politics for generations,’ says the BBC. This could be why French negotiators have been running rings round ours before, during and after our membership of the EU. Presidents Macron, Hollande and Chirac all went to the ENA (and now M. Macron is to shut it down ‘to boost social mobility’! How weird; not pulling up the ladder after oneself, then?) In how many instances could ‘because Brexit’ be replaced by ‘because EU spite’ (think Ursula von der Leyen and weaponized vaccines) or ‘because British political incompetence’ (think Heath and now Johnson re the sell-out of the fishing industry?)

It’s not just China, of course – she’s not the only emerging market; and it’s not just the Far East, either. The EU was well aware of the implications of opening its borders in 2004 to new members such as Poland and imposed a seven-year moratorium on labour migration; but Mr Blair (Fettes and St. John’s) messed it up for the UK. Ten years earlier, French MEP Sir James Goldsmith was spelling out the socioeconomic consequences of GATT to PBS’s Charlie Rose:

 and to Weekend World’s Brian Walden:

Anyhow, we should welcome improved pay rates for workers here, because Brexit. It means they will spend more, so increasing the velocity of money in the economy and helping with the employment and profits of others; and pay more tax, so eventually the rates may come down and disposable income will 'fructify in the pockets of the people’ as Gladstone said.

Except… There’s not much point in letting the lower classes have more to spend if much of it goes back out on cellphones and plastic gewgaws from China, dinner sets from India, trainers from Vietnam and half our food from everywhere but Britain. Never mind smart cars, phones, meters and speakers; we need smart politicians to stop the sell-off of our businesses to, and negotiate fairer trade with, other nations.

It can’t be left to individual consumer initiative. We had ‘I’m Backing Britain’ in 1968, but that didn’t stop the rot. When real wage rates stalled and money got tight, the ordinary Brit bought the less expensive alternative; and unemployment, part-time and less-skilled and lower-paid work seeped in like a spring tide. It’s taken us goodness knows how long to get out of the clutches of the EU, and that’s only the start of the battle against supranational powers. We’ve done Brexit; now the little men, and little women, need to get together again.