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Brexit 101

  #671 (permalink)
 
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Fat Tails View Post
Or did I miss something?

I know your remarks are likely tongue in cheek and, should the UK crash out of the EU, the impact may not be noticeable to EU citizens, but I think the EU economy as a whole will suffer.

As I have said before, it is not clear at all what this will mean for the UK in the long term.

What is certain, the UK has been paying the price for the choice made for nearly 3 years now. I don't see that changing any time soon.


I'm sure most of us have Brexit hangover by now!

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  #672 (permalink)
 
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xplorer View Post
I know your remarks are likely tongue in cheek and, should the UK crash out of the EU, the impact may not be noticeable to EU citizens, but I think the EU economy as a whole will suffer.

As I have said before, it is not clear at all what this will mean for the UK in the long term.

What is certain, the UK has been paying the price for the choice made for nearly 3 years now. I don't see that changing any time soon.


I'm sure most of us have Brexit hangover by now!


I had just tried to imitate British calmness and composure as it was 70 years ago.

Britain has always been an island and from the very beginning the British have been more reluctant to conform to the common rules and decisions of the European Community. For me it is logicial that they are the first ever to drop out. Orwell was partly right in drawing up his map in 1984, but overestimated the Bristish influence in South Africa (see https://en.wikipedia.org/wiki/Nations_of_Nineteen_Eighty-Four).

The Brexit also is a sign of political maturity. If it is possible to both join and leave a political union without warfare, this is fantastic. Both the Scottish vote from 2014 and the British vote from 2016 have shown that Britain belongs to the more advanced nations when it comes to political culture. For different reasons Spain has more of a problem with Catalonia. And we don't talk about totalitarian Russia and all countries East and South of Russia which are still following war fuelling policies that were fashionable in the 19th century.

Separating a larger entity into smaller entities is not a bad thing by itself. It depends on the circumstances. Currently globalization has basically lead to the depletion of resources and the destruction of our environment. This is not the fault of capitalism or imperialism or any other isms. The globalization basically has thrived on deregulation. Deregulation means that there is a lack of supervision, which favors selfish behavior.

Liberalists pretend that there is no need for supervision, as their thinking has not much evolved, since Adam Smith published his idea of the invisible hand. The invisible hand represents the free market and it works well, if it is based on common values and rules that have been proved succesful in the past. Unfortunately the invisible hand has become a religion, although it is only a paraphrase for a system of partly-adjusting control loops.

As with a trading system, the success of control loops depends on the input parameters. However, international trade and policies neglect some of the main parameters that should be optimized. This problem is known as the "tragedy of the commons". It is the "tragedy of the commons" that describes some of our major problems like climatic change, environmental pollution and species extinction: Behind that tragedy you will find a multi-dimensional prisoner's dilemma. The "tragedy of commons" therefore belongs to the problems of game theory.

Actually international trade is very much like soccer. You need a level playing field for the soccer players, possibly without a slope that would favor any of the teams. If you let them play by themselves they will modify rules, play fouls and cheat as they like. Therefore regulation is required. Regulation needs to be enacted by common institutions. Regulation makes sure that the input parameters for the competitive play have been correctly set.
Once the rules have been enacted someone needs to make sure that they are enforced. For soccers it means that besides the players there is a need for officials and arbiters. For regelementing and supervising international trade powerful institutions (parliaments and courts) are required that deal with all the questions implied by the use of common goods. Control loops need to be carefully designed that take into account the hidden cost of using common resources and which prevent the tragedy of the commons which cannot be handled by the invisible hand. By the way this just described the separation of powers (trias politica, Montesquieu) and application to international affairs. Unfortunately, such institutions do not exist.

From George Orwell's "Animal Farm", I remember the sentence "Some animals are more equal than other animals". This well describes the current international playing field. There are nuclear states with veto powers which do not abide by international rules but simply follow their own geopolitical interests. Soccer is a bit ahead of politics. Manchester City may not have been successful by neglecting financial fair play rules, they are not having veto rights.

This sounds theoretical, so let me give a few examples. International flights are not being taxed at all. When I fly from Berlin to London, there is no petroleum tax and no VAT on the ticket. Airlines currently have an unfair advantage when compared to train operators or bus operators. The flight from Berlin to London costs me about the same as the taxi to the airport. Thus the (incompetent) regulator has favored transportation with the highest consumption of primary resources. Here are a few figures for CO2 emissions per person and 1000 km - this is the one-way distance from Berlin and London:

air plane (load factor 71%) 213 kg
passrnger car (2 passengers) 110 kg
railway (load factor 50%) 41 kg
bus (load factor 60%) 32 kg

Current regulation taxes car, railway and bus travel, but exempts air travel, which is creating between 2 and 7 times more damages to the climate. Even worse, low airfares lead to an increased demand and ever higher damage. The common regulation therefore does not take into account the disproportionate damage to the environment created by airlines. My daughter tells me that it is cheaper to prepare her university exams in Athens, because she can get a ticket for 25 Euros.

I could give you lots of other examples (look at sulphur content of heavy fuels for cargo ships, food reglementation, genetic engineering), but this may be the wrong forum for such discussions.

What I wanted to say and to demonstrate is that larger level playing fields also require more sophisticated common regulation and supervision, all of which must be based on common values. Europe has already grown too large without developing common values. There is a lot of corruption in the South and South East, totalitarian shifts in some of the Eastern European countries, nationalism (the root of all wars) thriving again. Why not leave one of the larger level playing fields and have a smaller one which in fact may become an alternative to European reglementation?

For me the most striking achievement of the European integration is that there has not been any major war during the last 74 years. I do not think Brexit increases the risk of wafare in Europe, so let it go. Let us see what happens and how to cope with it.

The more dangerous thing about Brexit is underlying nationalism or racism. However, this is due to the speed of change which was perceived as too high by British citizens. However, I am not afraid of a negative economic impact on both sides. What does it mean that GDP is expected to be 5% or 10% lower in 2030?. Does GDP measure the depletion of the commons? Is it a goal by itself?

Sorry for my detailed answer, originally I only had written my summary - which was about Scottish and Irish Whiskey - but as you have responded to my statement I have now explained what I have meant to say .....

I am not worried about Britain.

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  #673 (permalink)
 
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Thanks @Fat Tails, I appreciate the thoughtful post. As you say, this would probably need a wider discussion, especially about what we as a species are doing to ourselves.

I agree about Europe. I think there was another thread where this was debated at lenght, must have been the Greece one.

About Brexit, I have mostly been of the opinion that being part of a larger whole is beneficial, for a variety of reasons.

But what really concerns me the most is the strong doubts that most people who voted to leave did so predominantly on the basis of an emotionally charged, nostalgic and propaganda-based campaign.

Time will tell whether people did the right thing for the wrong reasons or not.

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D-day may (or not) be here.

https://www.parliamentlive.tv/home/_404?aspxerrorpath=/Event/Index/b6cf0fc5-ae6f-4672-b8e7-d89603fdf018

Just curious - anybody going to trade 6B during the parliament vote later on today?


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xplorer View Post
Just curious - anybody going to trade 6B during the parliament vote later on today?

The last ones who tried this are all locked in a psychiatric hospital with straitjacket...

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sam028 View Post
The last ones who tried this are all locked in a psychiatric hospital with straitjacket...

Lol.... I actually remember MLM trading the Brexit referendum vote back in 2016, he did quite alright

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MPs voted down her deal by 391 to 242 - a smaller defeat than when they rejected it in January.

The PM said MPs will now get a vote on whether the UK should leave the EU without a deal and, if that fails, on whether Brexit should be delayed.



On BBC News

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Yes, I enjoyed @Fat Tails post, too.

However, whilst the focus has been on the inevitable economic damage of Brexit to the UK, it is also a huge disaster for the EU, for reasons that I think I have already stated. We seem to be living in a time of almost unparalleled political incompetence around the world - or perhaps the "inter-relatedness of things" has become truly unmanageable.

But then again, I STILL don't think Brexit will happen... (nevertheless, I have this morning cashed in half my Brexit bets at the golf club, made on 3:1 odds in my favour, at 1:1 - so I have moved my stop to breakeven in trading terms !).

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Tariffs will be cut to zero on 87% of imports to the UK as part of a temporary no-deal plan but prices of some imports including meat, shoes, underpants and cars will go up.

In an attempt to prevent a £9bn price shock to business and consumers while “supporting farmers and producers who have been protected through high EU tariffs”, the government on Wednesday set out its long-awaited pricing regime in the event that the UK crashes out of the EU on 29 March.

Among the consumer goods that will be hit are imports of beef, which will go up by almost 7%, cheddar cheese, up by about £20 per 100kg, and imported “fully finished” cars, which would attract a 10.8% levy, or about £1,500 for an average new car.

Tins of tuna could go up by 24%, imported men’s wool jackets by 12% and men’s, women’s and girls’ underpants made of synthetic fibre by 12%.

The announcements were made in a last-ditch attempt to concentrate the minds of MPs who will be voting later on Wednesday to reject a no-deal Brexit after Theresa May’s 149-vote defeat.




Full article on The Guardian

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jtrade View Post
Yes, I enjoyed @Fat Tails post, too.

However, whilst the focus has been on the inevitable economic damage of Brexit to the UK, it is also a huge disaster for the EU, for reasons that I think I have already stated. We seem to be living in a time of almost unparalleled political incompetence around the world - or perhaps the "inter-relatedness of things" has become truly unmanageable.

But then again, I STILL don't think Brexit will happen... (nevertheless, I have this morning cashed in half my Brexit bets at the golf club, made on 3:1 odds in my favour, at 1:1 - so I have moved my stop to breakeven in trading terms !).

Hasn't much of the damage already happened and also irreversible at this point?


xplorer View Post
imported “fully finished” cars, which would attract a 10.8% levy, or about £1,500 for an average new car.

Protecting that Great British car industry!

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