Brexit: There may be trouble ahead
Brexit: There may be trouble ahead

So, barring some exceedingly unlikely extraordinary parliamentary gyrations that see a 380 odd majority at second reading overturned at third reading, it looks like Article 50 will be invoked to Theresa May’s timetable in March and negotiations will begin in earnest to achieve whatever they mean by “Brexit”. Whilst I was a remain voter, and would do so again if asked today, I did so for largely negative reasons: I do find the EU deeply flawed in many ways, but not as deeply flawed as our own Westminster system. And my worry that a Westminster government would take a leave result as endorsement of their own sense of self-importance seems to have been borne out in the intervening months.

We are told, variously, that people voted to leave to “bring back control” of our laws and lives, that many were frustrated that globalisation was drawing in cheaper labour, perceived to be (though wrongly) from the EU, and that “ordinary Brits” were not seeing the benefits of this growing prosperity. That unchecked immigration saw public services stretched (even as many of them work in those services and keep them going) and more and more Britons unable to afford to live a decent life in their own country.

Whether these were the result of shameless populist stretching of the truth or not, they point to some of the issues that need to be addressed by the “new constitution” we will have to develop over the next few years as we extricate ourselves from the institutions we have been so closely involved in for nearly half a century.

And herein lies the great opportunity. An opportunity to rewrite our constitution and re-engineer governance institutions. An opportunity liberals should grab with both hands and fight for a radical overhaul. An overhaul that can deliver both maximum trade opportunities, greater control in the hands of people and their communities instead of central government and state interference, and an economic system that will better distribute the great benefits we could accrue from free trade and higher productivity.

We can have both worker security, low taxes and strong collective services, while more equitably predistributing the benefits of economic prosperity, whether generated by humans or machines.

There’s little sign that this government has any great ideas about how to do this. Indeed, they will be bogged down in negotiations and forced onto a back foot with domestic policy, always reacting to whatever comes out of the Brexit process. If it costs our economy in lower output, and hence the government in lower revenue, they will have little headroom to increase expenditure to ameliorate the problems communities feeling let down by globalisation already feel, and more will likely begin to feel if Brexit doesn’t go well.

Perhaps counterintuitively, the one idea that has been floated that seems to have potential, though more of a threat than a policy, was Philip Hammond’s recent suggestion that if we can’t access the single market we might try and become a low regulation tax haven. Now hear me out. There were howls of derision at the suggestion: that it would leave us unable to support a welfare state; that the reduced regulation would leave workers powerless and at risk from abuse. But regulation is not the only way to give workers relative power, and taxation is not the only way to fund public and social services. They are not even the best way.

Britain needs Plan B: Beyond Brexit

The current tax system, based on fining the productive, for having jobs, for investing in productive business, and for buying and selling things, imposes a huge dampener on our economic productivity. By one estimate, this “deadweight loss” amounts to as much as our entire current trade with our EU partners. Eradicating as much of this self-imposed tariff regime as possible would free up that enormous economic potential and cushion any blow that externally imposed tariffs or loss of trade might cause, whilst enabling us to go into trade talks with others in the knowledge that we can offer potential trade partners completely tariff free access to the UK.

On the other hand, regulation is most often controlled by those who have the resources to pressure legislators and regulators. Business regulation usually helps those larger corporations that can afford to internalise, absorb, the costs of compliance. Studies have suggested that small businesses bear up to seventeen times the costs for compliance as bigger companies. And they prevent workers from choosing to do things regulation prevents them by law from doing, however much they may want to. Such as negotiating better reward packages for accepting more risk, longer hours and so on. And all the regulation in the world might mean little if jobs are, as some predict, lost in large numbers to technological automation.

But we can have both worker security, low taxes and strong collective services, while more equitably predistributing (a word credited to Ed Milliband’s American influencer James Hacker, but in fact already well in use by land and monetary reformers well over a decade ago now) the benefits of economic prosperity, whether generated by humans or machines. At the same time we can reduce the costs of living that are putting so many in the “Just About Managing” category, particularly housing.

We should abolish as much “treadmill” taxation as possible, while at the same time switch to collecting the rental value of land and natural resources we use in production – either raw materials or the value of scarce land locations that enable us to be most effectively economically productive. We should distribute as much of this as possible as an equal “citizen’s dividend” to everyone in the relevant territory to help pay for the basics of life with the surplus productivity we all help to create that is currently expropriated by those who own land, completely unearned.

And we should radically devolve public services so that more local, perhaps regional, communities can precept into this rental flow to provide locally controlled services as their local electorates direct. People will have the basic resources to be able to say no to abusive employers, to save to spend on retraining and retirement. The economic growth unleashed by abolishing the fines on production will largely be distributed equally to all, while workers and owners of productive capital get to keep what they make.

The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty.
Winston Churchill

We have a once in generations opportunity here. We must not miss it. We can forge a new settlement that our partners will come to envy, and in time, can achieve more voluntary harmonisation with our neighbours perhaps than even the EU can dream of.

*Image courtesy of 70023venus2009 at Flickr.com

The Great Brexit Opportunity
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