Brexit What Happens Next Thread ---multiple merged threads.

[crouch]

1 hour ago, IMHAL said:

My confidence of the medium and long term damage [unless someone comes up with a good plan] derives from two very real facts. We are going to lose unencumbered trade with our largest trading partner and we have no plan to replace this.

The plan is surely to replace this.

1 hour ago, IMHAL said:

So you don't know with 100% certainty what the future holds... bloody obvious....did it need saying?

Apparently - yes.

1 hour ago, IMHAL said:

How about another approach.....do you know of a strategic plan for our post Brexit future? One that is bought into? If not then I would have thought you would be much more pessimistic about our long term outlook.

One cannot be pessimistic about a plan or even the absence of one; a plan is something to achieve an objective and objectives are not pessimistic or optimistic; they are just - objectives and the absence of one is well, absence. In any case it assumes a "plan" is necessary and appropriate and that rather begs the question.

We're in the same place - like it or not.

[winkie]

What we need is more printing,QE, lower interest rates to borrow a lot more....will it ever be repaid?who will be paying for it, the future?.....what party did we vote for?......fed reducing? will we follow?......the future is bright the future is orange.?

[crouch]

49 minutes ago, slawek said:

You can't deny that being a part of the EU has a huge positive impact on our ability to trade with our partners there.

It has a positive impact.

50 minutes ago, slawek said:

Dwindling share of the UK trade with the EU last 10 years is just a result of rising China and other EMs economies, but they won't be able to replace the lost trade with the EU.

How do you know?

50 minutes ago, slawek said:

You can't escape the facts the EU is closer geographically and culturally.

Very much so and I would never dream of escaping facts; it's speculation I escape from.

52 minutes ago, slawek said:

We won't do as good as as we would have by staying in the EU.  Adaption has its limits, it can't overcome all issues.

How do you know this?

[Riedquat]

40 minutes ago, slawek said:

Imagine we leave the EU and our economy will get worse.

At that time (relative to the state at that time) , will probability of us getting better off in 50 years be greater than the probability of us getting worse in 50 years?

Anyone who claims to know either way, Brexit or no Brexit, is lying. You can simply toss a coin for all the difference it makes. That sort of timescale is just too unpredictable - all sorts of things can, and almost certainly will, happen (when was the last time there was a stable, steady period of 50 years where nothing came in and shook things up?)

Even if the economy gets worse the argument has not been made that it'll get worse enough to be rationally concerned about. As has been pointed out numerous times the UK's problem isn't a lack of wealth, it's knowing what to do with it and how it's distributed. Changes in that have had a far greater impact on ordinary lives than total wealth.

[crouch]

43 minutes ago, slawek said:

Imagine we leave the EU and our economy will get worse.

At that time (relative to the state at that time) , will probability of us getting better off in 50 years be greater than the probability of us getting worse in 50 years?

I think it will get worse anyway due to the factors I've mentioned. IMV the secular trend rate of growth is much less than say thirty years ago and reversing this will not be easy. But these are issues that affect the EU members as well; they are not unique to the UK.

Probabilities on states fifty years out are meaningless; you might just as well flip a coin. And in any case the acid test of this is not whether we are worse off or better off in fifty years time; the test is where we would have been if we'd stayed in the EU which requires a counterfactual.

[slawek]

7 minutes ago, Riedquat said:

Anyone who claims to know either way, Brexit or no Brexit, is lying. You can simply toss a coin for all the difference it makes. That sort of timescale is just too unpredictable - all sorts of things can, and almost certainly will, happen (when was the last time there was a stable, steady period of 50 years where nothing came in and shook things up?)

Even if the economy gets worse the argument has not been made that it'll get worse enough to be rationally concerned about. As has been pointed out numerous times the UK's problem isn't a lack of wealth, it's knowing what to do with it and how it's distributed. Changes in that have had a far greater impact on ordinary lives than total wealth.

It is crouch who makes a prediction here. As far as I understand he claims that will get better in the long term even we got worse in a short term. 

I am not claiming that that we know what will happen exactly in 50 years. We all agree the long term prediction are more uncertain that short term. That however doesn't exclude our ability to predict what is more likely in the future, even if likelihood differences are relatively small.

In a very extreme case, if we got a by a big asteroid the global GDP in 50 years would be most likely much lower. Of course there is a small chance that by some miracle (aliens' help for an example) we would be better off. It is all about likelihood.  

[slawek]

21 minutes ago, crouch said:

It has a positive impact.

How do you know?

Very much so and I would never dream of escaping facts; it's speculation I escape from.

How do you know this?

Do you throw your money down the toilet every day and expect to have the same amount of money in the future because you believe you will adapt to the new situation and make up for loss? 

We are not living in a magical world, we are constrained by laws of physics. Shipping goods between us and Asia will take longer than from Europe even when you travel with the speed of light, for an example.

[Dorkins]

The main problem with the argument "don't worry, we will make sure free trade with the EU continues pretty much as now, and people will still be able to move to and from the EU for work as they were able to before 1973" is: what is the point of Brexit if things are basically going to continue as is?

Edited July 22, 2019 by Dorkins

[slawek]

26 minutes ago, crouch said:

I think it will get worse anyway due to the factors I've mentioned. IMV the secular trend rate of growth is much less than say thirty years ago and reversing this will not be easy. But these are issues that affect the EU members as well; they are not unique to the UK.

Probabilities on states fifty years out are meaningless; you might just as well flip a coin. And in any case the acid test of this is not whether we are worse off or better off in fifty years time; the test is where we would have been if we'd stayed in the EU which requires a counterfactual.

So you are making a long term prediction even when you claim that is not possible.

I agree that certainty of the long term predictions is much smaller but it is still useful regardless how much smaller difference in probabilities between outcomes is.

Do you agree then with the following statement?

Based on the information at our disposal now, probability of us being better off in 50 years after Brexit is smaller that probability of this outcome with no Brexit. Difference is decaying with time horizon but positive.    

[crouch]

5 minutes ago, slawek said:

Do you throw your money down the toilet every day and expect to have the same amount of money in the future because you believe you will adapt to the new situation and make up for loss? 

Throwing money down the toilet is an irreversible act; unless of course you want to get your hands dirty. People will adapt to the changed circumstances; the very word adapt means a change in behavior. Whether any short term losses are made up by future gains remains to be seen.

8 minutes ago, slawek said:

We are not living in a magical world, we are constrained by laws of physics. Shipping goods between us and Asia will take longer than from Europe even when you travel with the speed of light, for an example.

Indeed and the gravity model of trade seems to me a perfectly valid concept. But it appears to assume we will lose a lot of trade with the EU. Where is the evidence for this? To assume this seems to me to be almost fantastical; some - probably; the majority - possibly but very unlikely.

Shipping between Asia and Europe will take longer and be more expensive but that doesn't mean that trade cannot take place. It may be more profitable to trade with Asia. There are trade offs.

[zugzwang]

NIESR: Brexit may already have pushed the UK into recession.

https://www.bloomberg.com/news/articles/2019-07-22/brexit-may-have-already-pushed-u-k-into-recession-niesr-says-jye664uk?srnd=markets-vp

[slawek]

Just now, crouch said:

Throwing money down the toilet is an irreversible act; unless of course you want to get your hands dirty. People will adapt to the changed circumstances; the very word adapt means a change in behavior. Whether any short term losses are made up by future gains remains to be seen.

Indeed and the gravity model of trade seems to me a perfectly valid concept. But it appears to assume we will lose a lot of trade with the EU. Where is the evidence for this? To assume this seems to me to be almost fantastical; some - probably; the majority - possibly but very unlikely.

Shipping between Asia and Europe will take longer and be more expensive but that doesn't mean that trade cannot take place. It may be more profitable to trade with Asia. There are trade offs.

Some outcomes of Brexit are also irreversible, we would lose trade, some companies would go bust, some people would lose jobs, so analogy is valid. I guess you wouldn't throw money down the toilet then. So why do you want to cripple us?   

We gained lots of trade after joining in 1973, it is reasonable to estimate that we lose similar amount of the trade after leaving.

I am not saying we won't trade with Asian, only that because of the physical constraints we won't achieve the same level of trade when compared with a scenario that we are being part of the EU.  

[crouch]

1 minute ago, slawek said:

So you are making a long term prediction even when you claim that is not possible.

No I'm making a prophesy. But that prophesy is on much firmer ground that any other study for two reasons:

- population trends are much more amenable to long term forecasting because of the length of the cycle. If I'm told that the population in the UK will reach say 80 million by 2050 my confidence in that is much higher than if someone tells me that GDP per head will be less than today - that is a cardinal forecast (80 million) against a merely ordinal one (GDP per head will be less).

- secular productivity trends are similar; they embody a capital and labour stock that is simply likely to carry on, subject to cyclical fluctuations. This is part of the prophesy that's much less certain than population because of adaptation but it has some indicative salience.

12 minutes ago, slawek said:

Do you agree then with the following statement?

Based on the information at our disposal now, probability of us being better off in 50 years after Brexit is smaller that probability of this outcome with no Brexit. Difference is decaying with time horizon but positive.

The probability of any outcome is the ratio of the number of favourable outcomes over the number of possible outcomes. As these have to be expressed in cardinal terms I cannot see how it's possible to answer that question.

[crouch]

2 minutes ago, slawek said:

Some outcomes of Brexit are also irreversible, we would lose trade, some companies would go bust, some people would lose jobs, so analogy is valid. I guess you wouldn't throw money down the toilet then. So why do you want to cripple us?

"Crippling us" is a pejorative term; it assumes what requires to be demonstrated.

Implicitly you assume no adaptation or recovery. You may be right. On the other hand you may be wrong.

3 minutes ago, slawek said:

We gained lots of trade after joining in 1973, it is reasonable to estimate that we lose similar amount of the trade after leaving.

There are no grounds for assuming that at all.

5 minutes ago, slawek said:

I am not saying we won't trade with Asian, only that because of the physical constraints we won't achieve the same level of trade when compared with a scenario that we are being part of the EU.  

If it's profitable then we will trade - wherever it is. I have no idea whether we will achieve the same level of trade.

[crouch]

1 hour ago, slawek said:

It is crouch who makes a prediction here. As far as I understand he claims that will get better in the long term even we got worse in a short term. 

The essence of my argument is that it is not possible to make long term predictions. You can make prophesies; you can guess; you can speculate but you cannot predict.

Edited July 22, 2019 by crouch

[Gigantic Purple Slug]

36 minutes ago, crouch said:

Throwing money down the toilet is an irreversible act; unless of course you want to get your hands dirty. People will adapt to the changed circumstances; the very word adapt means a change in behavior. Whether any short term losses are made up by future gains remains to be seen.

Indeed and the gravity model of trade seems to me a perfectly valid concept. But it appears to assume we will lose a lot of trade with the EU. Where is the evidence for this? To assume this seems to me to be almost fantastical; some - probably; the majority - possibly but very unlikely.

Shipping between Asia and Europe will take longer and be more expensive but that doesn't mean that trade cannot take place. It may be more profitable to trade with Asia. There are trade offs.

Shipping costs from Asia are negligible.

Hence the inordinate amount of low value/low margin stuff we import from there. If shipping costs were significant this simply would not be possible.

I think for shipping something the size of a notebook from China to the UK costs of the order of 1GBP.

Whether those costs are sustainable long term is another issue.

[GrizzlyDave]

2 hours ago, slawek said:

wrong timing (1973 vs 1975), wrong direction (less oil imports means less trade), wrong magnitude (100 mln tonnes of oil that is around 4% of GDP at that time) 

I think UK North Sea Gas production came onstream around that time?

Oil and Gas production is one element; but it fuels pharma, fuel, and plastics amongst other things.

Would be interesting to see a % of GDP oil and gas has had over the years...

 

 

[Dorkins]

12 minutes ago, Gigantic Purple Slug said:

Shipping costs from Asia are negligible.

Hence the inordinate amount of low value/low margin stuff we import from there. If shipping costs were significant this simply would not be possible.

I think for shipping something the size of a notebook from China to the UK costs of the order of 1GBP.

Whether those costs are sustainable long term is another issue.

Shipping technology is pretty amazing. Lamb is shipped by sea from New Zealand without freezing it just by vacuum packing it carefully and storing at just above freezing temperature, can be kept like that for 5-6 weeks.

[slawek]

17 minutes ago, crouch said:

The essence of my argument is that it is not possible to make long term predictions. You can make prophesies; you can guess; you can speculate but you cannot predict.

To be precise, by prediction I mean making claims on the likelihood of some outcomes in the future. 

You still have addressed the following contradictions in your argument

1) In some posts you making long term predictions

2) ability to make short term predictions and a lack of ability to make long term predictions are mutually exclusive, you can't have both, but you agree that Brexit will be damaging in the short term

[slawek]

5 minutes ago, GrizzlyDave said:

I think UK North Sea Gas production came onstream around that time?

Oil and Gas production is one element; but it fuels pharma, fuel, and plastics amongst other things.

Would be interesting to see a % of GDP oil and gas has had over the years...

 

 

Gas production lowers trade, less imports. 

You can use oil before it is produced.

[crouch]

1 minute ago, slawek said:

To be precise, by prediction I mean making claims on the likelihood of some outcomes in the future. 

You still have addressed the following contradictions in your argument

1) In some posts you making long term predictions

2) ability to make short term predictions and a lack of ability to make long term predictions are mutually exclusive, you can't have both, but you agree that Brexit will be damaging in the short term

No these are not meant to be long term predictions they are just indications (prophesies)  based on momentum.

Certainly the population predictions have quite a reasonable probability of being true although, thinking about it and to be fair, they are based in part on immigration trends which may now be subject to change in the light (or dark) of Brexit.

The productivity ones are less certain.

The reason I raise these is that secular trends are based on momentum and are unlikely to change in the short/medium term. Certainly the energy cost constraint is an issue going forward as is the debt level. The point in highlighting these things is to emphasise that there is a good deal more going on than Brexit.

As far as Brexit being damaging in the short term I believe this is nailed on. There will, at the very least be postponement of investment and spending, which may only be partially reversed.

[kzb]

3 hours ago, slawek said:

All show a jump around 1973 apart of the first one, which seems to be smoothed. Some graphs are only goods.

The UK benefits the least out of all EU countries from the single market.

The EU's own calculation said that the single market gave the UK just 1% growth over 20 years (= 0.05% per year).  Probably did not compensate for the recession caused by Black Wednesday.

8% of UK GDP is trade in goods with EU (paradoxically although we are still bottom of the EU league this showed one of the largest increases in the EU after the referendum)

5.6% of UK GDP is services trade to EU

https://ec.europa.eu/internal_market/scoreboard/integration_market_openness/trade_goods_services/index_en.htm

 

 

Edited July 22, 2019 by kzb

[slawek]

36 minutes ago, crouch said:

"Crippling us" is a pejorative term; it assumes what requires to be demonstrated.

Implicitly you assume no adaptation or recovery. You may be right. On the other hand you may be wrong.

There are no grounds for assuming that at all.

If it's profitable then we will trade - wherever it is. I have no idea whether we will achieve the same level of trade.

I didn't try to imply a permanent damage. Even if the recovery is unknown you don't hurt yourself

1)  because of the short pain it will cause

2)  the risk you will never recover or not fully recover

There is no way adding additional costs and constraints will not lower our trade with the EU. If there was no difference why would countries enter FTA or trading blocks. You are denying the reality. It makes our discussion pointless.     

[zugzwang]

41 minutes ago, crouch said:

The probability of any outcome is the ratio of the number of favourable outcomes over the number of possible outcomes. As these have to be expressed in cardinal terms I cannot see how it's possible to answer that question.

That's the frequentist definition of probability. There are others.

As Slawek has pointed out, you regularly express confidence that the short-term consequences of Brexit will be negative. How? By counting the number of favourable outcomes vs the number of possible outcomes?

[slawek]

7 minutes ago, crouch said:

No these are not meant to be long term predictions they are just indications (prophesies)  based on momentum.

Certainly the population predictions have quite a reasonable probability of being true although, thinking about it and to be fair, they are based in part on immigration trends which may now be subject to change in the light (or dark) of Brexit.

The productivity ones are less certain.

The reason I raise these is that secular trends are based on momentum and are unlikely to change in the short/medium term. Certainly the energy cost constraint is an issue going forward as is the debt level. The point in highlighting these things is to emphasise that there is a good deal more going on than Brexit.

As far as Brexit being damaging in the short term I believe this is nailed on. There will, at the very least be postponement of investment and spending, which may only be partially reversed.

They are still complying with a definition, making claims on the likelihood of some outcomes in the future.  What name do you assign to is irrelevant? How do you define word "prediction"?

So you agree than Brexit is more likely to be damaging in the longer term, however small this likelihood increase is.