Thursday, June 2, 2016

Comparing apples with a bunch of Boris Johnson shaped bananas across countries

The very small minority of economists in favour of Brexit keep working hard on showing us the miracles of a non-European Britain, in spite of the lack of attention paid to them even by their campaign leaders. But qualified representatives of the great majority of economists have an easy and fun job at showing their inconsistencies. For example, Johan Van Reenen and his co-authors have shown that trade disarmament to compensate for the costs of Brexit is both bad politics and bad economics. Their conclusions of a review of the so-called Minford model are clear. According to this model, prices paid by UK consumers for manufacturing and agricultural goods would fall by 10 per cent under Britain Alone: "The 10 per cent number does not come from looking at the actual level of tariffs, which are only around 3 per cent. Rather, it comes from looking at the differences in guesstimated producer price levels between the UK and some other countries using data that is 14 years out of date, and arguing that these higher prices are entirely due to EU trade barriers.
This is really far-fetched. Cross-country price differences are due to a number of factors, particularly different tastes and quality. For example, say Europeans put a higher premium on high-quality clothing compared with Americans. It will look like Europeans are paying more for their clothes, but in reality, the higher average prices simply reflect a different mix of purchases. He ends up comparing apples with a bunch of Boris Johnson shaped bananas across countries." Brexiteers try to surround their prejudices with an aura of science. When they are sober, they even try to convince us that they love Europe (similarly the Catalan secessionsits usually say that they "love Spain"). The Economist says that "BREXITEERS rarely hesitate to profess their love of Europe. Daniel Hannan, a campaigning MEP, stresses that he speaks Spanish and French. Sarah Vine, a journalist married to Michael Gove, the anti-EU justice secretary, points to her husband’s penchant for a glass of Bordeaux: I love Europe!”This is the conclusion of the Bagehot column in the magazine: "The result in 2016 is a large moral, economic and political stake in the success of the mainland, the dominant institution of whose common civic life is currently—like it or not—the EU. To be “pro-European”, really, is not to have a passion for Beethoven, or to be able to conjugate a passé simple. It is to possess a concern, both selfish and munificent, for an old continent that encompasses Britain now as in the past. “Love Europe? Make the EU better.”

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