The two unions

The European Union consists of two parts: an economic union and a political union. The economic union has a single market with the same rules applying to all member states. Non-members of the EU who export to the EU must comply with those rules for their goods, but not for goods they trade outside the EU. The economic union features a common customs tariff for goods entering the EU, but none on trade between EU members. The political union has an elected Parliament with some legislative and budgetary powers; so does the Council of Ministers, composed of 28 ministers (one per member state). The European Council, composed of the 28 heads of state or government defines the EU's policy agenda, and the European Commission is the executive, dealing with the day-to-day running of the EU and enforcing its treaties. It has one commissioner appointed by each state. The aim of the political union is "ever closer union," increasingly giving the EU the characteristics of a unitary state. The aim of many of its adherents is a European state with its own army, embassies, and laws.

Several states outside the EU have negotiated trade deals with it giving them access to the economic union's single market, without becoming part of its political union. If the UK were to leave the EU's political union, it would certainly do the same, since this would be hugely to the advantage of both the UK and the EU. Similarly several non-EU states have agreed visa-free travel with the EU, though of course non-members have to pass through passport and customs controls, as UK travellers currently do.

The case for the UK's leaving the EU amounts to advocating that the UK retains the advantages of the economic union, with access to the single market, and with EU access to its own market, while withdrawing from the political union that gives EU bodies powers over it.

The case for remaining in the EU ought to be about continuing to be a part of a developing political entity, pointing to any gains that derive from this. Instead it has thus far been almost entirely based on the fear of adverse economic consequences, many of them based on the utterly false assumption that the UK would not negotiate an agreement that kept it closely integrated with the EU's economic union.

The UK's citizenry has never wholeheartedly endorsed the political union. When it voted in the 1975 referendum to endorse the legislative decision to join, the arguments were almost entirely about the economic advantages of doing so. The case for remaining in the political union has never really been put to the test, and is not now being done. A vote to leave would be one to reject the political union, while remaining closely integrated with the EU's economic union.

We wholly approve of voluntary migration

No, we're not quite thinking of the wave of migration entering Europe just at present although obviously open borders do have their attractions. Rather, we're thinking of migrations in which people sort themselves into the sort of State that they desire. Like, for example, American "liberals" moving to Canada to find a society that they desire rather more:

“If Americans want to live in a country where there is an investment in public education, where people aren’t afraid of going bankrupt because they get sick, and where democracy is taken seriously, they should move, because an alternative exists,” said Tom Kertes, 43, who moved from Seattle to Canada with his now husband Ron Braun in 2007. ... For Laura Kaminker, however, that’s completely out of the question. In the 20 years before she and her partner Allan Wood finally moved to Canada from New York City in 2005, she had “lost hope” in the country she saw plagued by “civil liberties crackdowns” and “endless wars”. Although she still has her American citizenship, she doesn’t vote any more in US elections, and whenever she comes back to Canada after visiting family or friends in the States, she breathes a sigh of relief.

“Every time I say, ‘God, I’m so glad to be out of that crazy country,’” she said.

That's not a view of the United States that we share but then we are liberals not "liberals". Chacun a son gout and good luck to all who sail in her is our motto. And if you don't like the society you're in but can see a better one, by your lights, just over the horizon then great, move to it.

It certainly strikes us as a great deal more honest, more adult even, to go and live in a society that operates as you wish one did rather than try to insist that your 320 million fellow countrymen must follow your own plans. It's not so much that we would say good riddance to those who with to be more statist, it's that we do indeed understand that different people have different ideas about what the good society entails. and we're just fine with people going off to one they find more congenial. As, of course, is the foundational myth of the United States itself.

It's just that we'd really rather hope that the tolerance would be mutual, that we might move, or if they do we might remain, in a society more attuned to our own tastes and prejudices but that never really does seem to happen, does it?

It's time to start the Brexit contingency planning

There were reports this week that civil servants are thinking about what happens if the UK votes to leave the EU (‘Brexit’) – but are not writing anything down in case they get a Freedom of Information request. Sounds more as if they are not thinking about it at all. But if the UK is to succeed in its bargaining, it must have a credible alternative. We should start by creating a small group of advisers and civil servants, led by a (Eurosceptic?) minister, to draft an exit plan that can be put to Parliament very soon after the referendum in the event of a NO vote. If it is a NO vote, we should be prepared to serve immediate notice to leave the EU, under Article 50. We should offer to give up the UK’s presidency (for the second half of 2017) and cancel the UK’s participation in EU elections (2019) while negotiations are going on, and cease appointing UK officials to EU bodies. To be taken seriously in Brexit negotiations, we would need to appoint a tough (Eurosceptic) Foreign Secretary, and a tough Eurosceptic Ambassador to the EU. The Foreign Secretary will need a slick team of negotiators, with skills in trade law, economics, and EU politics.

We would have to reform the existing Economic Affairs Committee (EAC) of the Cabinet, bringing it under the Foreign Secretary and charging it with supervising the withdrawal. It would need to move quickly to identify the economic and legal issues arising from Brexit and establish the UK’s objectives in the talks. We would also need a dedicated communications team to promote the UK’s case and negotiating demands, and to show that it has a future outside the EU. That means identifying genuine free trade as the future framework for the UK’s trade, economic and foreign policy.

The Bank of England should also have plans in place to deal with any financial turbulence following a NO vote. It needs to coordinate with the financial authorities in EU to manage abnormal capital movements. And the MoD will have to revisit how it patrols UK fisheries.

Arrangements also need to be put in place for bilateral talks with countries remaining in the EU, and especially Ireland and our maritime neighbours. And we need to move very quickly on negotiating free trade deals with non-EU countries. At the end of the Brexit talks, we could usefully have not only a Secession Bill, but also a Free Trade Bill – inviting all-comers to trade freely with the United Kingdom. Indeed, drafting that Bill now might and implementing it earlier might just show our negotiating partners in Brussels that we really are deadly serious and that the trade gains will be ours.

That is a lot to think about. If the civil service daren’t put it all on paper, somebody else will have to.

What on earth is Theresa May up to here?

The answer to that headline question is depressingly simple: politics.

A new £1,000-a-year immigration skills levy is expected to be introduced on all firms for each skilled migrant they recruit from outside Europe, under a new crackdown ordered by the home secretary, Theresa May.

There is no sense to this at all. The point about accepting economic migrants is that doing so makes us richer. So why on earth we should be charging people for going through the process of making us richer is unknown. Except, of course, that we do know very well why this is happening.

There is concern generally about the level of immigration. We don't share that concern but then so what? Politics is the art of at least pretending to do something about the issues that the voters care about. But what can the government do about immigration?

It cannot limit any movement of people from within the European Union. Other than family reunion issues and the like the UK doesn't really have much in the way of unskilled ex-EU immigration. Refugees and asylum seekers are also dealt with under international agreements and are not part of domestic policy. The only part of immigration that is actually under the control of those in Westminster is skilled, economic, migration from outside the EU. Thus, if the populace are getting antsy about immigration that's where the people in Westminster will do something.

What they do, how they do it, the sense of what they do isn't the point at all. Given that something must be done and this is the only place where they can do something then this is where they will. Despite the fact that skilled migration is exactly the type we want and charging people for employing those who make us richer is simply nonsensical.

But then, you know, politics. It's rather why we're so adamant that politics should be restricted, as a way of running things, to only those things that cannot be handled in any other manner. Simply because the results from politics are so often so dismal.

Another ten bad arguments for staying in the EU

Here are another 10 of the arguments for remaining in the EU that do not stand up. 11. A leave vote would be a leap into a perilous and unpredictable unknown

It is certainly true that an exit from the EU would take the UK into an unpredictable unknown, though there is no reason to suppose that it need be particularly perilous. It would be unpredictable because the future always is. If we stayed in the EU we would also face an unpredictable future.

It is important to understand that status quo is not an option. If we vote to remain, we are not voting to stay inside an unchanging EU, but to stay in one that will continue to develop and change. Many in the EU wish it to move to "ever closer union," and they mean political union, with ever more decisions being taken collectively by EU institutions rather than by the governments of member nations.

The choice between "remain" and "leave" thus comes down to a choice between staying within an organization that will develop towards closer political union, or choosing not to be a part of that closer unity. The UK could survive and prosper outside the EU; many other countries do. For much of our country's history it has stood alone, outside of political union, but intertwined with other nations by treaties, alliances and agreements.

A post EU Britain would continue to enjoy those relationships and the advantages and security they bring. It would retain friendly relations with the EU, as many countries already do. A UK that voted to stay in the EU might be able to retain a considerable area of independence from centralized decision-making. It might be an outrider, inside the EU, but outside of the central core of nations driving toward ever closer union. It depends on the terms that can be agreed. But there is no reason to suppose that our absence from that process need be perilous.

The least unknown course is to remain an economic partner of the EU, while choosing no longer to be a part of the political union. This would be achieved by a vote to leave.

____

12. Britain's voice is stronger in Europe

Some think that the UK doesn't count for much by itself these days, but by joining our voice into an EU chorus we can make ourselves heard more. The EU presently represents 28 nations with a combined population of over 500m. If the EU were a country it would be the world's third most populous and have the second biggest economy. With such a size, goes the argument, the EU has to be listened to. It can make its voice count for far more than any of its individual members, including the UK, could.

The problem with this argument is that it assumes that our interests coincide with those of the EU, and that it does in fact speak for us when it makes its voice heard. The reality is that the UK is one small voice within the EU, and one often not heeded. The UK is regularly outvoted within the EU, so EU positions are often ones that were opposed by the UK when they were first put forward. Securing agreement between 28 nations is difficult, so many collective decisions will act against the interests of some of the individual members.

The EU is also cumbersome. It takes time to negotiate a position that takes account of the preferences and views of its individual members. A single nation can declare its position on issues that arise, but the EU might take weeks or months before a joint position can be hammered out. And even then the position will probably be a compromise rather than a clear expression of its position.

A UK that was independent of the EU would, it is true, speak with a smaller voice than that of the EU, but it would be a voice that actually represented its interest every time, rather than having that interest swallowed up in the interests of others. An independent UK would also have its own seat in many of the world's assemblies, instead of having that seat occupied on its behalf by the EU. Its voice would speak for itself. ____

13. It will cost us money to leave the EU. We'd lose EU grants

While it is true that some UK institutions such as research laboratories receive grants from the EU, these are a tiny fraction of the amount that Britain pays in as its annual contribution. In 2014 that was £19.1bn. It would not, therefore, cost us money to leave the EU. On the contrary, the UK would end up well ahead financially if it did vote to leave.

The EU's record of money management has often come under attack. It has a huge budget and spends money on a lavish scale. Its expenses for parliamentarians and officials are notoriously profligate, and it gives grants to organizations within member states, choosing to reward pro-EU groups and to withhold funds from those that do not actively support it.

The UK would come out well ahead if it left, and would no longer have the EU interfering in its domestic politics through it use of grants to influence political thinking in the UK to support the EU and its policies. An independent UK would be more careful in spending its funds than the EU is with those funds it allegedly spends on our behalf.

The EU takes huge sums from the UK and spends large parts of them on projects in other countries, as well as in this one, that an independent UK would probably not choose to back. An independent UK would also gain economically by not having to follow the many EU regulations that raise the costs of business without achieving anything worthwhile. A UK that spent the funds for itself would certainly choose to spend them on things it decided were more in its interest.

There would be a positive effect on our national debt, too, in that if we were no longer in the EU we would no longer bear any liability (through our central contribution to its budget) to support states within the Euozone that have suffered economic collapse and need to be bailed out. ____

14. UK businesses would lose out if we left

This is almost certainly untrue. Once the trade deal is put in place, which will be well before we actually leave the EU, UK businesses will have continued access to the Single Market. Since less than half Britain's trade is with the EU, and since 95 percent of UK firms do not export there, the expectation is that UK businesses will continue after exit much as they did beforehand. Some firms will take advantage of the more favourable regulatory climate after exit to lower their costs and increase their worldwide sales outside the EU.

Some firms, especially in the financial industry of the City, will have to overcome difficulties by making changes to the way they do business. But with the difficulties come opportunities. Unconstrained by the EU on the global stage, UK financial firms are well placed to expand into new areas. London's role as the key global player in the finance industry will not be harmed if the referendum vote takes the UK out of the EU. Nor it will find that role threatened any more by EU encroachments designed to support its other members to our detriment. On the contrary, its new independence will enhance its status as a neutral ground on which the world finds it advantageous to do business.

It is noticeable that countries such as the US, Australia and Switzerland are not lining up for admission to the EU. They know the losses if they did join would far outweigh the gains.

It is generally true that UK governments have been more sympathetic to the needs and problems of businesses than have their EU counterparts. EU legislators and bureaucrats often seek to impose a political agenda on business, whereas the UK usually oversees business with a looser rein, preferring to see it seize opportunities to generate wealth rather than to constrain it within a political plan. A UK independent of the EU would almost certainly create a climate more favourable to business than any the EU itself might bring about. UK businesses would benefit, not suffer, if this were to happen. ____

15. International peace and stability are safer with Britain's EU membership

Peace and stability featured among the motives when the European Economic Community was first established. France and Germany had fought in two disastrous and costly world wars, and the thinking was that further wars could be prevented if they were bound together to each other by strong economic ties. These later developed into political ties. The strategy worked to some extent, in that France and Germany learned to negotiate and settle disputes by compromise and arbitration instead of by military posturing.

This was over 60 years ago, and represents yesterday's solution to yesterday's problem. It is no longer part of the EU remit to keep France and Germany from making war on each other because that is not a modern world problem. Some have pointed out in any case that it was the need to unite against the threat of Soviet aggression that threw France and Germany together more securely than did the EEC.

Indeed, military commentators and historians have made the case that it was not the EEC and its successor EU which preserved international peace and security, but the network of military alliances led by NATO which acted as a sufficiently strong deterrent to resist threats to that peace from the Soviet Union and its Warsaw Pact allies.

It is noticeable that the EU failed in its attempts to bring peace to the Balkans in the wars of the 1990s following the break-up of Yugoslavia. The killing and ethnic cleansing continued despite attempted EU mediation. It was only when NATO intervened with its armed forces, thereby causing the US to bring military force into the conflict, that peace was eventually restored.

A departure from the EU by the UK would not involve its departure from NATO or its other co-operative alliances, and would not bring any weakening of international peace and stability. ____

16. The UK farming industry would be destroyed if we came out

There is no doubt that farmers across the EU benefit from the subsidies and supports that the EU provides out of its budget. Determined to protect their farmers, together with the traditional look of their countryside, the French bargained hard to get the EC (as it then was) to support farming with subsidies and tariffs, and the Common Agricultural Policy was born.

The CAP subsidized over-production, leading to such excesses as "milk lakes" and "butter mountains" as surplus goods were stored. It had a malign impact on developing countries, since the EC closed its borders to their primary produce, while dumping its own surpluses onto world markets to undermine world prices for them. Its subsidized beet sugar, in particular, undercut poorer countries dependent on cane sugar exports.

The CAP was also charged, and still is, with promoting excess application of fertilizers and pesticides. More recently it subsidized bio-fuels from food crops, leading to food price rises in poorer countries so EU members could move to renewable fuels. The CAP record has been malign on the environment and world living standards.

Undoubtedly UK farming would change if we left the EU and its CAP. It would be more exposed to world markets and world prices, outside of the EU's protective bubble, and would have to adjust accordingly. It would have to move to farming crops and animals for markets, rather than for subsidies. Fortunately the more than £19bn that the UK would save in its membership payment would provide a buffer from which support for UK farmers could be phased out gradually as they adjusted to real-world conditions. The UK might choose to continue support to some areas of farming but, once out of the EU, these would be chosen to aid UK farmers rather than those of other EU members. UK farming would not be destroyed, but it would change for the better. ____

17. Civil rights would be weaker in Britain if we left the EU's jurisdiction

If the UK left the EU, it would cease to come under the rulings of the European Court of Justice (ECJ), but would continue its accession to the European Convention on Human Rights, which is overseen by the European Court of Human Rights. The ECJ fundamentally rules on EU law, but there is some overlap because it is obliged to weave into its findings a due respect for the ECHR. This Convention covers not just EU members, but the 47 nations of the Council of Europe.

This distinction reminds us that Europe and the EU are not the same; the latter is a subset of the former. There would be no loss to the UK in leaving the jurisdiction of the ECJ. The latter interprets EU law, and has usually ruled against the UK's when it has opposed interpretations of EU law that it believes are opposed to its interests.

It was a European Court ruling that declared it to be illegal to have a blanket ban on giving prisoners the vote, a move opposed by the UK which has traditionally denied them this right. There have been other cases, notably the ban on "whole life" sentences. Those adversely affected by decisions of the UK courts have resorted to appeal to the ECJ if the issue concerned interpretation of EU law, or to the ECHR if they felt they their human rights had been infringed. These include those charged with terrorist offences and those who have openly urged violence against Western nations including the UK.

If the UK quit the EU, it would still be bound by the ECHR, whose decisions UK judges have agreed to respect. There have been calls for a UK law to enshrine civil rights in a UK law that would replace the 1998 Act that took us into the ECHR. But this issue is not bound up with our membership of the EU, and would not be affected by our withdrawal from it. ____

18. The UK would be more likely to break up if we left the EU

SNP members have suggested that Scotland would also have to vote to leave in order for a UK-wide 'leave' vote in a referendum to be valid. There seems little if any evidence that Wales of Northern Ireland would want to seek independence and remain in the EU if the UK as a whole voted to leave, but the question is valid as to whether an exit vote might precipitate Scottish independence.

In law the position is fairly clear. If the UK votes to leave, this will apply to all parts of the UK when it is implemented. There is no question of Scotland being allowed to remain in the EU if Scots were outvoted in a UK-wide referendum, any more than Yorkshire would be allowed to remain if a majority of its residents bucked the national trend of a 'no' vote. Scotland would leave as part of a UK exit.

Whether this would inflame the nationalism of a Scotland determined to unite with Brussels rather than London is something that cannot be predicted. It seems strange that Scotland would want to leave one union in order to join another. A future independent Scotland would have to start the application process from scratch if it wished to join the EU.

As far as opinion polls can give any indication, they show that the Scottish population is divided on the issue, just as is the population of the rest of the UK. It is true that Scotland voted to elect many SNP Members of Parliament once they could safely do so without fear of separation from the UK after the independence vote was defeated. It seems that the Scots quite like the SNP without liking the idea of independence.

In the coming referendum it is likely that millions of Scots will vote to remain in the EU, though it is unlikely that a majority of the population will do so. It is also likely that millions of them will vote to leave the EU, though this, too, is unlikely to constitute a majority of the population. Scotland may or may not choose the path of independence in future, having recently rejected it. But whether the UK votes to leave in the EU or to remain within it does not seem likely to affect that outcome. ____

19. If we left we'd lose the regulatory controls through which the EU makes our banks and businesses behave properly

The supposition here is that the EU is in a better position than is the UK to ensure that banks and businesses conduct their affairs in ways that are satisfactory to people in the UK. There is no evidence for this. There is, however, considerable evidence that EU bureaucrats and politicians have far less knowledge or understanding of how business actually works than do their UK counterparts, which themselves are not always adequately competent.

It is also patently clear that EU regulations on business are subject to political horse-trading as EU member states vie to gain advantage for their own areas of business. In financial regulation, for example, there are many allegations that other EU members, envious of the UK's leading position in finance, deliberately seek to impose regulations that will restrict the UK's position in order to advance their own.

The notion that the UK is too weak-willed to adequately monitor and circumscribe the behaviour of its banks and businesses is a strange one. The implication is that we in the UK are prepared to condone irregularity and even immorality in our business affairs to a lesser degree than our EU counterparts. Given the business ethics that prevail in some EU countries, this is a truly remarkable notion.

The UK seems both ready and capable of introducing and implementing the regulations needed to ensure acceptable ethical and sound business practices within its shores. We have done so in the past and currently do so; but we can only do this at present within EU rules. We would enjoy greater flexibility outside the EU.

There is nothing to suggest that we need the distant decisions of EU bureaucrats and politicians to ensure that this happens, and much to suggest that we could do it better and more appropriately ourselves. ____

20. Leaving the EU would see the UK retreating from the world to become insular and narrow in its outlook and influence

This claim is the opposite of the truth. In fact the EU is characterized by a narrow regionalism that is anti-global in its outlook. It looks inward from behind its protective walls, and tries to keep out the world influences it thinks might upset its delicate balance. Too often it seeks to insulate itself from the rest of the world rather than to embrace and interact with it.

Furthermore the EU is growing less significant internationally as time passes, constituting a smaller share of the world economy. A UK which voted to separate from the EU would not be retreating from the world but advancing into it. The UK could make global trading partnerships and negotiate free trade deals that opened its markets to other countries and gave it access to theirs in return. The UK could think and act globally instead of tying its future only to the other members of the EU.

If the UK votes to leave there is no question of putting up shutters and fences to keep the world out. It is the exact reverse. The UK would play a full part on the global stage, recognizing that the future of the world lies not in seeking regional advantage, but in recognizing that the world is becoming one that interacts more widely for mutual advantage. We are moving into a world of interconnectivity, where people in distant parts of it impact daily on the lives of those in the far reaches of it.

The UK is held back from this by the need to conform to EU rules and to let the EU negotiate on its behalf agreements that are more restrictive and confining than those we could have negotiated for ourselves. A UK that voted to leave would not be retreating behind the walls of a 'Fortress Britain,' but declaring itself ready to deal and trade with the wider world beyond the EU's borders, and confident that it can do so effectively and in ways that make it a better place.

Ten bad arguments for staying in the EU

There are good arguments on both sides of the EU debate, both for staying and for leaving. Unfortunately, many bad arguments are being made. Here are 10 of the arguments for remaining in the EU that do not stand up.

1. A leave vote would cost jobs

It is commonly claimed that if the UK were to leave the EU, some 3m-4m jobs would be "at risk." Nick Clegg is among those who have claimed that some 3m jobs are "dependent on our EU membership." This is incorrect. As Ryan Bourne has shown, these jobs are dependent on our export trade with other EU countries, not on our membership.

If the UK left the EU, it would negotiate a trade deal with the EU, and exports would continue. It is not in the interests of other EU countries to cease trading with the UK, since trade benefits both partners. Countries as different as the US, Peru and Mexico all have trade deals that grant their goods access to EU markets and allow EU goods to sell in their own markets.

There is a case that UK jobs might increase if it left the EU. The EU share of UK exports has been declining, and is now less than half of what we sell elsewhere. It would be in our interest to expand trade with global partners such as China, and untrammelled by EU trade rules, it would probably be easier for us to do so.

Some of those predicting job losses previously predicted that the UK would lose 2m jobs if we failed to join the euro. They were wrong. There is no evidence of any job losses attributable to our keeping the pound. In fact that decision made it easier for the UK to deal with the Financial Crisis. We were able to implement policies denied to the euro countries, and were able to create more jobs in several years than the euro countries combined. The UK has seen job gains, not losses, because it kept its currency.

The numbers of alleged "job losses" if the UK left the EU are plucked from the air, making the completely false assumption that our trade with the EU would cease if we did. It could even be argued that the £20bn we pay annually to the EU would generate more UK jobs if it were spent here instead. ____

2. The UK would lose influence in the world

The thinking behind this is that in a world of continental powers, the UK is a small island without much impact. By being part of the EU, it acquires that body's collective strength and bargaining power, and can thus exercise more influence than it ever could unaided.

This notion derives from an age now past. It was true in the 1960s and 1970s that the UK's influence had much diminished and was still diminishing. The country had the lowest growth rate in Europe and the highest strike record. Beset by costly and unresponsive nationalized industries, and plagued by aggressive and powerful trade unions, Britain cut a pathetic figure and was sometimes called "the sick man of Europe." One of the motives for joining the EU (then called the EC) was the widespread feeling that we couldn't cut it on our own.

This changed in the 1980s and early 1990s as the UK reformed itself. It went from the lowest growth to the highest, from the highest strike rate to the lowest. It acquired a confidence it had lacked before, and became more influential as other countries noted and admired its progress.

The UK is not currently very influential within the EU. When it votes against measures proposed in the Council of Ministers it is defeated. Its interests compete with those of 27 other nations, many of whom often combine to promote their own interests. Increasingly the Eurozone countries combine to pass measures inimical to the interest of those not in the currency union.

Outside the EU the UK would negotiate its own position instead of having that position buried among the interests of others. It would take its own seat on international bodies such as the World Trade Organization and be able to lobby and bargain for its own advantage. It is highly likely that the UK would use that position to promote lower tariffs, more free trade, less protectionism and more opportunities for enterprise on a global scale. It cannot do that as 1 in 28 members of a body that currently monopolizes its representation. Outside the EU the UK would almost certainly be more influential in the world, not less. ____

3. Firms would leave the UK

Although some argue that firms would leave the UK and relocate within the EU if Britain voted to leave, there is scant evidence that this would happen. Only 5 percent of UK firms trade with the EU, but all firms currently have to obey EU rules and accept EU regulations. Many small and medium enterprises complain that they are adversely affected by those rules, and that extra costs are imposed upon them when they have to comply. They would stand to gain if the UK took control of its own business climate, and they would have no reason whatever to leave.

Among the 5 percent who do trade with the EU, there are many who would like to see control over trade deals taken back into UK hands. There are, it is true, a few large companies who favour remaining in the EU because its rules raise barriers that potential new competitors find it difficult to surmount. They are a minority that has strong influence over the Confederation of British Industry, whose "surveys" of opinion have been exposed for using flawed methodology to make them seem more representative. Even among these, there are hardly any that threaten to leave, and almost certainly none that would actually do so.

It was said that is we failed to join the euro, many businesses would leave the UK. In the event it did not happen.

Most business leaders, when asked, deny there is any question of them leaving the UK for elsewhere in the EU in the event of a UK withdrawal. These include big employers such as Vauxhall, Nissan, JCB, Airbus and GE. Any who did so would be at a huge disadvantage with respect to those who did not. They would have to follow EU regulations for their trade with the rest of the world, whereas their still UK-based competitors would only have to follow them for their trade with the EU.

There are considerable costs involved for most companies in relocating to another country. The perceived advantages of leaving the UK to move to a country still in the EU would have to be massive to justify such costs, whereas the reality is that they are not. Indeed, in most cases they are negative, and the advantage would lie in remaining in a UK that could now control its own regulations and negotiate its own trade deals. ____

4. The UK would lose inward investment

The theory is that if the UK were no longer located within the EU, foreign firms would transfer their investment to countries still inside it. Even if firms retained their factories and facilities already here, it is argued, the UK would lose new investment because those firms would choose to expand within the single market rather than outside it.

If the UK did decide to leave, it would negotiate a trade deal with the EU that allowed reciprocal access to each other's markets, just as the US, China, and many other countries have already done. International firms would therefore have no reason to consider the UK as a less attractive investment opportunity than it is presently.

Although the claim is made that they would pull out investment, there is a paucity of international investors announcing plans to withdraw investment, or even talking of doing so, if the UK votes to leave. On the contrary, car makers and others have said they have no plans to withdraw present or future investment if it does so.

Ernst and Young's Attractiveness survey found that 72 percent of US investors and two-thirds of Asian investors would like the UK to have "looser" relations with the EU. This means that instead of wanting to keep the UK bound tightly within the EU and its rules, investors would be relaxed, even favourable, to a looser relationship such that the UK might enjoy outside the EU, but with a trade treaty negotiated with the EU.

The UK is the favoured destination for foreign inward investment in Europe because it enjoys certain advantages, linguistic, cultural and historical, as well as business and financial. Those advantages would not be eroded if the UK decided to leave the EU. On the contrary, the odds are high that they would be enhanced if the UK were free to offer deals and terms that it is currently prevented from doing by the need to comply with EU rules and directives.

A UK outside the EU would need to think globally, taking links with the wider world as no less important than its deals with the EU. Its advantage would lie in seeking out and attracting more inward investment, not less, and there is no evidence to suggest that it would fail to do so. ____

5. If we came out, the UK would have to obey EU rules without any say in drafting them

Lord Heseltine recently flew this particular canard on the Radio 4 Today programme. He actually said that if the UK voted to leave, "our trade policy would be made in Germany without us having any say in it." It is certainly not true that America's trade policy is made in Germany, or Switzerland's, or Mexico's, Peru's, Australia's or the other countries that trade with the EU without being members of it.

A UK outside of the EU would similarly negotiate a trade deal with the EU. It would, like the other countries, comply with EU rules for the goods it traded with the EU, but not for goods traded outside it. The EU in turn has to meet the standards of the countries it exports to for the goods it trades with them. Some 95 percent of UK firms do not trade with the EU, so would not have to comply with EU rules, or have their trade policy decided in Germany without having any say in it.

The UK's trade policy would be made in the UK, not in Germany or Brussels, and would be such as to aid and encourage UK firms instead of tying them down with many pointless restrictions. Some people seem to assume that the UK would have a "Norway-type" relationship with the EU, or a "Switzerland-type" relationship, but if the UK did leave the EU it would develop and negotiate its own relationship with the EU, like many other countries have done.

The claim that the UK would lose its ability to influence the rules presupposes that it has any significant influence as things stand. The UK has 8 percent of the votes in the EU Council of Ministers. It has tried to block 72 measures over the past two decades and has been outvoted every single time. Each of them has passed into EU law. The notion that the UK has valuable input into the drafting of new EU laws is not really supported by the facts. Our presence within the EU basically means we are forced to comply with laws made by others against our opposition. Outside it we would not. ____

6. We'd have to negotiate with each of 27 separate EU countries

This has been said by some of those who support the UK remaining within the EU, including Lord Heseltine, even though it is obvious and palpable nonsense. Assuming that the other member states remain within the EU if the UK decides to leave, the EU will continue to exist, although containing 27 members for the time being instead of 28.

The UK would not have to negotiate with them one by one because the EU negotiates on their behalf. We would negotiate a trade deal with the EU, a deal that would then apply to all of the remaining members. UK firms would gain access to the single market via that trade deal, and their goods would then be able to enter each of the individual countries that make up the EU on the same terms. Similarly the goods from each of them would be able to enter the UK, all on the same terms as will then apply to the others.

UK citizens have their preferences, of course, as to which EU countries they favour more than others. Character, culture and history play a part in their choice of countries to visit, as does climate, and obviously the cost of living plays its part. These preferences would continue to be exercised, and doubtless to change over time, if the UK were no longer a fellow member of the EU. But the rules governing visits to them by UK nationals would be decided centrally by the EU, not by the 27 countries individually.

The Schengen Agreement for borderless travel between countries within the area does not currently apply to the UK because it, along with Ireland, chose not to join. This would be unchanged if the UK left the EU. UK citizens would have to show passports on entering other EU countries, as they do now. The difference would be that UK travellers would walk through the lines marked "non EU members." This also would not require negotiation with individual EU states.

It would be up to the UK if it left the EU to decide for itself whether to retain separate entry lanes for EU members as opposed to those entering from elsewhere in the world. It might be convenient to do so. ____

7. We'd lose access to EU markets, hitting our exports

Some commentators seem to think that if the UK voted to leave, then the EU would act vindictively to punish it for doing so by cutting trade links. Such an outcome is far-fetched to the point of fantasy. Countries to not behave like that, especially with friends and allies. They work together for mutual benefit and self-interest.

The EU has signed free trade deals with many countries, giving them access to its single market in return for its members having access to theirs. There is no doubt whatsoever that it would do the same with the UK if it chose a future for itself outside the EU.

Some pro-EU activists deny this. Stephen Kinnock MP recently said in Parliament that the UK would get a "punishment beating" if it left. This is unfounded. Punitive tariffs are banned under WTO rules. The EU's Lisbon Treaty states:

" The Union shall develop a special relationship with neighbouring countries, aiming to establish an area of prosperity and good neighbourliness, founded on the values of the Union and characterised by close and peaceful relations based on cooperation."

Britain is too important a trading partner for much of the EU for them ever to consider ending that economic interdependence. Similarly the UK's trade with the rest of the EU, although now less than our trade with the rest of the world, still represents almost half of our total trade. It is in the interests of both parties to allow mutual access to each other's markets, and there is no question that this would continue if the UK voted to leave. A free trade deal would be negotiated with the UK, just as the EU has already negotiated similar deals with other countries.

The reality is that if we left the EU, the economic relationship would continue, but the political relationship would be changed to one in which the UK made its own decisions instead of being obliged to accept collective ones. ____

8. Our ability to control immigration would be worse if we came out, not better

If we left the EU, there would still be constraints upon our ability to control immigration because of our commitment to international human rights and asylum conventions. We would, however, be able to restrict the numbers of EU citizens allowed to move and settle here. Whether we would want to do that is another matter, but we would no longer be forced to allow free movement of EU members if we were ourselves no longer part of the EU.

In some areas we would negotiate with other countries, but our ability you do so would be enhanced rather than diminished if we were able to do so independently, instead of having to do so collectively through the EU. There is no doubt that an independent UK policy on immigration would give it greater control than it could achieve through an EU wide immigration policy imposed upon it.

Some strange claims have been made, including one that the French would stop policing the migrant camps near Calais if the UK quit the EU. They would apparently do this to punish us for leaving, leaving Britain at the mercy of mass attempts to infiltrate into the UK. There is no evidence at all that anything like this would happen, or that it would have the effect predicted. No officials or spokespeople have indicated an intention to do this; the idea is empty and utterly implausible speculation.

There is a very good case for saying that immigration into Britain, especially skilled immigration, is a good and helpful thing. For centuries we have admitted those fleeing persecution or seeking to better their life. If this were under UK control, it is likely that we would continue with such a policy. But it would be easier, not harder, for the UK to be able to control the numbers, the rate of flow, and the type of immigrants we wanted to give priority to. We would be able to do so in ways that made it easier to absorb and integrate such people into our society and our culture. ____

9. UK citizens living in Europe would have to leave

It is difficult to see where this idea comes from because there is nothing to support it. If the UK opted out of the EU, there is no way that our ex-partners in that union are suddenly going to deport all UK citizens living within their borders. They would have no reason to do so. Nothing in our relationship with the EU, either now or following a withdrawal, would cause this to happen. British citizens living elsewhere in the EU are a positive asset, with most making a significant and positive economic contribution to the countries they reside in.

Similarly there would be no expulsion of EU citizens currently residing in the UK. Again, there would be no reason to, and nothing arising from the negotiations would imply it. The overwhelming majority of them make a similar positive contribution to our economy, and it would be very much in the interests of both parties not to change the status quo of those currently residing in each other's territories.

Anyone who lives in another EU country for 5 years or more gains the right of residence, and this right would not be rescinded, either for UK citizens who have chosen to live abroad, or for EU citizens who have settled here.

The UK remains part of Europe, whether or not it retains its membership of the EU. Undoubtedly UK citizens will continue to wish to take jobs in Europe, even if the UK leaves the EU. It is equally certain that EU citizens will be attracted by employment in the UK. In many businesses these days staff are often rotated through different foreign branches of an international company, gaining both experience and promotion opportunities. This will continue whether the UK remains in the EU or chooses to leave it. People from non-EU countries such as the US, Australia and Japan, come to live and work for a time in EU countries. The same would be true of UK citizens if we ourselves became a non-EU country.

UK citizens in the EU will not be forced to leave. On the contrary, they will be joined by fresh arrivals from the UK, and the same will be true of EU nationals living and working in the UK. ____

10. We'd all find it more difficult to visit EU countries

It would probably be no more and no less difficult for UK citizens to visit EU countries if the UK were to withdraw from it. We are not part of the Schengen area with its passport-free travel. UK citizens have to take passports and show them at frontiers. They are subject to possible customs and immigration checks. The same is true of EU visitors to the UK. This will continue. The EU has visa-free reciprocity with several countries, and would be virtually certain to achieve similar reciprocity with the UK if it ceased to be an EU member.

UK citizens would need passports, not visas, as they do at present to visit EU countries, and their citizens would similarly enjoy visa-free travel to the UK, with admission on showing passports.

Again, some make the specious claim that the EU would 'punish' the UK for leaving their club, and would retaliate spitefully against UK tourists. The reality is that many EU countries count UK tourists as important for their economy, and would not allow their governments to make travel more difficult for such visitors. It seems extraordinary that the people who make this false claim are happy to remain in association with countries as spiteful and vindictive as they believe them to be.

There might just be the minor difference of UK visitors having to walk through the line for "non EU members" when they arrived in EU countries. But just as UK visitors are usually allowed currently into Schengen countries with a nod and a cursory glance at the passport, so they would almost certainly be treated in future as they entered EU countries.

Given the numbers of EU citizens who wish to visit as tourists, it might even be advantageous for both sides to agree to continue the present arrangement both ways.

Oxfam's whining on about wealth inequality again

We think it rather sad to see the decline of an organisation. This is true whether we're talking about the steel works at Port Talbot or the frantic scrabbling around that Oxfam is indulging in:

The vast and growing gap between rich and poor has been laid bare in a new Oxfam report showing that the 62 richest billionaires own as much wealth as the poorer half of the world’s population.

Timed to coincide with this week’s gathering of many of the super-rich at the annual World Economic Forum in Davos, the report calls for urgent action to deal with a trend showing that 1% of people own more wealth than the other 99% combined.

As we mentioned last year when they proffered the same numbers there's almost certainly more of the 1% working for Oxfam than there are billionaires in the world. However, to that point about tempus mutandis, eheu fugaces. We do not glory in the jobs that are being lost as a result of technological change in the steel industry, nor do we cackle with glee at the sight of Oxfam's thrashing around for a new mission. But we will describe the situation as being exactly the same: the problems that brought each organisation into being have largely been solved, or at least we now know how to solve them. Therefore said organisations are attempting to find some new mission to keep the show on the road: Oxfam more successfully than Tata Steel.

Blast furnaces, now that we recycle much more old iron and steel, well, we simply need fewer of them. So, thus, some of those blast furnaces are closing. Very sad, the people working in them deserve and will get our help in reorganising their lives. Oxfam faces a different problem. It was originally set up to provide emergency famine relief and then morphed into being more about general development work in the poorest parts of the world. A worthy cause, both in fact, no doubt about it.

And yet that alleviation of poverty, that aid in development, we now know more about how to do it. It is, as Madsen Pirie here continually describes it, a matter of us all buying things made by poor people in poor countries. Let that free market, globalised in tooth and claw, rip and almost miraculously development proceeds and poverty recedes. As has in fact been happening over this past generation. We've seen the largest reduction in human poverty in the entire history of our species as we've simply allowed market forces to take effect. The World Bank announced in the autumn that, by the end of 2015, we would have less than 10% of humanity still stuck in that utter destitution of abject peasant poverty, for the first time ever as either a species or a civilisation.

We know now how to achieve Oxfam's task: and it doesn't require Oxfam to achieve it. Thus their thrashing around to find something else to do: for as C. Northcote Parkinson pointed out the only purpose of any organisation or bureaucracy is to perpetuate the existence of that organisation or bureaucracy. Which is why Oxfam is protesting that wealth inequality, the result of the very process that it was originally set up to achieve. As the world is becoming richer, as global income inequality is falling, it's entirely unsurprising to see wealth inequality rising. Oxfam was set up to achieve the first: now that it's working and we don't need them any more they struggle to find something else to do and thus the switch.

All rather sad really but there it is: technological change in poverty reduction leaves some marginalised just as much as technological change in the steel industry does. And our reaction should be the same too: aid those affected in making the necessary changes, don't prop up the organisations that are no longer needed.

Students should not be treated as immigrants

Some interesting figures emerge today in a City AM piece by Baroness Jo Valentine of London First, who commissioned a poll by ComRes to discover if Londoners think foreign students should be treated as immigrants. In the case of non-EU students studying in Britain, only 17 percent of people think of them as immigrants.  For EU students the figure drops to 15 percent.

Furthermore, their view of foreign students here is highly positive.  Some 66 percent of people think that foreign students provide useful global networks to promote trade with the UK.  The proportion thinking they pay tuition fees and make a valuable contribution to the UK economy rises to 72 percent.  And the number who think they bring valuable skills to the UK after graduation is 68 percent.  These are all very positive numbers.

The negative outlook is shared by only a minority.  Only 32 percent think they take places from UK students.  Only 25 percent think they should study in their own countries, and only 19 percent regard them as having a negative impact on public services.

This confirms something the ASI has said all along.  The UK has a multi-talented and diverse workforce, and should act to sustain its high skills talent pool.  Some who campaign against immigration add students to their numbers to augment them, even though the public agrees that international students constitute a great asset.  We should re-classify them as temporary visitors and look favourably on those who want work visas after graduation.

Of course we don't want bogus "English Schools" bringing in unqualified immigrants illegally, but we do most certainly want the talented, the skilled - those who qualify for admission and study at our academic institutions.  It is a small step to stop treating foreign students as immigrants, but it is one that would be beneficial to Britain and help keep our businesses competitive.

What exactly is the case for Brexit?

I tend to see myself as an agnostic on the European Union. I’m not a particular fan of anything about it, though I think it does have its qualities. Stopping politicians from throwing up barriers to migration and effectively banning them from renationalizing private industries are both good things, however undemocratic they may be. And I tend to think of the EU as being a force for good for Europe in general, the disastrous euro project notwithstanding. Of course there are huge problems with it as well. It is opaque, difficult to hold accountable and seems to hand down endless new regulations on everything from permitted working hours to olive oil storage. Britain’s legal and political institutions have evolved (and I stress the word evolved) quite separately from most of continental Europe’s, making it perhaps a poor fit with the rest of Europe. And, fundamentally, the EU is one extra layer of government, adding bureaucratic and political inertia to an already sclerotic political process.

But, as an agnostic, I am finding myself baffled and underwhelmed by the arguments currently being floated by “Leave” campaigners. So far, virtually none of them stand up to scrutiny. Unless something changes, I cannot see how these arguments can fly in a proper referendum.

Benefits: The issue of the day, thanks to a row between David Cameron and Donald Tusk that seems to be political theatre. The irrelevance of this was shown (by accident) by Julia Hartley-Brewer in a pro-Brexit piece today:

the argument often given by EU supporters is that very few migrants actually claim these benefits anyway, so it doesn’t really matter. According to the Government’s own figures, EU migrants on “in-work” benefits cost the taxpayer £530m in 2013. Total Government spending is £733 billion this year.

While half a billion quid is not a small number to ordinary taxpayers, it is the principle that matters to most of us. Why should anyone be entitled to come to live in this country and claim welfare benefits without having first made any contribution?

Got that? The £530 million (0.07% of the budget) that we spend on tax credits for Europeans – less than we give to the Arts Council England every year (including Lotto funds) – is a ‘principled’ reason to leave the EU. Never mind that by any decent measure EU immigrants are net contributors to the budget in other respects, or that British citizens receive reciprocal benefits when they work abroad, I suppose. If this is the principle over which we should decide whether to stay or go, count me In.

The balance sheet: Vote Leave say we should stop spending £350 million a week (£18.2bn/year) to Brussels so we can spend that on the NHS or on science fuding.

Well, maybe. Firstly, that number appears to be misleading – it’s a gross figure and doesn’t include the UK’s rebate or other EU grants. When you do include those things, it falls to about £9bn a year. And, as (pro-Brexit) Pete North points out, quite a bit of the remaining money goes on projects we’d want to be involved in whether we were in or out, like Europol and Single European Sky, which coordinates airspace across Europe.

Yes, it also includes disgraces like the Common Agricultural Policy. But it’s hard to believe that any government would have the spine not to just subsidize farmers domestically if we left the EU. And our net contribution to the CAP is quite small anyway – almost as little as we spend on tax credits for Europeans.

Regulation: It’s not difficult to find annoying, wasteful, illiberal regulations that come from the EU. But the question is the counterfactual: if we were out, what would we have instead?

Practically everyone agrees that we’d want, and probably get, a free trade agreement with the EU if we left. But tariffs are not the main barriers to trade between developed nations. The TTIP negotiations underline that – only 10% of the projected benefits will come from abolishing tariffs between the EU and the US. The rest will come from removing regulatory barriers, whether through mutual recognition (we accept US regulations, they accept our regulations) or harmonization. Mutual recognition is preferable, but obviously is only politically viable if each set of regulations is roughly as harmful as the other. If not, one side of the agreement will be outdone on everything by its freer rival.

So what should we expect a UK-EU free trade agreement? At best we can hope for a situation where only British exporters (and their suppliers?) are bound by EU rules; at worst, one where we end up with exactly the same set of rules, only now without any say in how those rules are made. Arguably, these rules are not even really designed at EU level at all.

But even if we get the better end of that stick, who has confidence that a Britain freed from the EU would actually be particularly free market? Maybe we’d lose things like the Working Time Directive, but in the grand scheme of things is there any reason to expect this or any likely alternative government to be any less interventionist than Brussels is? Remember the Red Tape Challenge, or the ‘bonfire of the quangos’ that never was. The counterfactual is just not very encouraging.

The big picture: Perhaps the question is, as Madsen and the pseudonymous WhiteWednesday both say, not about the details at all. They say that it doesn't matter what the reforms secured now are: being in the EU means an inevitable drift towards further centralization and federalism. And the fact on regulation that little would change immediately is a feature of Brexit, not a bug – it takes the risk out of it, and makes reform a long-term project that we can approach on a case-by-case basis, not as the sort of all-or-nothing deal that some others are telling us is on the table.

Perhaps. This does seem to assume a certain degree of inevitability in the European project that is at odds with the idea that the EU, not just the Eurozone, is ready to collapse at any moment. I’m not so sure, and against this I must weigh the possibility that our immigration policy would become a lot more restrictive. For now, the arguments being made by the Leave campaigns just do not cut it.

The myth of money and terrorism

Since the recent Paris attacks there have been a few articles (like this one) arguing that increasing foreign aid with the purpose of boosting economic development in poorer countries might be a way to battle terrorism at its roots. The first assumption here is that extremism is caused and fostered in countries with high levels of poverty, and that providing foreign aid will help to get the poorest out of poverty, thus reducing the attraction of these extremist groups.

However, there is a lot of evidence to show foreign aid itself is not actually the key to reducing poverty. Economists such Bill Easterly and Angus Deaton have successfully argued that aid does not help reduce poverty, and in fact could even increase it. In his book The Great Escape, Deaton says:

If poverty is not a result of lack of resources or opportunities, but of poor institutions, poor government, and toxic politics, giving money to poor countries — particularly giving money to the governments of poor countries — is likely to perpetuate and prolong poverty, not eliminate it.

Therefore, even if we assume that poverty leads to extremism, the remedy of increasing international aid is wrong.

However, we cannot assume poverty is a cause of terrorism in a first place. Any link between the two was proven to be more or less non existent in Alan Kruger’s paper “Education, Poverty, Political Violence, and Terrorism: Is There a Causal Connection?”, and if there is it’s indirect and incredibly weak. It is far more likely to be the result of a poor political climate within a country:

Perhaps surprisingly, our review of the evidence provides little reason for optimism that a reduction in poverty or an increase in educational attainment would meaningfully reduce international terrorism…. We suggest it is more accurately viewed as a response to political conditions and long-standing feelings of indignity and frustration that have little to do with economics.

This was backed up by a 2011 report by Christine Fair from Georgetown university, which actually found that in Pakistan people from a more affluent background with a higher level of education were most the most likely to be radicalised, as those with a lower socioeconomic status are the most likely to be adversely affected by terror attacks and violence.

There are a number of myths about the best way to stop the growth of terrorist groups, more of which are mentioned more in this blog by Mugwump, and it would appear that increasing foreign aid is just another one.