This is the economic theory the Tories really seem set to test at the end of this year. To say it’s risky would be vastly understating it
The weirdest thing about the political times we live in is that the government has pledged to make a revolutionary change at the end of this year and no one is really addressing what that might mean. Part of this is Brexit burnout; part of it is that we just had a general election in which “get Brexit done” was the winning slogan and so most people seem to really think this is the case, even though we’re still in the Single Market and Customs Union until the end of the year. A commenter on my blog unconsciously put it perfectly when he said I was being overly doom and gloomy about no deal possibilities at the end of the year given all predictions of doom and gloom haven’t come to pass thus far. That’s because we haven’t actually left anything of any economic consequence yet and when I say “anything” I do mean anything at all. It’s like saying scientist’s estimates of what damage a huge asteroid might do if it struck the Earth have all been proven wrong because no giant asteroid has hit the planet over the last few years. No one’s predictions of doom and gloom about Brexit have been proved or disproved because for all intents and purposes, we haven’t really left yet.
The relevant question concerning Brexit now is this: is the government’s no deal posturing just the shittiest bluff in world history or are they seriously going to go through with it? I’ve become convinced that what amounts to no deal with a few caveats is now the most likely thing to happen at the end of 2020, either by design or by accident. This means a large theory about how the world works in the 21st century is about to get tested on one of the largest economies in the world. All large economies have trade deals with other large economies, particularly those which are geographically close to them. No countries trade on WTO rules alone, but some have very few trade deals worth a lot. All of the countries in this latter category are poor; amongst the poorest in the world. However, we have no real idea how much those two things are connected – the poverty and lack of trade deals, I mean. Yes, there are theories galore on this subject, of course, but no one has ever tested it on a grand scale before. It is possible that a country with an economy the size and scale of Britain’s can operate without trade deals perfectly fine, I suppose. However, it is also very possible that it cannot. All current economic theory points to it not being able to do so very effectively at all, just to throw that in here. However, the Brexiteers do have a point when they say we don’t absolutely know for sure. That’s because no other country has been crazy enough to test this out previously. We’ll see in December whether or not our government is crazy enough to give it a go.
That’s what Brexit has come to: a huge experiment to test the value of trade agreements. I’ll give the Leavers this – if they turn out to be right on this one, it will turn a lot of assumptions about the way the world works upside down. Could be exciting? Aren’t you glad that they are gambling the livelihoods of millions to give this dry run a stab?
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