Not so fast, brexiters.

The media analysis of the brexit speech today has been disappointingly superficial. Even on social media, we’re basically just seeing remainers feeling disheartened and naive leavers lapping everything up without a second thought. Here’s my take, which is a bit deeper than anything I’ve seen written so far. Of course, I may be wrong to look at it so closely, it may be that Theresa May is simply aiming for a hard brexit. But it would be a bit embarrassing if it took her six months to decide that she’s just going to aim for the unmitigated worst case scenario and not try for anything better, wouldn’t it?

She hasn’t laid it out exactly, but we now know Theresa May’s negotiation strategy:

1. Suggest that we’ll become a tax haven if things don’t go our way
2. Say “Well we can’t be in the single market because it means immigration, the other EU leaders said so, hint hint”
3. Wait

She is now throwing the ball into the EU’s court and hoping they’ll see that she’s serious and soften on freedom of movement. It’s not an accident that the tax haven idle chatter, which has come out of nowhere, was first made in an interview with a German newspaper: it’s a threat levelled at Mrs Merkel.

This implies that Theresa May doesn’t think the tax haven idea is strong enough to be plan A.

She made the explicit assertion that immigration has put a downward pressure on wages. This is probably not true, and is easy to rebut by pointing out that London has the highest amount of immigration in the country, and also has the highest wages.

She also seems confused on globalisation. She is all for it with all her talk of a global Britain, as are most ultra-Tories, but most ordinary people resent globalisation; that’s why they voted for brexit. Becoming a tax haven is temporarily kicking the resentment of globalisation down the road. When we can’t blame immigrants for low wages and insecure employment, we’ll blame the foreign tax dodging multinationals. We already do, just not as much as we blame immigrants.

And the correct way to limit the political power of a multinational is to harmonise law and regulations within similar economic areas, like some kind of union of European countries. A European union, if you will.

The corporation tax cuts are also supposed to keep multinationals in the UK. Theresa May is betting that tax cuts will offset the lost competitiveness that will come in the form of increased bureaucracy and tariffs needed to maintain trade with the EU. However, multinationals already decide their own rate of tax and as a proportion of their revenue it is likely to be lower than the impact of additional tariffs and bureaucracy. Prepare for productivity to plummet under a plethora of previously purposeless paperwork.

If we go with the tax haven route, our plan is:

1. Leave the EU
2. ????
3. PROFIT!!!

It would be unfair to describe leaving the single market as risky, because the word risk suggests that there is some identifiable benefit to be realised, and no prominent leaver has yet managed to put that into words. Dangerous would be a better word; reckless would be another. However, there’s nobody at home preventing Theresa May from being dangerous or reckless. She has a parliamentary majority and an extremely weak opposition. It is therefore to be hoped that the EU will soften on freedom of movement, but British people don’t react well to being threatened and I suspect Europeans aren’t all that much different.

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Reality check

The most interesting thing here is that the government is happy to ally itself with the hard brexiteers, citing the referendum as a mandate to do so, while only 39% of the public want a hard brexit!

When Margaret Thatcher described referenda as tools for dictators, she wasn’t joking.

The hard brexiteers are getting excited today over Trump’s optimistic comments of an easy trade deal with the USA. Unfortunately what they are apparently not aware of is that the USA accounts for less than 10% of our trade, while the EU around 50%. Annoying the EU and running off to the USA is very much a loser’s strategy.

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Clean, hard brexit

If the rumours are correct that Theresa May is preparing to side with the hard brexiteers then we are in the interesting and possibly unprecedented case that both main parties’ leaderships have veered sharply over to their extremes and will not command the loyalty of their party in general. The lunatics have taken over the asylum.

If our political system is not completely broken then a new party will emerge in the centre. However, it is clear that our political system is broken thanks to FPTP, so this will be a test of just how regressive it is.

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The market can stay irrational longer than you can stay solvent

Today we are getting lots of news reports saying the economy is doing very well post brexit with everyone patting themselves on the back for ignoring the experts.

On 24th June I woke in an alternate universe. I now learn that not only is it an alternate universe, it is one where time is not linear.

The worst case scenario for brexiteers is that we’re currently seeing a rapid uplifting effect due to the rapid currency devaluation, which will plateau in the coming months. This would mean that the gains of brexit will be realised before it occurs, leaving the losses visible during and afterwards. That’s an undesirable political position to be in command of.

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This is fine

In light of the diplomat resignation…

There was a comment on the FT website which went viral. It’s not the most subtle piece of writing but it seems to accurately summarise 50% of the brexiteer response to Ivan Roger’s resignation, as they now look on in disbelief that he’s not performing his duty by using his specialist skills to implement a course of action he has no interest in.


The other 50% are ecstatic because it means Nigel Farage can take his job.

I’m not sure which is more delusional. The idea that he would ever allow himself to be in a position of responsibility where he will be judged on his achievements demonstrates a serious underestimation of Mr Farage. Farage is someone who thrives on the attention given to him by standing on the sidelines telling everyone he could do a better job, and he would run a mile (for the first time in his life) were he ever to find himself in danger of allowing that hypothesis to be tested.

There is speculation that this is because of disagreements with Theresa May, in which case this is quite interesting because it speaks poorly of her ability to hold things together. We’ve so far seen so little actual leadership from her that it’s reasonable to openly suspect she doesn’t have the skill. Personally I’m in the bizarre position of thinking we’d have been better off regarding brexit had Boris Johnson become PM.

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2017 Political Predictions

January-February: Theresa May specifies brexit’s exact shades of red, white and blue.
Early March: Under pressure for more details, Theresa May starts to describe brexit in terms of feel, smell and taste.
Late March: Theresa May decides on a theme tune.
April: Government announces it needs more time
May: Right wing of the Tory party starts getting rowdy
June: An increasingly pressured Theresa May announces it’ll be a pure, hard brexit and submits A50. Liberal Tories aghast. Mass cabinet resignations, including Philip Hammond.
July: Large internationals announce they have begun to move UK jobs to mainland Europe.
[some details missing]
November: Boris Johnson becomes prime minister, calls immediate general election, trounces Labour. Announces intention to rescind A50 as everyone agrees it’s a bit of a silly idea after all.
December: Keir Starmer becomes leader of the opposition.

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We seem to be seeing more traction on the Russia issue. Even The Telegraph is now getting in on it.

Most of the reactions to it are negative. I think there are two main reasons for this:

1. People who voted to leave the EU are mostly nationalistic and resent the suggestion that their side was aided by a generally hostile foreign state. This falls under the “I don’t like this, it can’t be true” umbrella of arguments, which you may recognise from other such topics as Evolution or Climate Change.

2. People misapply Occam’s razor. Occam’s razor roughly says “don’t make things more complex than they need to be”. It’s a fine mantra but its main weakness is people don’t always correctly identify complexity. In this case, it seems superficially obvious that including Russia is increasing the complexity, but this is actually incorrect because Russia’s geopolitical doctrine has always been to undermine America’s global influence and separate the UK from Europe, both of which are achieved by brexit. There are clear strategic reasons for doing so for a country with imperialistic ambitions. The suggestion that Russia would not engage in low risk internet based espionage to undermine the US and the UK actually falls afoul of Occam’s razor, because it implies they’ve completely changed, and provides no explanation as to why. As Willem of Occam would say: your entities have multiplied.

Putin’s highlights reel also includes such hits as Alexander Litvinenko, sending Kremlin backed Russian hooligans to the world cup to stir up trouble with other countries’ (less well trained) fans, engaging in industrial scale athletic doping, and, last but certainly not least, invading Ukraine while simultaneously denying any knowledge of it.

This kind of “Oh but poor little Russia wouldn’t do that, please stop victimising us” is a staple of the Putin era.

The question isn’t whether Russia interfered in the EU referendum, the question is how effective its interference was.

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