Using Ireland

I see that the government is changing its tone on Brexit and the border, and I welcome this whole-heartedly.

Life is too short to try to figure out what goes on inside the average Brexiteer’s head, but here is my best shot, as it relates to the Irish border.

Economics is all about choices, and consequently I have very little time for people who don’t realise that if, say, you eat a cake, you no longer have it. But as we know, the Brexiteers have refused to admit that their country does, in fact, have real and important choices to make.

In particular, if they want to avoid costly customs inspections, they need to remain members of the customs union. And if they want to avoid all the other border formalities and barriers to trade that existed before 1992, they have to remain members of the Single Market. If they exit both the customs union and the Single Market, this will inevitably reintroduce frictions of various sorts making trade with the EU more costly than at present, and this will remain true even after a free trade agreement is negotiated. For the whole point of the customs union and Single Market was to do away with those frictions.

So they have a choice, and it seems as though they are choosing to make trade more costly between the UK and the rest of the EU. That will have a variety of negative consequences for the UK economy. But to date, the UK government has been incapable of realising or at least admitting publicly that that is the choice they have made, since they are denying that you can’t both have your cake (leave the customs union and Single Market) and eat it (preserve frictionless trade with the EU). Perhaps they sincerely believe this — a scary thought. Or perhaps they just don’t want to admit it publicly, and given the many lies told during the Brexit campaign, you can understand why.

And this is where they hope that Ireland can help them. They tell us, hand on heart, that of course they want to avoid a Border, but what they really want is to leave the Single Market and customs union, and preserve frictionless trade with the entire EU. Which is, as said, impossible. But some of them apparently think that by shedding crocodile tears about the Irish border, they can achieve the impossible — by inducing the EU to turn a blind eye to smuggling across the border, thus undermining the EU customs regime and our consumer, environmental, and other safety standards. And of course, once the nonsense that technology can “solve” all border problems has been accepted in the Irish context, they hope that this will serve as a precedent for trade with the rest of the EU. Indeed, I have seen that argument made quite explicitly in the UK press, but since it’s Sunday I’m not going to spend an hour digging out the relevant quote.

But all that technology can do is lower (not eliminate) the Brexit-induced costs of legitimate UK-EU trade. It can’t stop illegitimate trade, which is why you really need border controls. And so we occasionally read British politicians and commentators tell us that the solution is of course going to involve a “light touch” approach towards smuggling, in effect “turning a blind eye” to it. Such suggestions are not only intellectually unserious, and unethical –since they amount to arguing that we should give a licence to organised crime to print money — but astonishingly politically naive. The UK is dealing with 27 other sovereign, democratic nations who aren’t going to allow their customs regime and regulatory standards be undermined, and their legal order upended, just to preserve the Brexiteers from the embarrassment that awaits them once the UK public figures out that cake, once eaten, is gone.

And so, as I say, I welcome the new tone coming from Merrion Street and Iveagh House. My best guess is that the hardline Brexiteers have never been interested in a special deal for Ireland per se, since they evidently don’t give a toss about the island, but that they have been hoping that Ireland can serve as the key unlocking a very, very special deal for the UK.

A deal so special that it is, in fact, impossible.

And I don’t think our country should let itself be used as the Brexiteers’ useful idiot.

 

 

 

 

65th Economic Policy Panel

For more than 30 years, Economic Policy has been publishing papers on pressing European policy issues. Preliminary versions of the papers are first discussed at Panel meetings. The 65th Panel meeting, which starts today in Valletta, features papers on the causes of Brexit, on the consequences of Brexit, on the impact of the 2015 reforms on the Italian labour market, on innovation, on entrepreneurship, on retirement, on monetary policy, and on mobile communications. The papers are available here.

Gambling

A colleague has pointed out this Economist piece on gambling to me. Check out the figures on average annual gambling losses per resident adult, and where Ireland comes in the list: am I the only one who thinks these numbers are enormous? Or that we should perhaps be worried about them — especially the very large online component?

(This also gives me an excuse to complain about the FAI’s League of Ireland streaming deal with an online gambling company.)