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Brexiters FOR State Aid?

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Brexiters FOR State Aid?

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Once upon a time, Newt Gingrich could say that Boris Johnson was “Margaret Thatcher with wild hair”. Now that would be difficult to argue.

Brexiters FOR State Aid? 2

Matthew Lesh, Head of Research at the Adam Smith Institute, reports on CapX that “the UK could sacrifice a deal with the EU — which would in the short run seriously disrupt trade in goods and services, undermine security service data sharing, and raise serious legal issues around the Northern Ireland Protocol — for the worst possible reason: an interventionist economic agenda.” Lesh adds: “For a supposedly conservative Government that just vanquished Corbynite socialism, that would be quite something.”

Lesh’s article is well worth reading.

As an outsider, I can see that a “No Deal” path would energize Brexiters and thus strengthen the government’s position in the country. It is an expensive way of making your supporters happy: nasty divorces often are. But it may well be that Johnson and his cabinet think the price is worth paying. Yet in politics, you can hardly do stuff claiming that you are doing it only for the sake of pleasing your voters: that would defy their very purpose, as voters themselves want high motives and nice sounding reasons, for you to do stuff which actually pleases them.

The high motive and nice sounding reason the British government worked out is that it should be able to support- with taxpayer money- all the companies it cares for. The Guardian (which is not Reason magazine) perfidiously reminds us that “Margaret Thatcher thought Europe allowed too much of it [state aid], Jeremy Corbyn believed there was not enough”.

On the one hand, then, the fact that the British government thinks the state aid issue is palatable to its voters as an excuse for a “No Deal” Brexit tells us something. Namely, that perhaps our vignette of the Tory voter as by and large more free-market oriented than others does no longer resemble reality. Sure, these voters detest the EU more than anything else, but their leaders’ vocabulary used to imply that the EU ought to be detested because it is bureaucratic and protectionist (do you remember “Global Britain”?), a petty organization that regulates anything which moves. Now should it be detested because it puts a brake on government subsidies…?

On the other hand, it may well be that conservative politicians, on top of believing a “No Deal” Brexit will be good for their popularity, actually believe that England needs more latitude in spending taxpayers money to the benefit of businesses of government’s choosing.

On that, I have little to add to the point Lesh makes:

Forsyth claims the Government is concerned that without subsidies the UK risks becoming “a technological vassal — reliant on either the United States or China, both of whom are unafraid to use the state to shape these markets”.
This is crazy technological isolationism. No single country can or should develop every single technology and keep it for themselves. We are much richer because of technologies developed and produced in other countries. Imagine how awful everything would be if we only used British-made goods no iPhones, no Zoom, no Samsung TVs, no Amazon, no Microsoft Windows. The list is endless. Remember too that the great tech success stories in the US, and even in communist China, are led by the private sector, not the state.
According to [ITV’s journalist Robert] Peston, Dominic Cummings [the main adviser to Boris Johnson] believes that the key to British success in the first industrial revolution was being the first mover in many key industries. Again, though this had little to do with state intervention. In fact, quite the opposite.
The reason Britain was successful during the industrial revolution was a combination of freedom to disrupt existing modes of production and a strong emphasis on entrepreneurship, underpinned by property rights. We should take the same approach today by getting rid of cumbersome red tape and taxes that hold businesses back.

Among contemporary ruling classes, the “technological isolationism” Lesh underlines is going strong. Everybody wants “his” science and “his” technology to be on top of everyone else’s. This is quite bizarre because one would think that if there is one area in which the benefits of international cooperation are clearly apparent is science and research. When a safe and effective vaccine about Covid-19 is happily produced, will you be refusing it, if it does not come out of your national labs?

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