Free Lunch: Stunts stand in for thinking in the Brexit debate

Remain’s Budget is fishy, Leave’s flotilla is fishier

Listen to this article

00:00
00:00

Winning hearts by losing minds

The Brexit referendum campaigns each mounted a stunt on Wednesday, neither of which was particularly edifying.

One was the hypothetical post-Brexit emergency Budget presented by not just one, but two chancellors of the Exchequer. George Osborne and his Labour predecessor Alistair Darling set out the tax increases (2 points on the basic rate of income tax, among other things) and spending cuts (even on health) that might be needed to close a fiscal hole in the tens of billions of pounds that the independent Institute for Fiscal Studies quite reasonably expected to open after a Brexit.

The Remain campaign has not, as its opponents claim, engaged in “Project Fear” so much as “Project Real”: the overwhelming consensus among economists that Brexit will hit the economy simply reflects that that’s the best prediction those who know what they are talking about can make. But the hypothetical Budget veers a little too close to scaremongering. It is true that a gaping fiscal hole will open. But whether to close it with immediate tightening — which would make things worse — would depend on the chancellor’s policy choice. Jonathan Portes points out that the best short-term response may well be fiscal stimulus, not consolidation.

The better warning may be one of stubbornly high inflation with which private incomes cannot keep up, and much higher public debt whose servicing cost will detract from public services funding.

Much worse, however, was the stunt by the Brexiters. Nigel Farage led a “flotilla” of fishing vessels up the Thames to protest against the EU’s common fisheries policy (CFP), bizarrely faced down by musician Bob Geldof in a pro-Remain boat. From the FT’s coverage: “Mr Farage’s vessel responded by firing its hose at the boat, which also had former London mayor Boris Johnson’s sister Rachel on board.”

There has been much mismanagement of EU fisheries. But the CFP also labours under misinformation. A briefing paper from the New Economics Foundation tries to set the record straight (so do several environmental organisations). Here are four salient facts that emerge:

First, the depletion of fish stocks predated the CFP: it was overfishing that caused the problem and necessitated quota limits on fishing. This is a straightforward instance of the basic economic finding that common resources tend to get overexploited, known as the tragedy of the commons.

Second, fish stocks in British waters, at least those regulated by EU quotas, are unaware of the borders over which Brexiters think the UK has lost control. Any quotas, therefore, have to be negotiated between the countries in whose waters they swim.

Third, the UK retains a lot of control. It negotiates a large share of the fish, and it alone decides how to divide its national quotas at home. If small fishermen have got a raw deal compared with large commercial operators, responsibility for their plight lies squarely with the British authorities that the organisers of Wednesday’s flotilla want to take more unilateral decisions.

Finally, the CFP has improved significantly. An overhaul took place in 2012 under the Danish presidency and was passed in 2013. Among the achievements of the reform was to ban discards of fish — something British activists had campaigned for.

As with immigration, fisheries policy is another issue in the referendum campaign where, sadly, perceptions matter more than facts.

Other readables

  • The Wall Street Journal reports on how male executives achieve work-life balance — or often don’t, but there is a quiet generational change under way.
  • The Wall Street Journal also live-blogged Fed chair Janet Yellen’s press conference.
  • The MIT Technology Review takes politicians seriously, and asks whether the iPhone could really be made entirely in the US (hat tip: the Browser). 

To receive Martin Sandbu's Free Lunch by email every workday, sign up here.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.