There is a great risk in Brexit Britain. It’s the possibility that the country’s leaders will listen to all the calls for protectionism, subsidies, and metaphorical wall-building that are increasing as the idea that Britain is going to leave the European Union sinks in. A recent example is the call by Britain’s manufacturers’ trade body for a “cultural” change towards buying British-made content, which it calls “nurturing” rather than protectionism. This would be a huge mistake.
In our paper, Cutting the Gordian Knot, Rory Broomfield and I argue that Britain needs to double down on its classical liberal heritage, and open up its markets to the world, rather than the other way round (we note the General DeGaulle cited Britain’s tradition of seeking the cheapest food sources possible as incompatible with the European project).
Three examples should help illustrate the point:
- In fisheries, the UK’s territorial waters returning to national control would mean the end of the Common Fisheries Policy, which most environmental groups agree has been a disaster for fish. The UK would have the chance to implement a genuine property rights-based fisheries management program that would not only strengthen the fishing industry but promote better management of fish stocks, potentially leading to recovery of previously overfished species.
- In agriculture, we note that subsidies can be the farmer’s worst enemy. Building on the example of New Zealand, which abolished subsidies to farmers in the 1980s, we note that “New Zealand farmers now recognize that subsidies are a form of government intervention into their industry. Indeed, the abolition of subsidies has allowed agricultural firms to become leaders in the New Zealand economy as the owners prove themselves to be agile entrepreneurs.” In addition, returning to global market prices for food could cut consumers’ food bills by up to 17%, according to the Institute of Economic Affairs.
- In immigration, the capability to control its own immigration policy could be seen by some as a license to stop all immigration entirely. This would be a mistake – it would lead to much higher costs for businesses and consumers alike and a decrease in net welfare, even if some received higher wages. A complex bureaucratic points-based system is likely instead, but we argue for the true market-based system of an immigration tariff. Using this system, the British taxpayer would not be on the hook for any potential welfare claims by immigrants and revenue would go to the government rather than to criminal gangs that sacrifice immigrants’ safety in their attempts to enter the country.
In each case, we estimate that using the market-based system would provide significant benefits, especially in the medium to long term, to the UK’s economy, and place it streets ahead of an increasingly sclerotic Fortress Europe.