About Alex Harrowell

Alex Harrowell is a 33-year old research analyst for a start-up telecoms consulting firm. He's from Yorkshire, now an economic migrant in London. His specialist subjects are military history, Germany, the telecommunications industry, and networks of all kinds. He would like to point out that it's nothing personal. Writes the Yorkshire Ranter.

Self-Binding Back To The Deal

I think the logic in this post and this earlier one has stood up rather well. There were only three possible options – hard border, sea border, and no border. Everyone involved rejected the hard border. The DUP, and quite a few other people, rejected the sea border. That left only no border. The Tory Brexit caucus claimed to have a veto on that. But their leverage was just that they could howl for concessions from the prime minister. Once the EU Commission, the Republic, and the Northern Irish parties were signed up, though, the prime minister was constrained to offer them nothing. Anything she offered them would be vetoed by the others.

Negotiating theory has the interesting conclusion that you can become stronger by getting rid of alternatives. You can’t be argued into giving something up that you can’t in fact give up. This is the logic of a so-called self-binding commitment, and we saw its full force this week. Ultra-Brexiter Michael Gove was the first to crack, going the rounds of the TV and radio studios to argue in favour of the deal. European Research Group (never mind what research it might have done) chairman Steve Baker stepped up to argue for it. The promised resignations haven’t happened. It was the biggest cave since Lascaux.

So, what’s the deal? The key machinery is in paragraph 49, as George Peretz QC points out:

So, the UK guarantees to avoid a hard border. It’s worth thinking in terms of sequencing here, again. In the first instance, this guarantee is to be made good as part of the “overall EU-UK relationship”. To put it another way, the agreement between the EU and the UK should avoid a hard border. This has to be tried first. Failing that, some sort of Ireland-specific solution can be proposed by the British side. Paragraph 50 states that a sea border could happen if the Northern Ireland executive agrees to it, which requires cross-community consent. Failing that, as a last resort “in the absence of agreed solutions”, the UK will “maintain full alignment with those rules of the Single Market and Customs Union which, now or in the future, support North-South cooperation, the all-island economy, and the maintenance of the 1998 agreement”.

“Alignment” was probably the most-discussed point here for the press. Was that the same thing as “no divergence”? The second was probably whether or not there might be a sea border. But the plain meaning of Paragraph 49 is that both of these are second- or third-best options. The primary aim, the first option, is a top-level agreement between the EU and the UK that enshrines no border. The other options are there as fallback guarantees in case the talks break down. And the scope of this commitment is sweeping. Peretz again:

The hard border is defined in paragraph 43 as anything with physical infrastructure, checks, or controls. To put it another way, the only acceptable border is no border. This would be closer integration than either Norway or Switzerland has with the EU. Fascinatingly, these paragraphs do not seem to have been controversial between the British and the European Commission delegations. The Irish Times quoted something very similar to Paragraph 49 as early as Monday.

On the same day, the DUP’s threat to Theresa May said that Northern Ireland staying in the customs union might destabilise their agreement. It said nothing about the whole of the UK doing so. Arlene Foster vetoed:

any suggestion that Northern Ireland, unlike the rest of the UK, will have to mirror European regulations

Again, she said nothing about the whole of the UK doing so. In fact the DUP had not committed itself to the harder Brexit Theresa May introduced at the 2016 Conservative Party conference – ever. It’s hard to imagine how it could ever do so. As the leading Unionist voice in Ireland it needs the Good Friday agreement. As people living in Northern Ireland, they need the peace. As a political party whose constituency is largely farmers, they couldn’t live with a hard border. On the other hand, their overriding existential mission is to veto anything like a border between the UK and Northern Ireland.

A lot of people on the Left seem to have assumed the DUP was vetoing a soft-Brexit agreement, on the basis that they are Tories but more so. A lot of ERG Tories seem to have believed the same thing, on the basis that they were a substitute for Tory or UKIP MPs they hoped would get elected, or maybe because they thought the famous £435,000 donation bought something even though the DUP as such didn’t get any of it. But this misunderstands the DUP fundamentally. It is an Irish party, from Ireland, whose concerns are Irish. Its understanding of Irishness is very different from the Republic’s, but then accepting this is the whole point of the peace. If it acts as a Westminster party it usually does so for ruthlessly transactional reasons, and unlike Theresa May the ERG offered them nothing. Rather than a terrible beauty, a sordid clarity is born.

EU Commissioner Michel Barnier seems to have understood this very well. I was plenty critical of his decision to raise Northern Ireland as an issue early on – it’s important and people can get killed and I didn’t want it fiddling with, and it seemed strange to define the detail of a border before deciding what it was meant to separate. But it worked in that it anchored the vague into the specific, and put the veto actors to the test. Someone else who may have got it was Oliver Robbins, the top civil servant whose group was moved back from DEXEU to the Cabinet Office in the summer and who led the British delegation. And, of course, the Republic’s negotiators got it supremely well. It was no coincidence that the best news source throughout was RTE’s Tony Connolley.

Pulling a Brexit From Your Hat

Following up on this post, what are we to make of today’s news? The UK put forward a proposal to maintain “regulatory alignment”, which is apparently not the same thing as a lack of divergence, “on the island of Ireland”. In the terms of the previous post, this means either option b) – a sea border – or option c) – no border. The whole of the UK maintaining the alignment would, by definition, maintain it on the island of Ireland. So would giving Northern Ireland a special status and creating a sea border.

If it is option b), though, this is intolerable to the DUP, a party that exists to provide absolute certainty that it will veto anything that divides NI from the UK. And that’s exactly what the DUP did, via a 20 minute phone call to the prime minister. So why bother make an offer you know will be rejected? The DUP’s statement last week made it very clear they would veto any hint of a sea border, while saying precisely nothing about a UK-wide arrangement.

The answer may be a question of sequencing. Consider this tweet from BBC political editor Laura Kuenssberg, earlier on when the deal was still a thing:

Indeed. The proposed deal would commit part of the UK to a Norway-like status, leaving the rest of the country’s status open. But any different status for the rest of the UK would now trigger the DUP veto. This sounds a lot like an effort to deal with the multiple veto actors separately. There are quite a few – fortunately, the EU Commission and the Republic (and indeed the nationalist community in NI) are so closely aligned we can think of them as one unit. Then there are the DUP, the hard-Brexit caucus within the Tories, and the anti-Brexit majority in the Commons.

May’s original concession was worded to sound specific to Ireland, and squared veto actor no.1. Had it gone ahead, the next challenge would have been veto actor no.3 – the hard-Brexit caucus within the Tories. After all, veto actor no.1 has been promised either a sea border or no border, and veto actor no.2 will veto a sea border. The only option that is still not vetoed is no border. In this scenario, the boot is on the other foot. The DUP’s veto is now working for the prime minister, as it constitutes a self-binding commitment that constrains her from making concessions to the hard-Brexit MPs. (I see Robert Peston also noticed this.)

In the ultimate test, pushing too hard might cause the DUP to implement its veto by ending its support for the government, and either cause a general election the Conservatives would probably lose or else drive the prime minister back on the support of the anti-Brexit majority of the Commons.

It’s not a bad plan. The problem, though, is that it requires keeping the DUP sweet between the first and the third step in the sequence. A conjurer would see this as a trick with a set-up and a reveal, that needs some prestige or stage business to fill the gap between the two. Getting back to negotiating theory, though, between making the concession to veto actor 1, and confronting veto actor 3, there is a period when veto actor 2 needs reassurance – a costly signal or a side-payment – that the confrontation will actually happen. Also, the hard-Brexit caucus would have every interest in trying to sway them, as beyond this point their position is quite weak.

When you have eliminated the impossible…

A quick thought on the news that the UK “offer” has been agreed by Cabinet (see Robert Peston).

One thing that has been underdiscussed in all the arguing about the Irish border issue is that the core principle of the Good Friday agreement is cross-community consent. The agreement foresees that there can be no change in the status of Northern Ireland without the consent of both communities, and the agreement itself was subject to an act of public consent in the form of a referendum. This is crucial to the whole project. Cross-community consent offers a guarantee to the Unionists that they cannot be sold out by the British, but it is more than just a Unionist veto. To say that there can be no change without cross-community consent is also to say that there can be change, if such consent were given. In taking imposed change off the table, it puts the possibility of change through consent on it.

This is sauce for the goose and for the gander. Stephen Bush on the New Statesman has repeatedly pointed out that there are precisely three options:

a) a land border
b) a sea border
c) no border

The problem with both a) and b) is that they both represent a change in the status of Northern Ireland. I suppose a real sophist might try to claim it wasn’t substantive change, but I can’t see it washing with anyone. If you are committed to the GFA, like all British and Irish political parties, you can’t really support either unless you think you can convince the Unionists to accept b) or the Nationalists to accept a). Neither is realistic. It is not just that the DUP would hate b) or Sinn Fein a) – neither option is acceptable in terms of the GFA because both involve a change in the status of NI imposed on one community or the other.

With a) and b) ruled out that leaves only c), no border. Even the much mocked DEXEU paper on drones, balloons, and such is a sort of twisted acceptance of this point. The point of a “frictionless” or “invisible” border is that it is very like no border. This leads us to a further trilemma. The DUP, and indeed the British government, has acquired three commitments:

1) the Union
2) the GFA
3) Brexit, defined to exclude the customs union

The first is existential. The second is extremely important. DUP ministers, members, and voters benefit from peace and the open border. The third was entered into verbally when Theresa May chose to up the rhetoric at the 2016 Conservative conference, and is not binding in any way. If the first cannot be given up, the second would be extremely costly to give up, and the third merely embarrassing, what do you think will give? How does your answer change now the government has agreed to pay up?

This is why I have not been particularly worried about the Irish element of Brexit, and why I think we’re staying in something.

Article 63: It’s the New Article 50

So what’s going to happen next in Germany? It’s worth taking a look at the mechanics of how Germany elects a Chancellor. These are set out quite specifically in Article 63 of the Grundgesetz. The text is here and an official explanatory note by the parliamentary administration is here. Article 63 foresees a step-by-step process:

1) The Federal President, currently Frank-Walter Steinmeier, proposes a candidate. This candidate can be any German citizen who possesses the right to vote and to stand for election, and doesn’t have to be a member of the Bundestag. The choice is left entirely to the President, who is not required to take heed of any recommendation from the parties or anyone else. The Bundestag note says that such a candidate should be capable of a majority in parliament, but the letter of the law doesn’t prescribe any test for this. The law leaves open how long the President can take to make a decision. During this period of time, the President can require the current Chancellor to stay in office, and in practice always does. While this is the case, the Bundestag can’t vote no-confidence in them.

2) Once the choice is made, the Bundestag divides on a straight up-or-down vote. There is no debate and no other candidate at this point, it’s purely yes or no on a secret ballot. If the candidate gets an absolute majority, the President is legally bound to appoint him or her as Chancellor without further delay. Every Chancellor so far has been elected at this step.

3) If the absolute majority is not forthcoming, the Bundestag now gets 14 consecutive days from the time of the vote to elect a Chancellor, again by absolute majority. If a candidate is elected, the President must appoint them within seven days. The law leaves this phase entirely up to the Bundestag and therefore to its President, a certain Wolfgang Schäuble.

4) If there is still no solution after 14 days, a further round of voting takes place immediately. If a candidate does, in fact, get a majority at this point the usual rules apply and the President must appoint them with seven days. Failing that, though, the President has the right to either appoint the candidate with the most votes, or call a general election, which must occur within 60 days. If there is a tie, voting continues. If the President wants new elections, they must be called within the seven days or else that option is lost.

Some comments about this. First, the President’s role is quite powerful. Rather than ratifying the majority leader’s claim, the President at least theoretically makes an active choice and can in fact choose someone completely different.

Second, it’s going to be difficult to go through this process without Angela Merkel being chosen. The law leaves the President free to choose, but as the Parliamentary note points out, the President is given plenty of time precisely in order to choose someone who commands a majority. It is hard to think of anyone with a better claim. And the first Bundestag vote does not provide for an alternative candidate. It would be very difficult to keep half the Bundestag from electing her given the chance, or bringing her back in the second phase if Steinmeier was to astonish everyone by picking someone else.

Third, it’s going to be very difficult to get to new elections without cross-party agreement that they are necessary. The process defined in Article 63 sets up steadily rising pressure on the parties to agree on a chancellor. For almost any party, it would be better to come to an agreement under 3) rather than have someone imposed under 4). It would likely be necessary for one or more parties to deliberately throw several votes in order to get to new elections.

Fourth, the Bundestag is free to organise Step 3 as it wishes, so it’s probably worth having a look at that.

In the 2013-2017 Bundestag, the parliament’s own rules of procedure required a candidate to get either the signatures of 25% of its members, or else the support of a parliamentary party including 25% of the members. The absolute minimum of support required to appear on the ballot was therefore 12.5% plus one vote – a majority of a party big enough to account for 25% of the members. This rule, Section 4 of the Rules, is still in force. Now, the only parliamentary party big enough by itself to put forward a candidate is the joint CDU-CSU, with 246 out of 709 seats, 34.7%. Section 4 therefore provides that the magic number required to put forward a candidate is 17.35% or 124 exclusively CDU-CSU votes – if we get to Step 3 at all. For a cross-party candidate, it’s 177.

The FDP has left the centre

This chart from the Berliner Morgenpost‘s election night data feature tells you everything you need to know about how the German coalition talks broke down. It shows the ideological positioning of every new MdB from the 2017 election.

The data is taken from Abgeordnetenwatch‘s candidate checker, which administered a standard questionnaire to all the candidates. I think the analysis they ran is the same one Chris Lightfoot’s empirical political compass survey used – ask them all a list of questions and then apply principal-components analysis in order to discover which combinations of questions and answers explain most of the variation between them. Rather than define the political positions and score people against them, this technique allows the positions to emerge from implicit relationships among the responses.

In the event, one axis shows a well-defined left-to-right political spectrum, spookily matching the Bundestag’s own hemicycle. The Left Party lines up on the far left, the Greens come next, and then the Social Democrats. Beyond the centre, the CDU and CSU line up in a similar way. All very orderly, like the main sequence of stars in the Hertzsprung-Russell diagram.

But then there’s the other axis. This gives us a cloud of anomalous outliers. You could try to make sense of this as a liberal-authoritarian axis, but the civil-libertarian Greens are on the same level as the CSU, so that won’t wash. It might be more useful to think of it as running between pro-Europeans or globalists and Eurosceptics or even, thinking of the AfD, provincial particularists. This might be right – some of the Left Party and CSU people on the fringes score higher on it, and both groups are critical of the EU.

Whatever it is, the property it measures is something that the AfD has in spades and that the rest of the political system doesn’t. The most left- and right-wing members of the political main sequence also have it to some extent. Fascinatingly, the new FDP MdBs are often very high scorers on it. In fact, the FDP overlaps startingly with the AfD, and it seems to have largely vacated the centre. Centrist Dad has left the building.

One possibility is that this axis might be measuring discontent with the Federal Republic in general, or a stereotypically populist attitude. Now, it’s been suggested on and off going back to the early 2000s that the FDP might drift into populism. Its early postwar history, in fact, saw it skate very close to a role like the FPO’s in Austria, basically a retirement home for old Nazis, before it installed itself in the main sequence of Federal Republic politics. And its role in government has often been…rather like a populist protest movement, but for rich people.

In some ways, what differentiates the CDU from the FDP is that the first is dominated by the business lobby, and the second by the wealth lobby. Conservative parties usually try to fuse both roles, fighting for the market economy and also for plutocracy at one and the same time. Perhaps this is why the CDU is one of the least objectionable forms of conservatism? One way in which this might be working out in practice is economic libertarianism. The first version of the AfD was very much about hard-money libertarian economics, before it swung further towards nationalism and populism. And after all, the alliance of libertarianism and nationalism is stinking up a comments thread near you right now. Jasper von Altenbockum says something similar in the FAZ here, pointing out that the FDP has been emphasising both its economic libertarian and its “national-liberal” side in pursuit of AfD votes.

This makes a lot of sense. Neither the CDU nor the Greens have any use for the politics of the Internet troll. And Rich People Populists; it’s a thing. You down with RPP? Yeah, you know me…

The Populist Papers: 29 Years of Populism

Thinking about Brexit, the Donald, Austria having a presidential election replay, and other things, it struck me that in a sense I’ve lived through a Populist Era, a parallel history to the official narrative of ever-closer European union and what we might call ever-closer Western union. The starting point is hard to place. Jörg Haider’s party joined the Austrian government at the end of 2000. Silvio Berlusconi was first elected as Italian prime minister in 1994. In the same year, the BNP won and lost its first local council seat. But we’d be fools to ignore what was happening further east – Vladimir Meciar’s third term as Slovak prime minister from 1994-1998 is an example, and some people argue Slobodan Milosevic from 1989 onwards was the very first. Then you have to deal with the FN’s electoral breakthrough, at the French parliamentary election of 1987. Jean-Marie Le Pen achieved a score that time his party wouldn’t equal until 2015.

Since then, they’ve come thick and fast and all over the world, in societies as various as Thailand and Australia, or Bradford and Dresden. They are as diverse as the societies that gave rise to them, and the degree of success they have achieved varies enormously. It is commonly said that the word “populist” just means a political party others don’t want to accept, but I disagree with this. It is true that they differ dramatically in their content. Leaving the European Union is obviously not a priority for the newly elected bishop-mayor of Rio de Janeiro, Marcelo Crivella. Yet Crivella is recognisably a populist and would fit nicely on a platform with Marine Le Pen, Nigel Farage, Beppe Grillo, or Donald Trump.

Instead, I think, what unites them is a way of doing rather than a way of seeing. You can look at this as an aesthetic style, or as a technology for winning elections. It doesn’t matter; style, after all, is founded on technique. But looking at it as a set of style tropes and technical solutions has the advantage that we can understand it as such. Technology diffuses. Once it is invented, sooner or later, it spreads, and it spreads the faster the more people feel able to try it out and to adapt it to their own aims, aims which are themselves changed by the process of trial. We know quite a lot about the sociology of innovation diffusion.

So I want to pick out the minimal common elements of the technology here. So far I’ve got:

Politics against method

Most types of state have some form of universal ideology, a body of ideas that are meant to guide the citizenry in all they do. Conservatism in Burke’s sense claims this is embodied in old institutions, which must be defended. It therefore aligns the power of the state with the authority of those institutions. Liberalism demands that the institutions get out of the way of the citizenry in the name of liberty, and therefore sets up the power of the state as a sort of depoliticised referee whose mission is to guarantee that liberty. In this sense, socialism or at least social democracy is the sturdy child of liberalism – rather than merely asserting the equality of citizens and sitting back to let them get on with it, the state aims to actively ensure their equality in the name of positive liberty. Even beyond this, most states also believe in some form of technocracy, in economic or administrative principles and techniques that represent the state of the art and can be rolled out around the territory for the greater good.

One of the most interesting features of populism is that it rejects method. This goes well beyond the now quaint idea that what matters is what works. Method is both a source of power, and a constraint on power. If it doesn’t work, you can’t do it. On the other side, it is entirely acceptable to argue that you are pursuing “politics for the little man” and immediately offer a massive tax cut to the richest, justifying this on libertarian grounds, and then demand that the state subsidises petrol prices. I remember Jörg Haider doing all these things in the same speech. Method is a construct of the boring, and a tiresome constraint on rhetorical creativity. Instrumental rationality is subordinated to expressiveness. This is one of the reasons why populism is often described as “post-modern”.

Method is also a force against one of populism’s most important aims, which I am about to discuss.

Repoliticising the state

Liberalism, very broadly defined, likes to see the state as a neutral force, hanging “above the parties” as the Germans say. Conservatism and socialism both see it as a force for universal good, differently defined. They all, however, believe that it is different from partisan politics. This does not mean that it is apolitical, just that it is different. Parties and interest groups come and go, but the state endures, and at least claims to serve the public good. One way to look at this is as a depoliticisation of the state. Rather than being defined by opposition to an enemy, it is defined by the inclusion of its citizens.

Carl Schmitt argued that the fundamental political act was to define friends and enemies. He is an example of a long-running counter-tradition in Western political thought that fears this depoliticisation and wishes for a partisan state. Populists demand that the government takes sides among its citizens, that it acts in an explicitly partisan manner. They want to feel that the state is on their side, not because it serves the public good, but because they personally get took care of. Following any particular method obstructs the state in doing this, as it requires that the state acts in accordance with rules.

An important concept here is victimhood. I covered this in a previous post on my own blog. In an important way, populism democratises access to the category of people who feel justified in demanding state help. This is a consequence of the rejection of method; if there is no determinate standard of victimhood, then everyone can feel justified in wallowing enjoyably in it.

Many other writers on populism, from Richard Hofstader onwards, have observed that it arrogates to itself the right to define the people. This is primarily important, though, because it permits them to use the state in the manner that great political thinker, the Salford Machiavelli, Dominic Noonan advised: Look after those that look after you, fuck off those that fuck off you. It shouldn’t need saying that the EU is a prize example of an institution built on method that tends to depoliticise the state, as is NATO, NAFTA, and the WTO. Interestingly, the German ultraconservatives of the 1920s thought the same about the League of Nations.

I’ll make you a deal

It follows that the response to a problem or an injustice is not necessarily to solve it, but rather to make an exception. Schmitt, again, held that this was precisely the attribute that defined sovereignty, and perhaps that is why populists are so attached to the idea of sovereignty. Populism is a system of exceptions. If you do not believe it is possible to get anything right systematically, and you do not believe in the institutions, you can still hope you might be able to get special treatment for yourself. As such, it is something of an indicator-species for a low trust society. Soviet citizens were constantly trying to get treated “po chelovek”, on a personal basis.

Donald Trump, of course, tries to cope with literally everything this way. The F-35 project is far too complicated and is costing too much? If you yell at Lockheed-Martin hard enough, they might give you a discount for the sake of quiet, and of course you can also take care of them by ordering more airframes down the line when everyone will have forgotten. You can’t compete with German exporters? Jump the counter and yell until they offer you a deal. But it’s not just him. Haider offered cheap Libyan diesel around come election time; Theresa May has taken to distributing cash whenever a charismatic exporter threatens to leave the UK. This can also be done in a negative sense, by calling someone in and publicly humiliating them.

It is worth noting that a problem, in this view, is an opportunity to make yourself indispensable. There’s a reason why low-trust societies don’t function well.

Bullshit, and the rejection of constraint

If you reject method, and reduce politics to a system of individual customer-retention gimmes and theatrical humiliations, it follows that you don’t have much use for facts. In some sense, a fact arises because of a method. I think this may explain why the rejection of constraint is so important to populists. Nigel Farage affects to believe that cigarettes are good for you. Donald Trump grabs ’em by the pussy. I asked a Brazilian friend of mine who voted for Crivella, and she thought for a moment and said “People with big white trucks who live in Zona Oeste”. This remark needs a bit of unpacking; the socio-cultural references packed in there are meant to evoke a petty bourgeois or nouveau riche aesthetic, but I’d like to focus on the truck.

If there’s a constraint they like to reject above all others it’s anything to do with energy, the climate, and hence transport. In part this is explained by the fact there are major funders available who hand out cash to people who reject this constraint. Beyond cynicism, though, is it too impressionistic to imagine that some people feel experts in general just want to take their trucks and make them listen to the doctor and stop smoking? I think this is interesting, because the populist target market tends to be the same around the world – rather well-off but not particularly educated fifty-somethings, not coincidentally also a demographic that likes to jump the counter and demand a deal, and that consumes a lot of ambient media.

That said, I also don’t believe Farage really thinks Craven “A” don’t affect your throat. Instead I think this is a performative statement. Harry Frankfurt famously defined bullshit as speech that doesn’t bear any relationship with truth, not even the negative one lies do. The great thing about bullshit, in Frankfurt’s telling, is that it offers so much creative freedom to the bullshitter to come up with what his audience would enjoy hearing. Populist bullshit arises because it’s fun and it gets the desired audience on your side. Farage’s audience would like to feel, for a while, that cigarettes are good for you and that they might get a special offer.

How many people care about immigration?

I wrote this for Politico Europe, but they won’t have it, perhaps because it’s not OMG BREXIT enough. To update it, let’s note that Ipsos MORI reckons only 20% care about immigration and more people think they, personally, have benefited from it than not.

With ten days to go, the two Brexit campaigns are talking about almost nothing but immigration. Gone, the expansive talk about whether the “Norway model”, the “Canadian model”, or indeed the “Albanian model” so dear to Michael Gove’s soul would be preferable. Nobody is now pushing the virtues of unilateral free trade. Instead, it’s all about immigrants, immigrants, immigrants, or sometimes Turkey, a placeholder for immigrants.

This worries a lot of people. Immigration polls badly. Surely this is the Leavers’ strongest suit? The problem, though, is that something can be your strongest suit and still be pretty damn weak. Consider a chart I used back in April, 2015, for this Politico piece. Back then, using YouGov’s online poll, immigration was rated the No.1 issue nationally, with 50% of the public saying it was their biggest concern for the country.

If you asked them what they, themselves, worried about, well. Immigration plummeted from 50% to 20%, far behind the economy, the NHS, pensions, and tax. Even UKIP voters displayed the same effect, although the level was different. 90% thought immigration was the top issue for the country, until they had to put some skin in the game, when it came down to 49%.

YouGov’s most recent referendum poll, from the 6th-7th of June, hammers the point home. This was a forced-choice question, where the respondents had to pick one issue and one only. Only 20% of the public say immigration will decide how they vote. 31% say the economy. Another 31% say it’s:

Which is likely to strike a better balance between Britain’s right to act independently, and the appropriate level of co-operation with other countries

And 4% say it’s foreign policy in the classic sense. Now, Remain is camped all over the economy, which it’s hitting from all angles, and Leave has pretty much stopped even trying. We can try different assumptions about the vaguely defined “appropriate co-operation” question. If the Remain side is getting as little as a third of those, though, it suggests they are addressing about 45% of the electorate, with an upper bound around 60%. The problem with All Immigrants, All The Time is that only about 20% of the public care all that much.

Of course, perhaps there are so many more people worked up about immigration out there. They’ve managed not to show it at any general election in their lifetimes. But now der Tag is upon us, and they will rise like lions after slumber. Could happen, as we said in Yorkshire. Meaning: don’t hold your breath.

Daniel Kahneman, of Judgment under Uncertainty and Thinking, Fast and Slow fame, got his Nobel prize in part for his contribution to prospect theory, the study of how human intuitions about risk diverge from rationality. In principle, a 40% chance of gaining €100 should be worth exactly as much as a 100% chance of gaining €40. In practice, it’s much more complicated than that; the curve bends, so people generally prefer the sure thing even when the expected value is identical.

More interestingly, your decision depends on your starting point. If you’re in the money, rather than being more recklessly confident, you’ll pass up more chances. If you’re out of the money, though, you’ll tend to double down and pick opportunities with worse chances and bigger payoffs in order to chase your losses. Like: betting the farm on those 20%. That said, that YouGov poll does say 40% of the public think #Brexit would be good for the NHS. I stick by my call, but chance is chance.

A simple solution for #Brexit-related uncertainty

Prominent Brexiter Andrew Lilico, I see, argues that we could avoid the uncertainty created by triggering the Article 50 process by not doing so:

The Treasury says an instant triggering of Article 50 post-referendum would be a driver of uncertainty. In which case, maybe don’t do that?

Indeed. Article 50 of the Lisbon Treaty lays down the process for voluntary withdrawal from the EU. You trigger it if you want to leave the EU. If you haven’t, you haven’t left the EU. Not triggering it – staying in the EU – would indeed avoid quite a lot of uncertainty.

But, Andrew, we could go one better. We could completely eliminate it. All we need do is vote to stay in.

#Brexit, trade, and the J-curve

A couple of thoughts on the economic consequences of #Brexit. HM Treasury, the Institute for Fiscal Studies, and others have published their efforts to forecast the short- to medium-term impacts of leaving the EU, and it’s fair to say none of them are good. The point I would like to highlight is that everyone seems to expect a big – 15% is a consensus number – devaluation in sterling post-Brexit.

I’m usually quite a “cheap pound” guy, so you might think I’d see this as an offset to the risks of Brexit. Actually I don’t, and here’s why. Just as a “strong” currency isn’t good in itself, but instead good for some groups in society and bad for others, a “weak” currency is good for some people – exporters, basically – and bad for others – importers, basically. A fall of 15% in the sterling trade-weighted index will help exporters in that it’s an immediate 15% price cut, and harm importers by the 15% increase in their prices. On balance, you’d expect it to reduce the current account deficit by 15% * some elasticity parameter.

It’s not that simple, though – there’s the famous J-curve effect. It might take time for exporters to increase their volumes, while import prices go up straight away. As a result, devaluations often have a contractionary effect immediately, and then a greater, expansionary one later. The problem, in the Brexit scenario, is that we propose to do something that will induce a substantial devaluation at the same moment that we commit ourselves to a whole lot of uncertainty regarding trade with Europe.

The case for it all turning out OK is basically a bet that the lower sterling trade-weighted index will lead to enough growth in export volumes to make it up. However, we’re meant to be taking this bet just at the time we do something that’s likely to constrain volumes on about 44% of our exports, even if only temporarily. Also, a lot of export-heavy companies are manufacturers integrated in international supply chains, who probably use quite a lot of intermediate products sourced from inside the EU. These companies will see their input prices rise sharply, while they may not be able to take advantage of the cheap pound on about half their market. As a result, they will experience quite a dramatic margin squeeze.

I can certainly see this leading to a beast of a J-curve recession, even if it doesn’t manage to push the housing market off the wall. One important trigger for a big drop in sterling, by the way, would be a drop in foreign portfolio investment in the UK. A hell of a lot of that is real estate, and there is already evidence of investors putting purchases on hold.

Before you all write at once, I stick with the 44% number. This has been criticised due to the so-called Rotterdam effect, where goods going to the wider world get trans-shipped through EU load centre ports like Rotterdam, Antwerp, or Hamburg, and therefore counted in the port statistics as exports to the Netherlands, Belgium, or Germany. There’s a good account of it here. I do not accept that this is a problem. Rather, I do not accept that it is a valid argument that European trade is less important than we think.

If shippers in the UK choose to ship to, say, China via Rotterdam rather than direct ex-Felixstowe or Southampton, they presumably do so for a reason, typically that bigger volumes and bigger ships mean lower freight rates and more choice of routes and sailings. There is no reason, I think, to expect Maersk or whoever to call at UK ports more often post-Brexit. Shipping via Rotterdam to somewhere extra-European represents trade with the EU in that the UK imports port services from the Netherlands, paid for out of the revenue from exporting. If we had a port the size of Rotterdam, we certainly wouldn’t discourage European shippers from using it! And of course, we do – just it’s an airport, and it’s called Heathrow, and just listen to the business lobby hollering for more capacity there.

In conclusion, one of the contradictions of Brexit that bothers me is that its strongest advocates seem to believe that relatively petty regulatory burdens are enormous restraints on the economy, whose removal would lead to a surge of growth, while they also seem to believe that incurring even relatively petty trade barriers would mean, well, nothing much. You can’t have it both ways. Either the economy is robust to petty interference, in which case we might as well stay in, or it’s not, in which case we surely have no business putting a new layer of it between us and Europe. After all, it’s unrealistic to imagine the electorate ever agreeing to some sort of Donner Party libertarian utopia – we wouldn’t be swapping open trade, with levels of regulation that don’t seem to do German exporters any harm, for a tariff, but zero regulation. Instead we’d likely get a worse relationship with Europe by quite a lot, offset by a few doubtfully useful regulatory changes at the margins.

I find this baffling. Perhaps, in the end, the belief is that even trivial regulatory changes would be transformative, and the relationship with the EU would, well, somehow turn out OK in an unspecified manner. That strikes me as too many leaps of faith for one lunchtime.

PS – don’t trust me, ask a Felixstowe docker!

It will make a difference. FXT will surely suffer as they will no longer be able to tranship to R’dam and elsewhere without documentation as they can now. Why would shippers go through two lots of clearance procedures when they can cut FXT out and ship straight to the continent?

Why IS hates refugees, and what that tells us about it

The Syrian passport found on one of the Paris attackers turns out to be a fake. The Egyptian one Le Point thought belonged to another turns out to belong to a bystander. The only attacker for whom we have a positive identification so far is a Frenchman. There are a couple of possible readings for this – it’s possible that a home-grown terrorist who went to Syria used the fake document to return discreetly, that a terrorist who entered the EU as a refugee used a fake document because they came from Daesh country, where valid ones are not issued, or that the attackers wanted to label their act as a blow struck in the Syrian war, or alternatively, that they wanted to smear the refugees. Mike Giglio, of Buzzfeed, was early with this one.

This may seem a bit conspiratorial, but you ask Germany’s interior minister, Thomas de Maiziére. Since I drafted this post on Sunday, more information has emerged and it turns out all the passports so far found are stiff, and every one of the perpetrators so far identified are either French or Belgian nationals. Even the Daily Hell has recast its original OMG REFUGEES coverage as how easy it is to buy fake passports. It seems to be approaching the status of conventional wisdom.

In fact, there’s quite a lot of evidence that the leadership of Daesh is furious with the refugees. Aaron Zelin has collected a string of their propaganda videos in which Daesh leaders alternately implore the refugees heading for Europe to stay, denounce them as traitors, and assert conspiracy theories about replacing proper Sunni Muslims with Shias, Druze, and Christians. With exquisite irony, this last mirrors the ideas of Umvolkung or the grand remplacement dear to European right-wing extremists. During September, as the exodus began, this seems to have been a major theme of IS propaganda. Over the weekend, they reprised the theme.

The explanation of this is the S in IS – it’s a state, and it’s a particular kind of state. It offers a particular religious and political group – Muslims who accept its claims – three things. First, a defensive haven of security. Second, a beacon of inspiration. Third, a champion of strength, waiting in overwatch to defend them outside its borders. This is to be achieved by emigration as a form of revolution.

Moving to the Islamic state helps to create it. It also helps to achieve its aims. And it is also a way of pursuing personal transformation. Emigration to Daesh is both a physical journey, and a journey in the sense of Tony Blair’s memoirs. Participating in the creation of the state is meant to change both the community, and the individuals who take part. War is either accepted as necessary in self-defence, or actively sought as an accelerant to the process.

This was true, more or less, of many other states. The United States of America incorporates this mythos into its official founding story. This tweet is snarky, but it gets at the point.

The Soviet Union started off a bit like that. You could say the same for the Crusader kingdoms – they aimed to protect the Christians of the Levant and their holy sites, to deter anyone else who threatened them once that was achieved, and to transform themselves by demonstrating both Christianity and chivalry. Bits of those four elements show up repeatedly in colonial-era narratives about emigrating to escape the decline of the old country and to be a better person. And Israel probably expressed all four elements more thoroughly than any other state. In fact, I borrowed the elements pretty much from Theodor Herzl.

A more radical and aggressive version of this sets out to force its people to leave and join the new state. Consider some more IS texts. The point is to eliminate even the possibility of coexistence, to force everyone to take sides.

There were even people in the Revisionist wing of Zionism who were willing to treat with the Nazis for exactly those reasons, as the ultimate polarising force. Whatever you might say about this Hitler fellow, he wasn’t going to leave any grey zones of coexistence lying around.

This ought to be familiar, again, because it’s the doctrine of Barry from Four Lions:

The idea of seeking security in Paris – or, heavens forbid, Berlin – is intensely subversive to such a state. It crushes their claim to provide a safe haven for the faithful. It tramples Daesh’s claim to be an inspiration to Muslims. And it makes the idea of providing a defensive overwatch to them around the Middle East look absurd.

The refugee exodus is also harmful materially. IS is a state, and a state at war craves manpower. It has frequently been pointed out that young men are over-represented among the refugees. This is because they went ahead, hoping to find a home and bring the rest afterwards. And it is also because IS is most likely to conscript them. It may also be because when the World Food Programme temporarily ran out of cash, people calculated it was more likely to keep feeding the most vulnerable. They had a choice; believe in IS, or in Europe.

Perhaps we should see the last few weeks as the result of an IS crisis. The movement of refugees was a political disaster. Although a lot of people are sceptical about Russian aims, they can hardly have been pleased to see the roaming Hinds overhead. US airpower has been hitting high-value targets again, after it was reinforced recently. Other Syrian forces have been receiving a lot of guided weapons again. The Kurds have been advancing towards Sinjar, which they took on Saturday, and threatening to cut the road from Deir ez-Zour to Mosul. What to do?

The answer seems to be to strike in the deep, using their ability to recruit in Europe as a kind of terrorist air power. The point is simply to impose costs and spread fear, but also to put soldiers on the streets who might otherwise be deployed somewhere closer. And if they’re really lucky, on the strategic level, to prove that we agree with them deep down on at least one issue.