So How Do You Like Your Brexit?

On June 23rd 2016 (23/6/16) the UK voted to leave the European Union (EU) - the so-called "Brexit."

Since then precisely two things have happened.

On November 3rd (3/11/16) the UK High Court ruled that the British government could not use what is known as "Royal Prerogative" to trigger the Article 50 of the 2007 Lisbon Treaty which is used for nations to exit the EU. That ruling is today being argued in front of the UK Supreme Court/Law Lords who are expected to hand down their ruling in early January 2017.

The other - and I think much more important - development is that Euronews has been removed from the Freesat television network in what seems like an opening salvo.

Of course if Britain's political and media classes were to admit that very little has actually happened with Brexit so far they would be forced to find something else to talk about. That may have to involve them having to do some work.

In fact I suspect the recent scandal about sexual abuse in youth football has come to light simply to change the subject. After all some people are clearly going to need to learn to pace themselves.

Despite there actually being very little to talk about Britain has spent the last nearly 6 months in the grips of an almost constant public discussion about Brexit.  One of the main topics of debate is whether Britain wants to go with what is being termed a; "Soft Brexit" or a so-called; "Hard Brexit."

The terms Hard or Soft Brexit are themselves not particularly well defined. In fact they strike me as one of those open ended conversation starters intended to get people to talk about what Brexit means to them. For some people this is hugely emotional topic with the type of relationship they want with the EU almost defining their identity or sense of self.

As someone who voted to Leave and very gently encouraged other people to follow suit I should probably explain what I envisaged by Brexit.

I see Britain's relationship with the EU as very much like a failing marriage.

Britain was never sure that it wanted to get married in the first place and has long felt trapped by the relationship. However up until now Britain has not had the courage to leave. So instead it's dedicated its time to making everything as difficult and unpleasant as possible. Almost in the hope that the EU will decide to be the first to leave.

With the UK trying to make everything as difficult as possible all the nations who do believe in the marriage have been forced to fight a constant battle to make things work. This forces them into a sort of bunker mentality in which it's impossible for them to entertain the idea that maybe some of the things they're trying to do are wrong or even if they're maybe just moving too fast.

Therefore I voted to leave thinking it would be better for both the UK and for the EU to simply dissolve the marriage but maintain civil relations for the sake of the children.

So by Brexit I see the UK leaving the political aspects of the EU.

That means the UK no longer has a role in drawing up EU law in the EU Parliament and is no longer bound by them. The UK would also have no further role in the EU Council of leaders and wouldn't be bound by its decisions. The sanctions on Russia and the refugee deal with Turkey being just two topical examples. Crucially the UK would also stop paying into the EU budget.

The European Human Rights (EHRA) has always been a separate issue from the EU. However membership of the EHRA has always been a condition of EU membership. Therefore once the UK has left the EU it would be free to decide whether it wanted to remain a member of the EHRA as a separate issue.

However the November 3rd (3/11/16) case did heavily reference the British Bill of Rights of 1689. I would think that would be quite a large rap across the knuckles of the people who want to scrap the EHRA to introduce a British Bill of Rights. Scrapping the 1689 Bill of Rights would of course be the first step towards achieving that.

Despite removing itself from the political aspects of the EU I did envision the UK remaining part of the economic aspects of the EU - essentially the EU Single/Free market.

I think this political rather than economic split is generally what is meant by a; "Soft Brexit." A "Hard Brexit" is generally considered to be the nuclear option of breaking off all political and economic ties with the EU.

The main barrier to achieving the sort of Soft Brexit I envisioned is the issue of migration/free movement of people. This was a significant factor that drove many people to vote Leave in the referendum.

The problem is that migrants are people. However economists refer to them as; "Human Capital." That is because it is people's labour that is one of the main means of production on which an economy is based.

I know that sort of statement just sound a bit like Karl Marx and his idea of Communism. However Marx actually turned up rather late to the party. The notion of human capital has been discussed from all the way back in the time of the Ancient Greek philosophers. The renowned free market capitalist Adam Smith - the guy on £20 notes - also worked extensively in this area.

A good example of how the notion of human capital works is the building of a wall. In order to do that you need some raw materials like bricks, sand, cement, water and gravel along with a few tools. However the real value being added comes from the skills in the head and hands of the person turning those raw materials into a finished wall.

Obviously if you place restrictions on when and where a person can sell their labour such as border controls you no longer have a free market. Instead you have a distorted market with the distortion always handing an advantage to someone at the expense of someone else.

Therefore by definition the UK cannot restrict migration and remain part of the EU's Single/Free market because it would no longer be a free market. It's similar to saying that you want to go live on the Moon but at the same time stay on Earth.

Normally when you get a distortion in a market taxes or tariffs are then imposed to correct the distortion. With the EU starting out life as the European Coal & Steel Community back in 1945 this provides rather a good example. If you distort the free market by placing tariffs on coal imports that distortion is corrected by other nations imposing a similar tariff on exports of the steel you have produced with that coal.

Imposing and maintaining a fair system of tariffs is never easy. However it is relatively simple when you are dealing with tangible raw materials such as coal and steel. For example you know how much coal it takes to produce a certain amount of steel and how much steel is in a particular car.

Things get a lot more complicated when you are dealing with intangibles like labour or human capital.

For example I think it's reasonable to argue that it takes much more time, knowledge and skill to make a car than it does to sell a car. However it is the car salesman who gets the customer to exchange money for the car builder's labours paying the car builder's wages. Therefore arguably the salesman's labour is more valuable than the builders.

In the late 1990's the economist Robert Putnam took this idea one step further. He argued that not only do people have value within an economic system but the relationships between people have a value all of their own. He termed this "Social Capital."

In January 2014 lead Brexiteer Nigel Farage touched on this very idea. He gave a speech in which he pointed out that in the financial services industry women who take a career break say to have children are worth less to their employer because they've been unable to maintain the long-term relationships with clients on which the industry depends. I'm guessing the feminists who then shouted Farage down were unfamiliar with Putnam's work.

The complexity of trying to negotiate tariffs to correct market distortions created by Human or Social capital is absolutely mind boggling.

It is exactly the sort of thing that will discourage business - particularly the highly valuable financial services industry - from operating within the UK. It will just be far simpler for them to locate within the EU Single/Free market than try to negotiate access to it from within the UK.

Fortunately I think there may be an alternative;

Rather than getting individual companies to work out the specific tariffs they need to pay on the array of goods and services that they want to the export the UK simply pays a block tariff into the EU budget on their behalf. It would then fall on the British government to decide how it would recoup that money from the private companies. An export band for Corporation tax being one example.

As a member the UK pays £1.8bn into the EU budget each year.  Therefore in an effort to start the discussion I would suggest a £900m block tariff. Simply because it's a big number right in the middle.

The big challenge of course will be getting the 27 other nations that make up the rest of the EU to agree to the idea.

At around 17:50 on 5/12/16 (UK date) I will attempt to address that after dinner.

Edited at around 19:40 on 5/12/16 (UK date) to add;

To many of the people committed to the idea of a united Europe the issue of the free movement of people goes far beyond mere economics. For them it goes almost to the core of their social identity. Essentially allowing people to live, work and love in a continent without borders shows that you are not racist, you're not a misogynist and you are not a homophobe.

This attitude has been clearly on display in response to the current refugee crisis. For many people it's become much more important to say whether you are pro-refugee or anti-refugee then it has been to have any discussion about what is causing these people to become refugees and what help they need.

The problem is that these political elites are often very far removed from the day-to-day realities of their high-minded philosophical ideas.

For many of the EU's political leaders migration means only that they can get a really cheap cleaner or builder who will tell them all about this lovely beach resort in Hungary where they can holiday for a bargain price. Or they will hear from business leaders about how much the driving down of their labour costs have boosted their profits meaning that they now have so much more to donate to re-election campaigns.

What very few of these leaders will ever see with their own eyes are the conditions in those workplaces.

In many British workplaces due to the EU's free movement policy you won't get one or two people from another EU country. Instead almost the entire workforce will be made up of people from a completely different EU nation - often Poland. So much so that often all the signs, notices and contracts have to be written in that other EU language.

What those migrant workers do is work absolutely flat out for a few years to make a relative fortune they can return home with. So not only do they sleep dozens to a room they will often share beds with person working the day shift and another working the night shift. As they don't have to worry about things like finding somewhere decent to live, getting married or starting a family in the country their working in they can afford to work for much lower wages.

If you are born in and want to continue living in a country where this is happening you can't simply get on with a life like that.

This large-scale migration isn't just causing problems in the wealthy western EU nations that people are migrating to. It is also causing problems for the poorer eastern EU nations they are migrating from.

When I was working as a traffic warden I was working alongside a guy from Poland. I can't remember if he had a Bachelors degree or a Masters degree in economics but back Poland he worked as a bank manager. However he'd moved to the UK because he could earn more money as a traffic warden there then he could as a bank manager in Poland.

Although he was a nice guy you always got the impression that he'd much rather be working in a field he'd spent years studying to become expert in and then go home at night to his wife and children rather than getting sworn at by British motorists. By the same token Poland clearly has more need for skilled economists and bank managers than Britain has need for traffic wardens who can quote John Locke at you.

A new EU member state that has suffered particularly hard from the mass of emigration is Romania.

Since becoming an EU member state some 2.5% of Romania's adult population have left to find work in other EU member states. This has resulted in some 350,000 Romanian children effectively becoming orphans as they're raised by grandparents and relatives or left to fend for themselves as both of their parents leave to find work.

The fate of what have become known as; "The Left Behind Children" is such a concern that it has become an issue for the United Nations Children's Fund (UNICEF) amid fears these unattended children could be subjected to exploitation - particularly sexual exploitation.

The Romanian government has also been forced to mount a campaign urging parents to stay Romania to look after their children. That actually led to some trouble at the 2015 Eurovision Song Contest when Romania featured that overt political message as part of their entry.

However I notice in a worrying sign since then the Romanian government are no longer urging parents to stay in Romania. Instead they'll now settle for the parents simply telling the school who'll be looking after their children while they emigrate to find work.

The EU's migration problems largely stem from the fact that it has simply expanded far too fast. As a result you get this huge disparity in wealth between the older western EU nations and the newer eastern EU nations.

Part of the thinking behind the free movement of people is that as some people travel from the east to the west to find work the remittances they send back home will help close this wealth gap. It is just that this is happening on a far larger scale then anybody imagined and it now seems to be causing more problems than it is solving.

So for a good number of years people have been bouncing around the idea that rather than giving new EU members immediate access to the free movement zone the EU first sends them a lot more assistance money. This allows them to close the wealth gap reducing the mad rush of people flocking to other EU member states once they are granted access to the free movement zone.

So this idea of the UK paying a block tariff in return for some controls on migration might not just be a solution for the UK's future relationship with the EU.

It may even be a future direction for the EU itself with other member states paying a block tariff on top of their usual budget contribution is return for being able to limit certain groups of workers from specific new member states.

This will help reduce the wealth gap between new and established member states and the social problems it causes. I certainly consider the likes of Marine to be a social problem.

20:55 on 5/12/16 (UK date).