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No libertarian Brexit

Summary:
Some people argued that Brexit would free Britain from burdensome EU regulations, allowing it to become a sort of Singapore of Europe.  In 2018, I expressed doubt that this would occur: It’s fine to talk about the “will of the voters”, but precisely what version of Brexit did they support?  If it’s the Singapore version, then why do British voters consistently support politicians who favor big government and lots of regulations?  The fact is that people voted for Brexit for many different reasons, and under a representative democracy it’s up to the elected representatives to implement the actual policy. This is from today’s Financial Times: In 2017 Mr Johnson and Michael Gove, a fellow Brexiter, used their positions in Theresa May’s cabinet to urge the then prime

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Some people argued that Brexit would free Britain from burdensome EU regulations, allowing it to become a sort of Singapore of Europe.  In 2018, I expressed doubt that this would occur:

It’s fine to talk about the “will of the voters”, but precisely what version of Brexit did they support?  If it’s the Singapore version, then why do British voters consistently support politicians who favor big government and lots of regulations?  The fact is that people voted for Brexit for many different reasons, and under a representative democracy it’s up to the elected representatives to implement the actual policy.

This is from today’s Financial Times:

In 2017 Mr Johnson and Michael Gove, a fellow Brexiter, used their positions in Theresa May’s cabinet to urge the then prime minister to pursue a robust Brexit, in which Britain could adopt “pro-competitive regulation” and tax “simplification”. Some Conservatives cited Singapore as the kind of free market idyll they envisaged after Brexit.

But Mr Johnson has always been ideologically nimble or, as the former Tory deputy prime minister Michael Heseltine calls him, “the most flexible politician in modern times”. Realising that his new voters have little enthusiasm for a small state and aggressive deregulation, the One Nation vision Mr Johnson now offers is one in which the state actively intervenes to promote economic recovery. He is offering higher spending, particularly on infrastructure, and has dropped a previous commitment to cut taxes for higher earners.

Although Mr Johnson insists on the “right to diverge” from EU regulations, his ministers say they will “not diverge for the sake of it”. Indeed, the prime minister argues that he wants the right to set tougher regulations on workers’ rights and the environment than those agreed at a European level.

I expect Britain to gain little from Brexit.  It won’t be a disaster, but Britain’s GDP growth will likely be slower than otherwise.  Yesterday, the Conservatives announced that part of the railway system will be nationalized—an item that was also on Jeremy Corbyn’s agenda.

PS.  As for infrastructure, this doesn’t look good.

No libertarian Brexit

Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment". In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

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