Brexiteers come in all sizes and shapes. Some primarily object to Brussels imposing rules and regulations on us. Others complain about surrendering our jobs to immigrants from the EU. Another group may argue that we British are distinct, so why should we throw in our lot with the foreigners who appreciate none of our traditions and way of life.
I do not belong to any of these groups. I am a development economist. I believe in the complementarity between trade and labour flows – especially so in the case of trade in services that is on the upsurge. I believe that immigrants, especially skilled immigrants, have a lot to offer to the UK economy, especially so for an economy with a high population dependency ratio — one fifth of UK’s population is of retirement age.
Recent policy measures under discussion, such as according permanent residence status to EU immigrants in Britain and the relaxation of regulations on doctors and nurses from non-EU countries, attest to the contribution of immigrants to the British economy, especially in the health service and education sectors. These measures are pragmatic and vital for the growth and development of the economy. According permanent residence to EU citizens resident in Britain is but fair and essential for the promotion of trade in goods and factor flows between EU countries and the UK post-Brexit.
Indeed, one of the reasons for my advocacy of Brexit is the current immigration policy that discriminates between EU and non-EU immigrants. The policy discrimination between economic agents from the EU and outside the EU is not only inequitable but also inefficient. It is inefficient as it reduces the pool of skilled labour and the choices open to employers in the labour market. It is inequitable in that it accords priority to the geographic origin of prospective immigrants rather than their skill endowments.
Admittedly, the UK, if it so wishes, is free to liberalise inflows of labour from non-EU countries too. However, such a policy would cause havoc in labour markets with excessive inflows of labour. The pragmatic alternative would be to organise labour inflows, irrespective of their origin, with a set of rules and regulations that promote both equity and efficiency. The regulations in place that require non-EU immigrants – such as nurses and doctors – to undergo various tests, pay an annual visa fee, a medical fee and earn more than £32,000 per annum to gain permanent residency, are inequitable and all but prohibitive. It is odd that whilst immigrants from Commonwealth countries are subject to these rules and regulations, they are accorded the privilege of exercising their franchise in not only elections but also in referendums. A strange case of representation with taxation but no rights.
It is odd that the UK should downgrade trade and factor flows with Commonwealth countries, most of which – especially India – have, for historical reasons, adopted British traits and institutions; use of the English language for business, government ,education, and the judiciary; British style business institutions; and cricket (a universal religion in India). Indeed, as an Indian historian has remarked, India – a highly non-homogenous country with several languages and innumerable Gods – is held together by English, cricket and Lata Mangeshkar – a background singer from Bollywood and an avid fan of cricket.
Paradoxical as it may seem, the economy of India fulfils most of the criteria for an integrated economic union, much more so than the EU. Trade between the 29 states and 7 centrally administered territories that constitute the Indian Union is free of all restrictions. Monetary policy administered by the Central Bank of India is coordinated with fiscal policy administered by the Ministry of Finance. Income tax and customs duties collected by central government are distributed to the state governments based on criteria reviewed and administered by the finance commission every five years, while the Government has recently devised a value added tax with uniform rates across the 29 states. The supreme court is the highest law-enforcing body in the state. History and socio-cultural ties with the UK have endowed India with the sort of institutions that underlie a successful economic union.
I have chosen to be a Brexiteer for yet another reason. The EU is an odd institution that combines free trade with protection, a policy framework referred to by trade economists as a second best policy. The common external tariff on imports, coupled with free trade between member countries, is hardly the sort of policy that would augment the welfare of the relatively low-income citizens of the EU. Much more disconcerting are the heavy subsidies to agriculture, coupled with tariffs on imports from non-member countries, that have lowered growth and development of several developing countries that export agricultural products.
In sum, I am a Brexiteer because of:
- The UK’s immigration and trade policies that discriminate in favour of the EU and against Commonwealth countries
- The nature of an EU that straddles protection and free trade, with its economic policies impeding the international trade of developing countries
- The UK’s neglect of Commonwealth countries, especially India, whose economic and political structure it has shaped
So what will happen after Brexit? Whatever the nature of Brexit, the UK’s trade and international factor flows will undergo a period of adjustment. The UK will be forced to seek new markets or extended markets in emerging economies, including Commonwealth countries, China and the USA, whilst maintaining trade ties with the EU, albeit at a lower level than at present. The adjustments may not be all that painful for the UK, for it will be all too familiar with the institutions and the cultural traits that govern its trade and capital flows with the non-EU countries, principally those in the Commonwealth.
The light-hearted comment of a former British politician that the national dish of the country is Chicken Tikka Masala captures it all.
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