FUDing BrExit

My usual pattern is to lay the basis with detail, then build to the “punch line” at the end. I prefer foundations first, generally. In this case, I’m going to “do it backwards” since the complexity hides much in the foundation, and knowing what you are looking for in the data helps to see it. So first up is the conclusion, then we’ll explore some alternative detailed views of the data.

FUD – Who Wins if Britain Stays?

FUD is the abbreviation for Fear Uncertainty and Doubt. It was a widely recognized strategy used by I.B.M. to sell mainframes in the ’70s and ’80s. “Nobody ever lost their job for buying I.B.M.” not so subtly said if you bought Amdahl (or any of the half dozen other sellers of ‘me too’ mainframes) you could be fired if anything didn’t go perfectly. Generally, the strategy worked. Now we see FUD used as a strategy all over the place. “Be afraid, be very afraid” of all sorts of things someone wants you to buy. From “Don’t insult muslims, they might get angry” to “don’t eat eggs you might get a heart attack” to “don’t use oil, you could be burning up the planet”. Always be on the lookout for FUD. The FUD Factor is gigantic.

In BrExit we see a lot of FUD, IMHO. From ‘it will wreck the economy’ to ‘the EU will collapse’ to, well, it’s a long list. I’m only going to look at the economic issues, and in particular, the idea that the British Economy just can’t hack it in the greater world and is woefully dependent on the EU to thrive. The implication is that Britain exports a LOT to the EU, that the EU doesn’t export just as much to Britain, and that Britain can’t possibly find another partner (doubt) to trade with nearly as much; so will have economic catastrophe and hard times. (fear)

I really like looking at the “negative space” of problems. Everyone is “panties in a bunch” over exports from Britain. But what about imports? What does the EU stand to lose if it freezes out Britain? Hmmm?

Graphs in this article come from the Harvard Atlas of Economic Complexity. I’m just going to give one link, and you can play with all the knobs to get the rest yourself:

http://atlas.cid.harvard.edu/explore/map/export/gbr/show/all/2014/

From where does Britain Import goods?

From where does Britain Import goods?

Their image export function doesn’t handle the legends very well, but “red” is a lot, and yellow not so much.

Notice that THE country shipping LOTS of stuff to the U.K. is Germany. They are the ones with the most to lose if BrExit happens, as they lose their captive export market. Next behind them are China and the USA. Outside the EU, so no real dog in the fight. Yet it does say that anything the U.K. needs to import to replace EU exports is just one boat ride away in the USA and China. You might prefer a French Wine, but California wines are just as good…

Now lets look at the other side. Where do UK Exports go? What might get ‘cut off’ in a messy angry BrExit?

UK Exports Map 2014

UK Exports Map 2014

Inside the EU, the biggest customer is Germany. Second is France. Yet at about the same “color” we have the USA and China. Outside the EU… Hmmmm… So it looks like Britain does a dandy job of exporting to non-EU places.

Furthermore, it looks like if Germany and the EU gets “pissy” about trade, Germany has as much or more to lose on their exports to the UK…

Frankly, to me, it looks like Britain can easily swap USA for Germany and China for France and dump all the EU crap. But I’m just an uninvolved observer from the other side of the planet…

In no case does this map show any trouble for the U.K. to export to non-EU countries, and it does show that Germany (and to a lesser extent France) has as much on the line as Britain in any exit negotiations. Britain can bargain from strength in a BrExit. Where’s the FUD in that? (Maybe that’s why it has not been mentioned?)

Zooming In

We can look a bit closer at the “comes from goes to” maps.

Where did the U.K. import from?

Where did the U.K. Import FROM in 2014?

Where did the U.K. Import FROM in 2014?

Where did the U.K. export to?

Where did the U.K. export to in 2014?

Where did the U.K. export to in 2014?

Taken together, there is a LOT of EU in the Imports, somewhat less in the exports, to my eye. Switzerland just withdrew their application to join the EU, and IIRC Sweden is outside. There is a net imbalance with China in the favor of China, and the USA imports more from the UK than it exports to the UK, so we net fund the UK. Germany has a 5% surplus vs the UK, so in any trade shut off, they lose, Britain gains. (Though The Elite might need to give up their new Mercedes in favor of a U.K. brand…)

I would further point out that NOT having the EU taxes and legal entanglements in the way might well lead to easier and larger trade with the U.S.A. and China. I’m certain it would improve trade with Australia, Canada, and New Zealand (who had trade drop off when the U.K. joined the EU). New Zealand lamb is great, BTW…

But What Products

It’s all well and good to have these gross aggregates, but just which industry gets its ox gored? Eh?

What did the U.K. Import in 2014?

What did the U.K. Import in 2014?

What did the U.K. Export?

What did the U.K. Export?

These two maps have a lot in common. Gold, oil, oil products, cars, car parts, jet engines (Rolls Royce sells world wide, the USA buys a lot of their jet engines). Gold is a global market. Oil is a global market. Cars are a global market. Jets are a global market. Hmmmm…. Oh, and drugs / medicines too. Does anyone really think that UK Oil and Oil Products would not continue to be in demand in the R.O.W. (Rest Of World) if the EU decided they didn’t want them? Or gold and gold products? (My read on this is that the UK looks to import raw gold and export processed goods like jewelry, but that might just be me “projecting” based on the U.K. not being known for gold mines and exports of gold being more valuable than imports…)

It also looks like the UK net imports computing machinery (that upper left blue block) and next exports jet turbines. So we swap computers for turbines. Much of that, IMHO, will be USA and China trade, since we source computers and are known to buy U.K. turbines.

On medicines: Does anyone really think that if we need an antibiotic the U.K. makes, and the U.K. needs a cat scanner we make, that we will NOT buy the essential drugs and sell the scanner? Really? (The Germans mostly look to be selling cars to the U.K., so for them it becomes “Will you not buy a needed drug because you don’t want to sell V.W.s in Britain?” They do sell Mercedes in the USA, after all.)

Again, the legend doesn’t come across well in these captures. Most of the smaller more colorful “bottom right” are the things folks think about. Fruit and vegetables from Spain and Italy, Italian shoes and French shirts. Basically, that’s in the small scale. Furthermore, people have brand preferences. Folks who wear a particular shoe will not change if it costs 5% more, or less. France will still want to sell wine in Britain and they will still want to buy English beer and Scotch whiskey.
(IF the EU doesn’t want it, I’ll take it!!!)

But can we zoom in even more? What is the “net” for a given kind of product? I can swap English Beer for German Beer if imports get blocked (or taxed too much) but what’s the thing that I can’t swap for a domestic product? What is the net U.K. export that MUST be sold “somewhere”? The net import that MUST be sourced?

What products did the U.K. net Import?

What products did the U.K. net Import?

It looks to me like computers and similar goods, crude oil & gas, wine, trucks and some car parts, and then a smattering of particular agricultural and soft goods. All widely available on the global market. It might be interesting to “click the boxes” on the original and go into even more detail, but I’ll leave that for others.

What about “must sell”?

What products did the U.K. net Export?

What products did the U.K. net Export?

Oh, gee, Gold. That will be hard to sell /sarc;
(Saudi Princes, Russian Oligarchs, and Chinese Party Members abound).

Metals of many kinds – global market.

Alcoholic Preps for Beverages? One presumes that mass of odd bottles behind bars world wide to mix up particular drinks… Folks in Mexico and vacationing in Australia will continue to want their favorite Gin and Tonic and their preference in “bitters” will not change…

Similarly, aircraft parts will still be needed by those aircraft and the demand for centrifuges and specialized chemicals is global.

I don’t see anything on that list that shouts “depends on EU or dies”.

In Conclusion

Looked at from this 50,000 foot elevation, a BrExit is most likely to be a pain in the tush for Germany, not Britain. Germany needs to export cars, a lot of them. France needs to export wine. THE worst case is the UK is shunned, Germany has a rise in car inventory while Britain learns to live without Mercedes and V.W. (it isn’t like there is a shortage of car suppliers in the world) and you get your wine from California, Australia, and South Africa for a while. (Though I have to promote the New Zealand whites… very German style! And the South American, especially Chilean, reds nicely compete with Italian and Spanish… but I digress)

To me, it looks like there is a giant global market being given second place in the mindshare (not just the USA and China, but the whole Middle East buys a lot of U.K. goods, and then there is the Commonwealth to revive… shunning Australia, New Zealand, and Canada not to mention India as you did on E.U. entry was a big loss.)

The “risk” looks to be pissing off Germany and not buying as many German cars and French wines. Maybe getting your fresh vegetables and grains from a bit further away (assuming they decided not to sell, so as to remove their nose from their own faces…) But we already get vegetables and fruits from all over the globe, and Australian wheat is shipped globally. (Don’t know if they grow barley, but Canada does, so no worries on the mash, eh?)

Oh, and per “trade deals”: I’m pretty sure all of us on this side of the pond and down under would be happy to sign an emergency zero tariff trade deal, if asked. Heck, just a ‘glue on’ to NAFTA would get you all of North America. “The United Kingdom is added to NAFTA” doesn’t take long to write or sign. (But frankly, I don’t see that as needed unless you wanted it.)

So that’s my take on what these charts and this economic data says. There is far more FUD than truth in the Exit Scare. The British Economy is net gaining vs the Rest Of World, and net losing vs the EU, with Germany the big winner, and that is why Germany and the EU is so against a BrExit.

IMHO, you ought to “feel free to jump on in” the global swimming pool. The water’s fine! ;-) We will welcome you with open arms (and with open wallets… Tanqueray and Tonic, please…)

Or you can stay tied to the EU. Your choice.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
This entry was posted in Political Current Events, World Economics and tagged , , . Bookmark the permalink.

23 Responses to FUDing BrExit

  1. cdquarles says:

    Not only do they sell German auto makes here, we also *make* them. There is a Mercedes plant 80 miles from me. There is a BMW plant 400 miles from me. There is a VW plant 200 miles from me. There is a Honda plant 40 miles from me and a supplier plant 2 miles from me. Heck, they just put up a new warehouse half of a mile away from that plant this spring!

    [Pet rant time. “The US does not manufacture anything any more” is *FALSE*. There are farms and mines and factories all around me. The local stores all carry stuff *MADE IN THE USA*, especially Wal-Mart, which has had a buy local whenever possible policy from its inception.]

  2. Steve Crook says:

    I’d agree, the UK can perfectly well go it independent of the EU. My main concern is that Euroland requires a federal state if it’s to survive and the UK is set against that (no-one would dare suggest joining the Euro for the foreseeable). Which means that, inevitably, we’ll either be drawn into policies we don’t want and that don’t suit us, or, increasingly isolated as the bulk of the EU merges into the USE or whatever.

    Mind you, I’m not sure how well ever greater union will work once the Germans realise they’re going to be paying pensions in perpetuity for the bottom half of the Euroland economic table.

    Better to leave now, before there’s more integration, than later when we might have lost our ability to work independently.

  3. gareth says:

    The economic stuff is interesting, but not the point. Which is: do we want to be ruled by a foreign supra-national state?
    On the Yes (Remain) side we find all the establishment Westminster Bubble (who gave away our sovereignty, but make a nice living from the status quo, without any real effort being required), the BBC plus the Green Blob and other campaigning groups (who all receive nice bungs from the EU), “The Vampire Squid” et al, your own Dear President, and of course all the EU apparatchiks. Their campaign has been characterised by FUD on a massive scale, to the extent that the chancellor of the exchequer has threatened to trash the economy in the event of a “Brexit” vote. And even before that poor girl’s body is cold, we have EU loving folks (e.g. Alain Juppé, the Grauniad newspaper and other great and good, ) saying that Jo Cox’s death it’s all Brexit’s fault, and the BBC – while not of course exactly saying this – playing the same mood music wall to wall.
    On the Leave side we have a bunch of “High Publicity” Westminster Bubble chancers talking mostly complete bo****ks. The official “Leave” campaign appeared out of nowhere – the main man an old “Bullington Club” drinking chum of our Prime Minister, established liar, chief of the “Remainers”: false flag? – who knows?
    And then we have the population of this benighted land. Almost none of them think the EU is a “good thing” – the division is between those who are convinced that we must get out of this disastrous, torpid, failing “state” and those who are so worried by the FUD (and generally know little about how the EU actually works) that they will vote “Remain”. And maybe 20+% who are undecided and will carry the result.
    Imagine that the USA Federal Government had given away it’s (and the stares’) rights to make their own laws to a supra-national organisation made up of failed politicians and bureaucrats from Canada, Mexico, Argentina, Chile, Venezuela and sundry other states – would that be a “good thing” – or (if your political masters were kind enough to allow a vote) would you vote to leave?

  4. Another Ian says:

    Yep. Australia does grow barley

  5. Another Ian says:

    And

    “If I Were President, On The Day After Vote for Brexit…”

    http://www.coyoteblog.com/coyote_blog/2016/06/if-i-were-president-on-the-day-after-vote-for-brexit.html

    With a link to good reasons to leave

  6. Adrian Camp says:

    Nothing much will happen to Britain’s trade. We trade fine now. Speaking as a member of a six-person firm exporting goods and services to anywhere in the world from a rented warehouse in Buckinghamshire we send people stuff and an invoice. We don’t care where they are. They send us the money via electronic banking. Shipping agents take care of the complications. Oh, now I’m most of the US subsidiary. International trade? Easy in the age of the internet.

    Nobody is going to impose massive tariffs on the UK. If they do as EM points out, trade will self-adjust. In a year or two things will be no worse and probably far better. We’ll have our sovereignty back with no economic downside.
    Now I wonder why some organisations are just so desperate to paint this as a tragedy if we leave. Who are they serving by doing that? Yes BO, I mean you.

  7. BobN says:

    I think the world is waking up to the evils of globalism and realize they have given away their sovereignty inch by inch. The Brits most likely will be able to reach new trade agreements, but if not the drag from the lower EU being gone will about even out their economics.

    If Trump is elected I think there will be a lot of trade rewrites, so that may work out well for the Brits.

  8. p.g.sharrow says:

    One other thing;
    Prophecy is that the next leading world Empire is Anglo – American. Can’t have that with Briton in the EU… ;-)…pg

  9. Adrian Camp says:

    Gareth, I wonder whether both campaigns have been false flags, so useless have they been. The Remain campaign just doesn’t seem to understand the people at all. All their initiatives have the reverse effect. Overdoing the scare will not work on Brits.

    A word about free trade agreements. All you need is one sentence saying we will have free trade. In real life they then have 5000 pages of special-pleading exceptions and fixes for multi-nationals. That’s the bit that takes ten years to negotiate and cannot be revealed to the plebs.

  10. Poly says:

    Hey Chiefio, thanks for a very good economic view on Brexit.
    I have enjoyed your realistic economic/trading oriented posts.
    How about turning your brainpower and keyboard towards the effects and predictions of volcanos and earthquakes?
    Considering the huge potential economic and humanitarian risks of these natural events I am surprised there is not more interest in potential natural cycles and prediction possibilites out there.

  11. Chuck L says:

    Considering what Merkel has done to Germany and by extension, the rest of the EU, leaving the EU will be the best thing they can do and I don’t give a crap what happens to Germany. I will be visiting Scotland for 11 days starting on Monday, looking forward to talking to the locals and being there in the midst of the Brexit Tempest

  12. E.M.Smith says:

    @Gareth:

    Did you mean “bollocks”? It is ok to say that, as the wordpress filters seem to not speak proper British :-)

    BTW, the current fad here is to sign “free trade agreements” that put an unelected supranational tribunal in authority over US law. So far most have not caught on, but TPP is in trouble as some have started to notice. IMHO, this is a ‘boil a frog’ process akin to the EU destruction of national sovereignty. ..

  13. gallopingcamel says:

    Bureaucratic tyranny through a myriad of regulations is getting to be a serious problem in the USA but you can look to Europe to see how bad it can get. The EU is doomed to collapse simply because it stripped power from institutions that have been operating for centuries. The ship is sinking so should one exit the EU now or wait until it goes down?

    The British seem to have had enough already. They have recognized that the EU is an over-centralized bureaucracy dedicated to rule making that destroys freedom and creativity. That accounts for the dismal economic performance of the Eurozone.

    IMHO the UK would do well to get out now rather than wait for the economic collapse that is inevitable absent major reforms. The BREXIT vote would not be taking place if the EU had something on the lines of the 10th amendment to the US Constitution that states:
    “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

    The USA is in peril given our failure to respect the 10th amendment as evidenced by the continued usurpation of powers by the federal government.

    The trouble with centralizing political power is that it becomes tyranny comparable to what caused Americans to reject the rule of king George.

    I wonder what will happen when Texas holds a TEXIT referendum. Will we make war on them as Lincoln did or will we let them go?

  14. E.M.Smith says:

    @Poly:

    Because better folks than me already do it. At best I could point at them and say “What he said!”.

    Short term, lunar maximal tides correlate. Longer term, more of a metronome. On the several hundred to thousand years scale, great quake and volcano cycles tend to fairly consistent periods. I’ve noted this from time to time. Like:

    https://chiefio.wordpress.com/2011/03/15/1707-hoei-49-days-fuji/

    https://chiefio.wordpress.com/2012/03/31/1866-odd-coincidence/https:

  15. E.M.Smith says:

    @G.C.:

    Texas will never have a TEXIT vote… they could never handle the 200,000,000 new ‘citizens’ flooding in from the other States ;-)

    @P.G.:
    I know I asked this before, but I forgot the answer…. “Which prophecy”? Bible, Nostradamus, ??

  16. p.g.sharrow says:

    @EMSmith; while I have considered many such authors, Nostradamus is my favorite.
    Examination of these writers is much the same as bible passage reading, you must attempt to get in the head of the author and grasp intent as well as the words. The words of Nostradamus are the second most published works of all. Only the Christian Bible exceeds it.
    Among the words of Nostradamus was the passage that said 500 years after his time his words would be correctly be interpreted, not by an educated man, and it would be a great comfort to the people of that time. Now is that time, 500 years after his time..
    Remember that the French of Nostradamus was of the 15th century and not modern French that most of the modern interpretations of his passages are built on. He said he purposely wrote his Quatrains in a manner to confuse members of the Inquisition, but still be useful to those that inquired after him. I have found that an English Dictionary with the roots of development of English words to be most useful to me as I do not speak or understand modern French.
    The most telling lines to me were that at the end of the 20th century in the new city of the new world two great stones would crash/clash with a great loss of life. The information is contained in 3 sentences in three Quatrains. While the Quatrains are made up of 4 lines. They are actually 2 sentences, generally not about the same thing.
    Nostradamus said he collected his notes about his visions for 1 astrological cycle, 780 years. 780 years of predictions, 780 Quatrains that give time, place and event for the key points over 780 years, if you can graph it out.:-) or GROK it out…pg

  17. Graeme No.3 says:

    p.g.s.
    Obviously I failed to delve deeply enough into his predictions. I though that it was, to quote an ex-PM of Australia talking about AGW, “a load of crap”.
    Firstly, the quatrains usually claimed to be the most accurate may not have been his, but were included in the 11 year period from his death to their publication (to add authenticity). In the sixteenth century. Contrast the dodg recorded success since then. Also brush up on “delphic predictions”.
    Secondly, by your reckoning you have 45 years to go before the “true meaning is revealed”.
    Thirdly, the meanings have been changed to adapt to the times. The “three brothers” may have been the Kennedys but more likely were the three kings of France in the sixteenth century when he was ‘prophetizing”. And “the Bear” might be Russia, but at that time probably meant Saxony or the Commune of Bern, which had in the recent past supplied mercenaries in the wars conducted in the recent past by France in what was eventually to become Italy.

    On the other hand, if you tell me that David Cameron is behaving as he as he is because of a belief in Nostradamus then I will accept that as the only logical explanation, baring insanity.

  18. E.M.Smith says:

    @P.G.:

    I have a copy of side by side original French and English. They track pretty well IMHO. The old French isn’t that strange, though place names have changed. I’m good for about 10 pages of it, then the mind wanders :-)

    I just can’t make as many ‘leaps’ with it as others can. Like turning Hister to Hitler, when Hister was a river then. So I end up with blocks of loose ends and a buffer overflow…

  19. richard ilfeld says:

    There are literally dozens of things one could identify as “THE thing wrong with progressive governance and thought”. When a family of philosophies produce results from the Soviet Union to Venezuela, there is fertile ground for criticism. In this case, the unaccountable autocracy can be a hazard in many ways. But if one is looking at the future of an economy, there seems no greater hazard than the left, having a tendency to identify victims, chooses not to help them in productive and construction ways but to coerce the economy into a functionless pretzel in the name of “fairness”, I’m not that concerned about the next decade. I’m concerned that the next generation of Brits have an opportunity to excel in the world as their forbearers did for many centuries. Stagnation, decay, and ruin are the hallmarks of a progressive regime and the EU has not disappointed. Banding together for trade strength is a synonym for protectionism in the progressive lexicon. Perhaps Britain can and will fail on its own, but I consider “on its own” to provide a better opportunity than the EU.

    Note please that with the financial consumer ‘protection’ and destruction monstrosity that Ms Warren the faux native America has created, we now have the first of our un elected, unaccountable, not voted for or vetoeable EU type organization, and it is having the predicted result.

  20. p.g.sharrow says:

    Michel de Nostredame, 1503 to 1566, began publishing his Quatrains 1555, the last of them was published in 1568. He said 500 years from his time, not after his time. As to the exact meaning of that is anybody’s guess. For the correct interpretations, that remains to be seen. I have seen/read some hints of how that may be done but nothing solid yet. Kind of like Climate Science, some hints at understanding and lots of BS. Do not demise everything out of hand out of ignorance but some amount of skepticism is a good thing as you learn fact from fantasy. Often the facts turn out to be stranger then the fantasy. Logic is not always the best way to the solution to a problem. Sometimes there are far too many unknowns. Sometimes you do a SWAG and then see if it sticks together. When it doesn,t discard it and start over.
    @EMSmith”Eyes glazed over and Buffer overflow” ;-) I know that feeling. I have several books on Nostradamus and I dread diving back into them to gain more insight into his thought process separated from the books author’s view points…pg

  21. A C Osborn says:

    Chefio, don’t forget that we also have to pay £billions for the pleasure of being in the EU with it’s stranglehold of Rules, tarrifs and laws.
    The flooding in the UK has been as a direct result of our politician’s over zealous application of EU “Environmental” dictats.
    Our closure of perfectly good Coal powered Generators are due to applications of EU dictats on Climate Change and Environment.
    Our conversion of our biggest Coal fired power stations to burn US forests (woodchip) for the same reason.
    Our politicians have been infected by EU madness, but actually have a worse case than they do.
    Our spending billions on useless Wind Turbine farms for the same reason.
    Our Fishing Industry has gone, our ship building industry has gone, our politicions have been selling us down the river for decades.

  22. p.g.sharrow says:

    Remember! the infection of Liberal Progressive thought began in the salons of England:
    https://en.wikipedia.org/wiki/Thomas_More
    It has infested the Universities of western training for over 300years.
    More was a contemporary of Nostradamus, 7 February 1478 – 6 July 1535)
    In his quatrains Nostradamus said that The philosophy of More would be discredited during this era.
    We are now seeing the cracks beginning to form as the common people really feel the pinch from government following the lure of socialist thought toward it’s end game. Once again socialists are crashing the system as they run out of other peoples money. But will educated people get the message this time? or rewrite the history books again, to paint themselves as the saviors. Maybe the Educated Titles will lose their luster and authority as no one believes them anymore. Even “Holy” science has succumbed to the lure of other peoples money and sold their honor…pg

  23. Pingback: BrExit – Can’t Sell to EU Lie | Musings from the Chiefio

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