One of the rules of economics I learned fifty years ago was the relationship between Supply, Demand and Price. It seems that Iain Martin has forgotten what he was also taught in his desperate scramble to find a Brexit Benefit. One of the reasons that Margaret Thatcher was a great supporter of Free Trade was that she knew that if you increase Supply competition will lead to lower prices and better products. This rule applies to all the Factors of Production, including Labour.
The artificial restriction of Labour supply caused by Brexit is having a devastating effect on labour availability and costs. And on quality. Making it easier to become an HGV driver is a quality reduction and irresponsibly unsafe.
The way to ensure that workers have higher disposable incomes is not to close labour availability but to raise the minimum wage and to reduce taxation. And to rethink what “employment” should be. Proper jobs with proper contracts and proper worker representation and collective bargaining.
All economies have unique characteristics where skills, social priorities and restraints are concerned. The larger the labour pool the greater is the employer choice. Immigration widened that choice and furthered growth both new workers from the Commonwealth and Europeans using their Freedom of Movement rights contributed to national wealth.
There is almost a nineteenth century mercantilist feel to Brexit Britain – certainly as far as labour is concerned. Who would have thought that a country that once lead the world on Free Trade would become a closed society, denying itself labour choice ?
To argue that restriction on labour availability is beneficial you have to argue that thirty countries across Europe participating in Freedom of Movement (including some like Switzerland and Norway not in the EU) are wrong. And Little England is right. Ha !
One thought on “There is almost a nineteenth century mercantilist feel to Brexit Britain – certainly as far as labour is concerned”
In the nineteenth century, the labour supply was abundant. Unskilled workers mostly starving flocked into the cities from the countryside in pursuit of higher wages and found only poverty, overcrowding and degradation. Child labour was common. Britain is not quite there today.
One of the greatest barriers to economic growth is the lack of a large flexible labour supply. The government has not shown any indication they understand that. Their answer is the reduction of qualification standards. That is just insane and irrational.
Brexit is the dominant ideology in the government’s every policy. Reason and pragmatism are bye-passed in favour of keeping the faith pure. In fact, it’s become almost a competition for who in the government can keep the faith most. Any deviation will get you fired.
Eventually, the UK economy will become sclerotic. Labour and supply shortages in every sector will grin down industrial output and weaken the services sector.
There were very good reasons the Uk originally joined the common market. Those reasons still exist but more so.
The sad thing is it will take a number of years before the British people realise they made a ghastly mistake voting to leave the EU. By then it will be far too late. Britain will be reduced in every way as Europe marches forward. It’s already a sad caricature of what the nation was or could have been. It did not need to be like this. One day the people who caused it will be hung out to dry.