19 December 2019

The case for a Singapore-on-Thames Brexit

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According to the European Union any trade or other deal post-Brexit should keep current labour and environmental regulation so that “UK businesses cannot outcompete their EU rivals through deregulation”.  That raises an interesting question – why should the UK not do precisely that and outcompete our continental neighbours?

Don’t think of this as just a matter of rivalry though. The real consideration here is what the best policies are to raise our own standard of living?

The answer is obvious – dump those unnecessary regulatory constraints. The EU’s position alone underlines that its own bureaucracy is an economic burden – if it were not, why would changing our regulations put the UK at a competitive advantage?

A deregulatory Brexit is often witheringly referred to as ‘Singapore-on-Thames’. The likes of Will Hutton insist that this is not a serious option for the UK.  Well, why not? GDP per capita, (accounting for price differences across geography) in Singapore is $57,714, in Britain it’s $39,720. Would British voters really look askance at a 50% pay rise?

Of course, any opinion polling will show a positive answer to carefully posed questions like “Should we protect workers?” or “What about the environment?” but such simple questions rarely tell people the costs of following a particular. The cumulative costs of an over-regulated economy are considerable, as the high incomes of countries such as Singapore make amply clear.

It’s not even that Singapore is particularly laissez-faire, they just make sure that government does what must be done by government, effectively, and then stop. Their healthcare system is as good as any in the world and half the price. They do this by encouraging competition within the system, outsourcing as many services as is physically possible with the government picking up the bill for anyone really ill and individuals paying for their own routine care. That means they actually have state health insurance, rather than state health care per se – a world away from the monolithic approach of our own National Health Service.

The Singaporean approach to housebuilding is interesting too, the government does near all of it. Then immediately sells it off rather than maintaining political control through acreages of council housing.

Why isn’t any of this desirable? Well, because it’s an unpicking of the varied compromises and political power plays that have been made over the past 45 years of European Union membership.

Now, clearly housing and healthcare are not EU competences, but there are certain underlying assumptions built into the bedrock of the current political settlement. The precautionary principle, those strong protections for workers, the idea that all want to be social democrats. The idea of a country which had formerly signed up to this, then left and prospered would be a threat to everyone else succumbing to the institutional inertia.

That is, of course, the major danger to the current continental settlement. Not that Britain leaves, nor that it stops paying in. Rather, that leaving and doing well by rejecting those bedrocks of the current system emphasises the long-term costs of the EU’s way of doing things.

All of which seem to me to be an excellent reason for instituting something like Singapore-on-Thames.

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Tim Worstall works for the Continental Telegraph and the Adam Smith Institute