Brexit: The forgotten option

Now, I am not normally the person to rush to the front of the queue offering ideas to help the conservative government bail itself out from an inevitable political meltdown. However, in a deep-felt belief that we all need to put the needs of the country before our political self-interest, I wish to suggest an option that not only offers a lifeline to Theresa May but also provides the hope for a brighter future for our country: Albania Plus.

Think about it. At a stroke, we would do away with all the problems of an advanced economy. We would phase out high-tech industries, scientific advancement and all that nasty complicated stuff associated with the ‘supply chain’. Once we stop trading as an advanced international economy, we will no longer have endless streams of imports and exports travelling the highways and byways of the country.  This will not only reduce congestion on our roads, but it will also avoid the need to turn the M20 into a lorry park. Problem solved.

In the lead up to the referendum we were told that Brixit would bring multiple benefits: improvements to the NHS, reduced immigration and we would ‘take back control’ our laws.  No more meddling by bureaucrats in Brussels!

Albania Plus meets all of these promises. First, the NHS. As we transition to an Albanian-style economy, we will see a massive reduction in obesity. The savings to the NHS will be £350m a week. Put that on the side of a bus. Pushing handcarts down rutted roads will get people out of their cars and into the fresh air. Unhealthy diets will be replaced by cabbage, carrots and for the lucky few, extra cabbage.

Secondly: reduced immigration. Have you ever been irritated by someone speaking foreign when you stood in the queue at Waitrose? Few things can be more annoying. It’s not just that they come over here and take the jobs we don’t want; it’s the fact that the queue would be shorter if they went home. If we adopt Albania Plus, they will be jumping onto lorries at Dover faster than you can say ‘third-world economy.’

Thirdly: take back control of our laws. This is the big one. For too long this country has been shackled by regulations that told us how we should treat our workers, set standards on the quality of food and imposed legal obligations to protect the environment. Nonsense.

As the Conservative government fumbles for a way forward, the option of Albania Plus looks as though it could be the option that allows Britain to once again, take back control.

 

 

* Richard Joy is a member of Green Liberal Democrats

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33 Comments

  • Yeovil Yokel 12th Dec '18 - 11:07am

    I’m in.

  • John Marriott 12th Dec '18 - 11:17am

    Albania? Isn’t that where they once had a king called Zog and isn’t that where our own Norman Wisdom is a Saint? What’s not to like?

  • This article seems like it’s just mocking a poorer country. Not cool.

  • Laurence Cox 12th Dec '18 - 12:02pm

    Albania? I thought that was supposed to be the outcome if Corbyn became PM. Presumably, all the vegans will be happy because no-one will be able to afford to eat meat and we will meet our Paris climate change commitments thirty years early. Bring it on!

  • A another option is letting Remainers have their own way because Brexit has made them really sad and they’ve learned their lesson, honest, and stuff.

  • Peter Martin 12th Dec '18 - 1:05pm

    So you’re saying that EU Membership = “Advanced Economy”?

    If that really were the case why are there so many problems in the EU with constant wrangling between EU Governments and Brussels. The Governments want to expand their economies and Brussels insists on contraction.

    For a small country of some 300k people, Iceland does pretty well. They’ve actually managed to put a few bankers in jail which would indicate that their economy and political system might be somewhat more ‘advanced’ than our own!

    The Lib Dems might want to take a closer look at Iceland. It fits in quite nicely with a ‘small is better’ philosophy. They’ve taken on the US hedge funds and world banks with a remarkable level of effectiveness without being a formal part of of a mega super-state.

  • Nonconformistradical 12th Dec '18 - 1:10pm

    @Peter Martin

    “For a small country of some 300k people, Iceland does pretty well. ”
    Iceland has a ready supply of geothermal energy to supply its small population – that’s why some bitcoin operations take place there.

    “They’ve actually managed to put a few bankers in jail which would indicate that their economy and political system might be somewhat more ‘advanced’ than our own! ”

    If only their banks hadn’t got into trouble in the first place!!!!

  • Peter Martin 12th Dec '18 - 1:34pm

    @ Nonconformistradical

    “If only their banks hadn’t got into trouble in the first place!!!!”

    That’s a good point. There was a desire on the left to make an example of some bankers by putting them in jail for misconduct. We all know who the likely candidates would be. I wouldn’t have lost any sleep about any of them.

    However, doing that would have been rather like blaming a cat for killing birds . That’s just the nature of the animal. It’s the owners who are largely responsible for not keeping them under tighter control. That’s what we, both us and the Icelanders, really should concentrate on doing.

  • Peter Martin 12th Dec '18 - 2:11pm

    “We could not print money” ???

    A far as I know the Icelanders are no different to anyone else in this respect. Their krone is either printed or created in a computer like any other currency. It isn’t guaranteed against anything at at all. I suppose they could think about pegging it to the value of a kilo of cod!

    I’m sure there probably are a few problems left over from the GFC but “We just had to accept the losses, accept a world with much lower real wages, much lower living standards.” ???

    I don’t think so!

    Google { Iceland GDP per capita}

  • William Fowler 12th Dec '18 - 2:53pm

    ““We could not print money, so we had to face the reality. No-one really knows how all the money printing that has been taking place in the major economies of the West will end.”

    I can guarantee that the next crash will be bigger than it should have been had the West actually reformed govn spending and closed down some of the banks (whilst protecting depositors money.” History shows that the market is the market and the more you try to dilute its effects then the bigger the next crash.

    Iceland could have printed more money but the effect would have been to reduce its currency to zero so in effect it couldn’t print more money unless it wanted to move to a barter economy.

    Interesting to see how big a bubble is the UK economy…

  • David Evans 12th Dec '18 - 3:09pm

    Peter, I you have missed the point when you cut half of the sentence out. What was said was “We could not print money, so we had to face the reality.” If I remember correctly, most of the debt of the Icelandic Banks were not in Icelandic Kroner, but in US Dollars and Sterling (and possibly Euros). In addition, you have to remember that “Relative to the size of its economy, Iceland’s systemic banking collapse was the largest experienced by any country in economic history”.

    As you know, printing vast amounts of currency does not work in circumstances where there is significant risk of non-payment of debt.

    Iceland deserves great plaudits for dealing with the reality of the financial crisis. Sadly most other economies including the UK have not, because they really do think that printing ever more money is an acceptable solution.

  • Peter Martin 12th Dec '18 - 3:15pm

    @JoeB,

    Asset prices, of property and stocks , were allowed to inflate rapidly both here in the UK and elsewhere in the world (Australia, the USA, Canada, the EU generally) long before we had any QE. So the two aren’t necessarily connected.

    The appreciation of asset prices is, though, linked to ultra lax monetary policy. Simply, for economies like the USA and UK someone has to do the borrowing to pay the net import bills. If government doesn’t want to do it then someone else has to, and that’s where ultra interest rates comes in. They’ve led to increased private sector borrowing which has have pushed up asset prices and locked out the younger generation from the property market.

    We’ve created a dangerous bubble as a deliberate act of government policy. That bubble will deflate eventually and it will have negative macroeconomic implications for all. You’ll be happy to know that if we do exit the EU you’ll be able to blame it all on Brexit even though the problem was created while we were still a member of the EU.

  • Peter Martin 12th Dec '18 - 3:30pm

    @ David Evans,

    The phrase “printing money” is best avoided – at least when used as phrase of criticism. All modern money is, as I’ve said, either printed or created in a computer. So Governments have to create and spend some money -otherwise none of us would have any. But it should be just the right amount. Neither too much, and so causing high inflation, nor too little and so having a recessed or depressed economy.

    You are quite right about the part of Iceland’s debt that was in a foreign currency. Icelanders can run out of dollars, euros, pounds etc. They cannot create them and so if the debt in a foreign currency is unmanageable large, a default is the least worst option. Don’t borrow in a foreign currency should be the general rule but I would agree that is perhaps easier said than done for a small country like Iceland.

    A default would have been the sensible option in the euro countries too. I believe the Irish were toying with this idea in 2008/2009 but were told in no uncertain terms by the EU PTB that they should forget it.

  • Christopher Haigh 12th Dec '18 - 5:56pm

    Albania seems to be doing ok. It is a member of CEFTA (Central European Free Trade Area) with the likes of Serbia Bosnia Moldova and also has a trade agreement with the EFTA countries. Since 2014 it is on a waiting list for entry to the EU for the next expansion of the EU. This is the correct way for it to become a stable and prosperous nation within its region.

  • Peter Martin 12th Dec '18 - 9:25pm

    @ JoeB

    Name a business, a bank, or any private entity, that has withstood two or more centuries of ever increasing private debt without bankruptcy.

    Name a national government that has withstood two or more centuries of ever increasing national debt and is still alive and kicking. Just one will do, but multiple answers will be accepted.

    This is a major clue that the public debts of currency-issuing national governments are not a problem but that the encouragement of too much private debt certainly is.

    PS The other factor, besides import bills, is the propensity of the private sector to accumulate financial assets which explains why Japan has a National Debt/GDP ratio of around 250%. As far as I know Japan hasn’t yet sunk beneath the waves under the weight of such a burden!

  • Peter Martin 12th Dec '18 - 10:10pm

    @ Christopher Haigh

    “Albania seems to be doing ok.”

    Can I suggest you Google {albania gdp per capita } ?

    Things were moving the right way up to 2008 but something changed then. Maybe the Albanians took the view that they were rich enough with what they’d got and decided to take life a little easier?

  • Peter,

    any bank or business that has been in existence for two centuries will have enormously increased its level of debt over that time. – Coutts Bank incorporated in 1692 comes to mind as does InterContinental Hotels founded in 1777 as Bass Brewery.

    Lenin repudiated all Tsarist debt incurred in WW1 and earlier. At the same time, it decided that all assets of foreign capitalists in Russia would be confiscated and returned to the national heritage. In repudiating these debts,

    When a country fails to pay its creditors on time, it is said to go into “default”, the national equivalent of going bankrupt. But sovereign defaults are quite different from business bankruptcies as it is far harder for creditors to repossess the assets of a sovereign entity than to repossess the assets of a company (an unarmed Argentinian naval vessel detained in Ghana for ten weeks in 2012 was an exception). In the first instance, to curry favour in international markets, defaulting countries tend to restructure their debt rather than simply refusing to pay anything at all. But these so-called “haircuts”, where the original value of a bond is reduced, can be much more painful for the holders of government bonds than a simple clip of the scissors. After its $81 billion default in 2001, Argentina offered to pay its creditors a third of what it owed—93% of the debt was eventually swapped for performing securities in 2005 and 2010. But the remainder, which is held by vulture funds and other investors, is still in dispute. These “holdouts” are waiting for $1.3 billion plus interest. And when Greece defaulted in 2012, bondholders were forced to take hits as high as 50%. In less severe cases, countries may choose to restructure their debt by requesting more time to pay. This has the effect of reducing the present value of the bond—so it isn’t entirely pain-free for investors. Some suggest that this is the right course of action for Ukraine as it struggles to balance its immediate domestic priorities against its obligations to bondholders.

    The rapid growth in private sector debt (and associated property speculation) was a principal causal factor in the onset of the financial crisis. The crisis did not arise as a consequence of under-spending or under-borrowing by National governments on public sector services.

  • Albania has a lot of potential for developing its tourist economy. The country is still developing a market based economy but has relatively high levels of corruption and tax evasion to resolve. It suffered a setback in the financial crisis but going forward, the main priorities will be: to continue expanding revenue to strengthen public finances and to ensure debt sustainability, reduce Non-Performing Loans to strengthen financial stability and support credit recovery and structural reforms to improve the business climate. Strengthening of tax administration, broadening the tax base, and introduction of a value-based property tax remain important objectives. Improved public financial management will help ensure more efficient public spending and control of arrears. Structural reforms to enhance the business environment, address infrastructure gaps, and improve labour skills will also be crucial to strengthen competitiveness.

  • Peter Martin 13th Dec '18 - 8:00am

    @ JoeB,

    You’ve not read the question. I’m sure I have explained many times that a currency issuing country can choose to default on debt in its own currency. So, for example, I’ve got some Premium bonds which the Govt could choose to cancel if they wish. But they can never involuntarily default – because they can always create the pounds. That’s not to say there isn’t an inflation risk. But if the bonds were denominated in dollars or euros then it is possible that there could be an involuntary default because the UK Govt cannot create them.

    Neither the Coutts bank, nor the Intercontinenatl Hotels, nor Bass Brewery is in debt in the same way as its possible for a Govt to be. Yes they have liabilities on one side of the balance sheet but they have many more assets on the other.

    If we total up all the worlds ‘National Debts’ we get a figure of around $70 trillion. We don’t owe that money to Mars. We owe it to ourselves. They are everyone else’s financial assets.

    Stephanie Kelton explains that this is important stuff, for everyone who is interested in politics to understand, and isn’t the preserve of us old ‘grey beards’!

    https://www.facebook.com/abcplanetamerica/videos/extended-interview-prof-stephanie-kelton/1109792772514501/

  • Getting back to Albania. I have not been there, but know it is possible to buy cheap property there. So the Balkan country I have been to. In Bulgaria, when I was there earlier this year, a taxi driver explained the problems casused by the English coming in. He said he came from a village in the countryside – we were in Sofia – and English people were coming in, buying houses with their money – and driving up prices for the local people.
    So there we are – one advantage for the rest of Europe in our leaving the EU is that the English immigrants will be kept out.
    I know that Albania is a long way from Bulgaria and that Albania is not in the EU – but the Balkans means the Balkans as our Prime Minister would say.
    By the way I noticed that in Sofia there was an excellent, and cheap public transport system. Another advantage of the U.K. leaving the the EU is that when the most right wing country leaves they will be more likely to be able to keep it.

  • Peter Martin,
    Net financial assets as used in MMT represents financial savings net of domestic real investment by the private sector. It is not a measure of household savings. It is private sector savings excluding the vast preponderance of household savings, which is backed by private sector assets (whether owned by households directly or owned by businesses who then issue financial claims to households).
    MMT economists often suggest that if the public sector fails to accommodate the private sector’s appetite for net financial assets, recession and financial instability will result. That is simply a reflection of the conventional wisdom that describes recessions as times when “animal spirits” are low, when people are risk averse. “Net financial assets” are a heterogeneous category. They include both claims against the domestic state and claims on foreign public and private sectors.
    Claims against the domestic state offer safety to their holders in a manner that can be quite dangerous to the rest of us. If we are all collectively poorer, the only way the state can make some claimants whole is by shifting their share of the aggregate loss to people who don’t hold the government’s promises. We’ve experienced this over the past decade, as both the European and American policymakers chose to make sure that holders of state assets would be made whole in real-terms, and imposed severe costs on debtors and the marginally employed to do so.
    Greg Mankiw http://gregmankiw.blogspot.com/ wrote:
    “Although… government debt does not affect the steady-state capital stock and national income, government debt does influence the distribution of income and consumption in the savers-spenders model… A higher level of debt means a higher level of taxation to pay for the interest payments on the debt. The taxes fall on both spenders and savers, but the interest payments go entirely to the savers. Thus, a higher level of debt raises the steady-state income and consumption of the savers and lowers the steady-state income and consumption and the spenders. The spenders, however, already had lower income and consumption than the savers (for only the savers earn capital income). Thus, a higher level of debt raises steady-state inequality in income and consumption.” This is the problem we face with increasing levels of public debt not matched by productive investments.

  • Steven Deller 13th Dec '18 - 2:55pm

    We need to have a peoples confidence vote on the ability of parliament to discharge it’s duty.

    We were told in 2016 that the decision on EU membership would be for the people not parliament. Parliament lied. We were told leave meant leaving all EU institutions and arrangements. Parliament lied. In 2017 we were told by the Conservative and Labour parties that they would respect the 2016 referendum result. It is now clear that the majority of those elected at that election had no intention of doing so and lied to obtain office. The peoples vote option is not only an admission by parliamentarians that they lack the skills and competencies required to govern this country it is also another false promise. In the event of a further leave vote this parliament would continue to refuse to implement it, as stated by every peoples vote advocate. A general election does not resolve this either. That is simply asking voters to choose between a selection of serial liars that have admitted they do not have the skills for the job. Parliament is now the problem and not the solution. It has no moral authority to make any decisions on relations with the EU. In any other walk of life these actions would result in dismissal. A peoples vote of confidence in parliament as a whole should be held to see if you should be allowed to continue. If as I expect this returns a vote of no confidence then a general election should follow from which all existing Members of Parliament, the parties they represent and all of their members are excluded as candidates. Only then can confidence start to be restored to politics in this country.

  • Steven Deller
    Who is going to do all of this? I doubt if Her Majesty the Queen will want to do it, and no one else can.

  • @ JoeB. Stephen Lloyd could do it. He’s free at the moment.

  • Arnold Kiel 18th Dec '18 - 7:53am

    In terms of rule-free enrichment of the few, dumping of the needy, and subsistence for all others, Albania+ is precisely what the ERG is after. May’s separation deal, despite its surface, does not preclude, but advances that outcome.

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