Friday 18 January 2019

David McWilliams: Change is constant in life... here's why we should embrace Brexit, not fear it

Economist David McWilliams. Pic Frank Mc Grath
Economist David McWilliams. Pic Frank Mc Grath

David McWilliams

The only constant in life is change. Once we appreciate this, we should embrace change and profit from it. The aim for all of us is to be resilient in the face of change, and sufficiently resourceful not only to withstand change, but to thrive on it.

Thriving on change is the difference between living and existing. Thriving on change is what makes people strong, impervious to other people's opinions and, ultimately, thriving on change is the only way to live in this tempestuous world. Look at the best companies, the best teams, the most creative people - the one thing they can all do when faced with an altering landscape is tear up Plan A and invent a Plan B.

This agility, this lightness of touch, this ability to embrace risk, knowing the pros and cons, is what it is all about. Sometimes you are rewarded, sometimes not, but if you don't give it a go, you will be passed.

Now, risk is not for everyone, which is why we have an insurance industry. Insurance minimises risk and seeks to shield people from the vagaries of the real world.

In the same way, a permanent job does this. Lots of people want the security of a permanent job. That's their call. But there are very few companies these days that can truly offer their employees a permanent position. As the great world spins, these jobs will become few and far between. The only fundamental aspect that guarantees an element of permanence is to involve yourself in a job that you love and if you love it, you will probably be good at it.

In a competitive world, being good is the only thing that ensures permanence, unless, of course, you rig the market by rules and regulations designed to minimise competition and maximise the amount of money you can gouge out of the market that you have rigged.

British Prime Minister Theresa May at theTory Party Conference in Birmingham at the weekend. Photo: Reuters. REUTERS/Toby Melville
British Prime Minister Theresa May at theTory Party Conference in Birmingham at the weekend. Photo: Reuters. REUTERS/Toby Melville

The same goes for countries. So imperialist countries in the past rigged the market and gouged the market.

This is why the great linen industry of India failed to compete with British linen in the Raj. It wasn't that the Indians weren't good at producing textiles, they were just prevented by a rigged imperialist system that rewarded English producers and penalised Indian ones.

We see this all the time. But change can't be prevented - it can only be retarded, at most.

So when a country is faced by change, what does it do?

The country that stands still, rests on its laurels and shrinks from the changes around it, is the country that will lose. On the other hand, the country that accepts change will at least be giving itself a chance.

This brings me to Brexit. The headlines, fed to journalists by civil servants who have an interest in the status quo and don't like change - if they did, they wouldn't be civil servants - talk about the "nightmare" of Brexit. Since Sunday, when the British decided that they were going for the "hard Brexit", we in Ireland have been on the receiving end of definitive lists citing all the terrible things that lie ahead for us because our closest neighbour is leaving the club.

But who knows what is going to happen? There are as many reasons to be optimistic as pessimistic.

Forget the politics for a minute.

Most of the stuff that is written as economics is simply biased political opinion dressed up as analysis.

A hard Brexit means that there will be a WTO tariff on British manufacturing goods of around 2pc-3pc. This will drive up the cost of exports in Ireland by this amount. We import 34pc of all our imports from the UK. In June, our total import bill was €6bn. So about €2.2bn came from the UK. So a 3pc tariff on this stuff will be about €70m to the Exchequer. Will 3pc divert our essential imports? I doubt it.

Now, look at what happened to imports in July. Imports fell by 11pc from June to July. Why do you think that happened? Could it be because of the dramatic fall in Sterling after the Brexit vote? Of course it was. So the dramatic fall in Sterling has hugely reduced the import bill in Ireland - and this is regarded as a "nightmare"? By who exactly? The fall in Sterling is actually making us richer, not poorer, but it is being spun as a disaster.

This isn't permanent, it's change and it has good and bad elements.

Think also now about the uncertainty the UK faces for the next few years, particularly with respect to direct foreign investment.

Might companies be worried that because the UK is throwing up barriers to highly skilled immigrants, the productivity of their UK investment will fall? This was the gist of what the head of Microsoft said when visiting Dublin yesterday. The implication is that it's not the tariffs that will scare away investment but the fact that investors have to depend on the lumpen English proletariat for their workforce.

If this is the case, why should this be a disaster for Ireland, a country that is open to European immigrants?

Wouldn't it be a significant positive for us if investment is diverted from the UK? Where is it likely to be diverted to: Romania, Italy, Spain?

It is not illogical to suggest that Ireland, as the only English- speaking country in the EU, will be ideally placed to profit from any investment disruptions that Brexit might spark.

The key for Ireland is to be as open to trade, investment and migration as possible because, with the British tied up in knots, we have a great chance to stake a legitimate claim as Europe's only pro-business trading nation.

Clearly there are issues with the Border. However, the stakeholders in this - ourselves, Stormont and Westminster - all want the Border to stay open for trade and travel.

So the only entity that might be intent on stopping this is the EU. Therefore, we should tell it where to go.

There needs to be a serious negotiation for a derogation on any hard border between us and the UK; as I said, this is only being suggested by Brussels or its paid-up mouthpieces in the Irish establishment. We have never had a border in terms of travel between both countries, so why start now? If we don't want to police it and the UK doesn't want to police it, would we have Finnish and Spanish police and customs on either side of the border? I doubt it!

There is as much chance that, managed properly, Brexit will be good for Ireland. It is change, and change is constant. Change can bring out the best in people, companies and countries - it's simply up to us to tap into that potential.

Irish Independent

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