Daily Archives: June 9, 2016

Reflections about Brexit the Movie – Part 2

Also check out previous and the next part of this blog series

Table of contents


Brexit the Movie – Case Study: Fish

When Britain joined the Common Market, it lost control of its Fishing grounds

Movie claim: When Britain joined the Common Market [aka European Economic Community aka ECC], it lost control of its Fishing grounds.

Correction:  The UK government was fully aware of the consequences on the fishing industry should the UK join the ECC. Regardless, the British government chose to do so in 1972 unlike Norway that did not join the ECC following a referendum (source).

In 1976, the initial 12 mile territorial waters (aka exclusive economic zones) were expanded to 200 miles.  At the time “Representatives from the UK fishing industry claim a 100-mile exclusion zone would provide enough fish for British markets and workers “to keep us going forever”.” (source).

The details: If the Wikipedia article is to be believed then there was a lot of foul play in the 70’s around the UK’s membership negotiations (the article has no source but seems to originate from this blogpost which says it quotes lectures by Professor Vernon Bogdanor on Britain and Europe and can allegedly be found in their entirety here).

The first rules on fishery were created in 1970. The original six Common Market members realized that four countries applying to join the Common Market at that time (Britain, Ireland, Denmark and Norway) would control the richest fishing grounds in the world. The original six therefore drew up Council Regulation 2141/70 giving all Members equal access to all fishing waters, even though the Treaty of Rome gave no authority for them to do this. This resolution was adopted on the morning of 30 June 1970, a few hours before the applications to join the ECC were officially received. This ensured that the regulations became part of the acquis communautaire before the new members joined, obliging them to accept the regulation. At first the UK refused to accept the rules but by the end of 1971 the UK gave way and signed the Accession Treaty on 22 January 1972, thereby handing over an estimated four fifths of all the fish off Western Europe (source).

Thus the member states did not lobby against the UK but sneaked in an allegedly illegal demand on giving all member states access to the fishing grounds of the UK, Ireland and Denmark.  More importantly, the decision to join the EEC was taken by the UK government being fully aware of the consequences.  Thus, the EU member states set their terms and the UK government and politicians accepted. In contrast to Norway, which still has not joined the Union.


Several countries lobbied the EU for Britain’s fishing rights

Correction: The quotas (aka total allowable catch) were not divided up between other European countries.  The decision about fishing rights in 1972 gave fishermen from any EEC country the right to fish in any other EEC country’s fishing grounds. (See previous section about 200 miles worth of territorial waters that UK got exclusive access to in 1976).


Quotas (akak total allowable catch) are decided by the Council of Ministers on an annual basis (source) .


The British government was powerless to stop this

Correction: The UK ministers have always been present at meetings where these were discussed and decided.   Such decisions are made in forums where the UK has always had the option of being represented.  Decisions are accepted with qualified majority voting.

Fun fact: Currently the UK has the fifth larges EEZ in the world (source).


The EU pays fishermen to leave an industry and destroy their boats

Correction: the EU provides partial funding for UK fishermen to destroy their boats following the national plan drawn up by the UK government.

Explanation: This ties into the different funding programs of the EU which started in the 70’s already.  Under the Financial  Instrument  for  Fisheries  Guidance (provided funding between 2000-2006) and the European Fisheries  Fund (2007-2013) there was the possibility to receive EU funding for decommissioning or transferring vessels.

Under the FIFG, these actions were available in specific circumstances, related to vessels 30 years or older or with reduced capacity (source).

Under the EFF, “aid may be available for vessels permanently or temporarily ceasing their activities”.  However, such aid was ONLY available if the Member States had decided to cut fishing opportunities and defined this in their NATIONAL strategic plans (source).

Also worth to point out is that the EU only funds such projects partially, the remainder (usually at least 20% of a project) is financed by the Member States – in this case the UK.

Details: In 1977 an aid programme was introduced to improve the fish processing industry (source).

In 1993 The Financial  Instrument  for  Fisheries  Guidance  (FIFG) was created.  Between 1994 to 1999 the budget for FIFG totalled 700 million ECU (source).

Between 2000 and 2006 the FIFG funded more than 84,000 initiatives with a total of 3.7 billion Euro from EU contribution (thats not counting the national contribution which was a minimum of 20% of the total cost) (source). The FIFG funded initiatives falling under the following topics: Adjustment of fishing effort, Fleet renewal and equipment or modernisation of fishing vessels, Small-scale coastal fishing, Fishing in inland waters, Protection and development of aquatic resources, Fishing port facilities, Development of aquaculture, Processing and marketing of fishery and aquaculture products, Measures to identify and promote new market outlets, Social measures accompanying restructuring, Measures by groups within the trade, and Temporary cessation of activities (source).

In  2007  the  FIFG  was  replaced  by  the  European Fisheries  Fund  (EFF).  A total of 4.3 billion Euros were allocated in this fund (source).

The European Maritime and Fisheries Fund (EMFF) replaced the EFF in 2014 making available a total of 6.4 billion Euros between 2014 and 2020 (source).

Interesting facts: What is interesting to point out, however, is that each country’s share of the funds total budget is based (at least in the EMFF) on the size of its fishing industry (source). However, looking at the official statistics about the UK fleet and the Spanish fleet, it is unclear why the Spanish fishing industry which has almost twice as many ships and catches roughly twice as much fish as the UK receives more than 100 times as much funds than the UK industry.
Between 2000 and 2006, the UK received 165 million Euros (5% of the total) while Spain received 1.7 billion Euros (48% of the total) of the available 3.5 billion.

Between 2007 and 2013, the UK was allocated 137 million Euros while Spain was allocated 1.1 billion Euros of the available 3.5 billion.

Between 2014 and 2020, the UK is allocated 120 million Euros while Spain is allocated 1.16 billion of the available 6.4 billion.

(see above links for sources).

An interesting article on the subject.


Britain is always defeated in the Council votes

Movie quote: Britain voted against 72 measures in the European Council and been defeated 72 times

Clarification: It is important to note that the European Council consists of Ministers from all Member States that VOTE on a topic.  Beyond that, it is impossible to know what the person was referring to – is it 72 measures on fishery? 72 measures in general?  During what time period?
The Guardian’s research (regarding European Council votes between 2004-2015) shows quite the opposite to this statement – the UK looses only 5% of the votes on the topic of Fisheries.  On the topic of budget, foreign policy and international development it looses European Council votes approximately 35% of the time, but never 100% of the time (source).

Fun facts: The various configurations of the European Council met 73 times in 2015.  The UK did definitely NOT loos 73 of those votes.  Check it out for yourself.

Also, regarding the topic of fishery, there have been 27 votes since 2009.  The UK has voted against the proposal once and abstained from voting once  (source).


Brexit the Movie – Why are British the cussed ones in Europe?

At this stage, the move leaves the topic of fisheries and starts a rant about why things were always better before.  In my opinion, these ideas are at best generalisations aiming to incite nationalistic feelings of former days of glory.  But there are plenty of false information in it as well.


Britons do not like to be bossed around by bureaucrats

Movie quotes: Britons do not like to be bossed around by bureaucrats; Britons don’t want to have a group of wise, experienced, public spirited experts who will run things in the best interest of all.  The British, historically have been sceptical to this kind of approach.

Correction: None of the decisions described above have been taken by a bureaucrat.  The European Commission bureaucrats and the experts prepare studies and proposals which the national bureaucrats and experts examine and comment on, which is negotiated between the national and EU bureaucrats and experts in Brussels and is then voted upon by national ministers.  The Brussels bureaucrat has no more power to decide than a public servant working for a ministry in the UK.


Why are we so attached to our independence and freedom?

Movie quotes, questions: Why are British the cussed ones in Europe?  Why are we so attached to our independence and freedom?  Why do we take so badly to regulation? Where does it all come from?

My comments: The movie never answers these questions, just talks about how things were much better in the time of the Great British Empire because there were no regulations then.


Britons freed from serfdom

Movie quotes, answers: The British freed themselves from feudal regulation centuries before the Europeans. While serfdom existed in large parts of Europe. The Great British were carrying out the great industrial and commercial revolution that gave birth to the modern world.

Correction:  While serfdom was abolished in the UK in the 15-16th century, slavery was only abolished in 1833 – i.e. just around the time when serfdom was abolished in the other European countries (give or take 10 years).  So indeed, the British didn’t need serfs to do the farming back home when they could get things done for even cheaper with slaves in their colonies. Back home the British could work under horrific conditions as factory workers instead.


Great Britain – ruler of the waves

Movie quotes: In the 19th century, unregulated Britain was the pioneer of global free trade, workshop of the world, dominating the world economy like a Leviathan.  Even on the dawn of WWI Britain was building about 60% of the worlds commercial ships and owned almost half the world’s cargo carrying, ocean going steamers.

My comments:  So it’s the fault of EU bureaucrats that Greece has now the largest fleet of tankers and that most of the production is in Asia… (source)

Also, note how Britain “dominated” the world economy.  And they certainly did.  It’s a contradiction of terms to compare global free trade with the British domination of the world economy.  Britain had an empire based on exploited colonies the consequences of which we are still feeling today on a global level.


Regulations – the root of all evil

Movie quotes: But the 1st World War changed everything.  New ministries were set up as the government extended its control over every aspect of British life. Industry became heavily regulated.  First shipping then the railways, canals and agriculture. A company was no longer private property but a national asset to be directed from above.  During the war the government increasingly thought that it should plan, it should control, it should regulate.

Comment: Ah, it wasn’t the EU who took away the freedom of the British, it was the British government!  It is ironic though that after 300 years of free trade pioneering and free trade, it was once the regulations took away Britons’ freedom, that life expectancy increased with 20 years, child labour was banned, labour laws were introduced and the quality of life generally improved.

Fun facts:

Life expectancy in the UK
between 1543 – 1850: +/- 40 years
between 1850 – 1900: rose from 40 to 50 years
between 1900 – 1950: rose from 50 to 70 years

Even with the dips for World War I, it seems that those harsh years made unbearable by heavy regulations still managed to increase their life expectancy with 20 years (source).

Child labour – “Many of the new factory owners preferred to employ children as they viewed them more docile tractable than adults.” (source).


Post WWI regulations

Movie quotes: When the War was over, so was the excuse for government regulation, and many were scrapped.  But not all of them and not for long. British government sought to control major sectors of the British economy. Basically checking the spirit of innovation that has been such a dominant feature of the British manufacturing sector in the 19th century.  With World War II regulation increased still further. War planning gave unprecedented control over our lives. And after the War, they were unwilling to hand back their power. Everything from heavy industry down to cloths, food and children toys were regulated. Britain became perhaps the most state controlled economy in Europe. A heavily regulated economy, ordered from above – the politicians assured us – would be a screaming success. But the very opposite happened. The purpose of regulation was to end wasteful competition. But it was competition that had kept industry efficient and innovative.  Nimble entrepreneurs who were rewarded for success and punished for failure were now replaced by plodding bureaucrats ticking boxes. Productivity and output plummeted. Shortages pushed up prices led to heavy rationing of some products.

Correction:  The government nationalised about 20% of the economy, including coal, railways, road transport, the Bank of England, civil aviation, cable and wireless, electricity and gas, and steel (source).
Fun facts: Clement Attlee formed the Attlee Ministry in the United Kingdom in 1945, succeeding Winston Churchill. During this heavily controlled governmental era:

  • hospitals were nationalised and provided for free universal medical care
  • sickness and unemployment benefits were provided for adults along with retirement pensions
  • expanded the Education Act
  • the government adopted Keynesianism

My comments:  To summarise the the movies argument:  Before regulations, everything was great (thats why people lived to be 50).  After regulation life became horrible (thats why they lived to be 70).  There was no room for innovation only bureaucracy and everyone was told how to do everything.

So according to the movie, the collapse of the British economy had nothing to do with the collapse of the British Empire or the fact that the rest of the world was recovering from two World Wars and the Great Depression.  It was because the bureaucrats were repressing innovation.


Brexit the Movie – Germany, the economic miracle

For Germany, it was a different story

Movie quotes: The War had left Germany little more than smoking rubble. Germany would receive some Marshall aid but only half of the amount sent to Britain. Germany needed a miracle. In the first free elections after the war Ludwig Erhard, the son of a shop keeper, became minister for the economy. A post he held until 1963.

Fun fact: During the Attlee Ministry, James Chuter Ede, the Secretary of State for the Home Department was also the son of a shopkeeper. George Henry Hall, the Secretary of State for the Colonies, worked in the mines since he was 12 (source)


Movie quotes: Erhard began the economic miracle by completely scrapping all of the controls that he had inherited from the Third Reich and he did this agains the strong advice of his British superiors in the occupied zone. They were happy to have an open and free trade, a deregulated economy, stand on their own two feet – and those that cant must make way for those that can.

Clarification: The British did not not advise the Germans to take away regulations.  Actually the US Military government of occupation in Germany, through Joint Chiefs of Staff directive 1067 (in force until 1947), was ordered to “…take no steps looking toward the economic rehabilitation of Germany [or] designed to maintain or strengthen the German economy” (source). It was in violation of the JSC that Germany made it’s currency reforms which was the first step in restoring the economy (source).


Movie quotes: Germany was open to the world, had free entry into business and commerce and professionals and the result was that the German economy became much more dynamic much more innovative and ultimately much, much more successful.  In Britain, there were shortages and rising prices, in Germany, goods were abundant and wages rose steeply.  The result for the ordinary person in Germany was sensational.

Clarification: The movie claims that it was free commerce that allowed wages to rise steeply.  It does not mention the tax reform that lowered taxes from 85/95% to 18%.


Movie quote: Britain, who won the war, was still rationed year after year whereas Germany who lost the war, rationing was abolished.

Correction: The last of the war-time rationing was ended in UK in 1953.  Food rationing stayed in place in Germany too after the war. “In early October 1945 the UK government privately acknowledged in a cabinet meeting that German civilian adult death rates had risen to 4 times the pre-war levels and death rates amongst the German children had risen by 10 times the pre-war levels” (source) . Also, in 1947, 4 million German prisoners of war were still working abroad as forced labour and there were acute food shortages in Germany (source).

Fun facts: Ludwig Erhard was a staunch believer in economic liberalism meaning social market economy (source). This is a social and economic system combining free market capitalism which supports private enterprise, alongside social policies which establish both fair competition within the market and a welfare state (source).