Post Brexit Economics

Yesterday’s post was about one of the two Chairs of Economists for Brexit, Dr Gerard Lyons who previously worked for the Mayor of London (Boris Johnson) and who published a report concluding that the best option for the UK was to remain in a reformed EU.  Now let’s look at the other Chair, Professor Patrick Minford who teaches at Cardiff University.  He is one of the few UK followers of the Milton Friedman school of economics.

According to the Economist, In March 1981, 364 eminent British economists published a letter to Margaret Thatcher in The Times condemning her plans to hike taxes even as her monetarist attack on inflation plunged the economy ever deeper into recession. The signatories wrote: There is no basis in economic theory or supporting evidence for the Government’s belief that by deflating demand they will bring inflation permanently under control and thereby induce an automatic recovery in output and employment … [P]resent politics will deepen the depression, erode the industrial base of our economy and threaten its social and political stability.  Mrs Thatcher was later asked if she could name even two economists who supported her programme. Margaret Thatcher replied that she could, and named Alan Walters and Patrick Minford. On returning to Downing Street, a civil servant said to her, ‘It is a good job he did not ask you to name three!”

Minford was a supporter of the poll tax which led to riots when it was introduced by Margaret Thatcher and which was abandoned by John Major.  Most Conservatives now accept that Major was right to do so. Minford was also one of the contributors to the “Sharper Axes – Lower Taxes” book published in 2001 by the Institute of Economic  Affairs which said on the blurb for the book

The current welfare system discriminates strongly against work, family formation and saving. Welfare should be completely reformed to provide income supplements through a negative income tax with household tax allowances. Furthermore, welfare claimants without jobs and who are of working age should be required to undertake work as a condition of receiving benefits. Reforming welfare and related changes to pensions would save £46.5 billion a year.

The National Health Service should be replaced by health savings accounts with insurance for catastrophic risks. Experience from other countries suggests that this can lead to better outcomes, lower costs and much stronger incentives for health promotion. This reform would save £44 billion a year. 

More radical reform of education to save over £15 billion is required: reforms should include parents making some contribution to the cost of their children’s education.

Policy in areas such as defence and foreign aid should be strategically reviewed. Foreign aid should be cut entirely except for emergency aid: the evidence suggests that growth in poor countries will come about only as a result of the adoption of market economies and through private investment. Aid probably hinders growth in the poorest countries. Reforms to defence and foreign aid should lead to spending reductions of £29 billion a year.

Unsurprisingly these  recommendations were endorsed by  prominent Brexit supporters including Dominic Raab MP, The Rt Hon John Redwood MP and  Daniel Hannan MEP.

The Moral is:  If you want to turn our country back to the time of the poor laws – vote Leave, but if you want a fairer Britain with protection of our rights , please Vote Remain.

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