Brexit and instability

Manage
71

I read Steve’s article with interest. Another link here: “Why I Voted for Brexit”

The author says he originally voted to join the EU because he likes free trade.

He voted for Brexit because of the costs of being part of the EU. These costs include:

  1. The EU equivalent of what we call “pork” in the US: “A Portuguese golf resort, a Bavarian hunting lodge, a virtual clone of Malmo, Sweden in the video game Second Life. A hemp farm. Puppet theatre.”

  2. Regulations: “…billions it costs British businesses to comply with often bizarre and Byzantine EU directives, such as those enforcing the curvature of bananas, banning diabetics from driving, and making it illegal to sell eggs by the dozen.”

One problem with this argument is that it is hard to quantitate regulatory costs. I am commenting on this because I may have encountered an anecdotal example today.

The P123 computer told me to buy HTZ (Hertz) today at $11 per share. But my broker would not let me buy as many shares as my port suggested. Seems my broker thinks it is now $44 per share. Looks like LYFT may have purchased or made an offer for HTZ.

So to quantitate the cost of regulations around taxi services one only needs to look at the market cap of UBER and LYFT. How much economic activity has been unleashed by the fact that UBER and LYFT have gotten around the regulations?

You could argue that UBER and LYFT are succeeding because they have leveraged smart-phone technology. But how long would it have taken for the taxi monopolies to start using these technologies? Surely competition and regulations have had an indirect affect on the adoption of this useful technology–even if you accept this argument.

This journalist is not an economist. And no doubt Britain will be worse off in the short term. But the author is at least smart enough to not use the term “crony capitalism” (sorry for the political connotation and the generally poor term).

Is this is an opportunity to quantitate the costs of one small regulation? If so, it is one small regulation but is it a small economic impact?