The unknowns are by how much trade with the EU is affected and how quickly trade with other countries grows to fill the gap.Yes, this is an entirely reasonable perspective, but I'd note that it's also a projection of hypothetical future events (large trade barriers) based on a projection of what Brussels thinks (no trade deal with the treacherous Brits regardless of the mutual costs).
My projection is not less valid than yours, even though it may appear that yours is more projected or more common than the other. My own research led me to conclude that the facade of 'expert consensus' is mostly a creation of journalists and (at the time of the referendum) the Civil Service operating under direction from Cameron and Osborne. There's really much less agreement in the field of economics on the topic of Brexit than is first apparent.
Now, you say this:
My belief is correct if we have a correct understanding of how trade affects growth. Do you think that both beliefs are equally robust?
Actually, yes, I think my beliefs are slightly more robust. Mainly for two reasons:
1. I don't think we have a correct understanding of what economists call growth theory.
2. I think EU realpolitik is significantly easier to analyse than something as large and complex as an economy. It's far fewer people for one, but also, I have made my own predictions about how things would play out both economically and politically with the EU, and so far I've been more right than most of the so-called experts (but not completely right).
The second is hard for me to prove without giving up my identity: I did write publicly about my predictions at the time of the referendum but prefer to post on HN anonymously these days. But anyway, the first will more interesting both for us and anyone reading this thread.
How well do we understand economic growth? The evidence suggests: very badly. It can be easily argued that our understanding hasn't really advanced since the 18th century.
Let's start with one piece of evidence: economic projections are basically always wrong. The only time they're right is when economists are just extrapolating the current trend line and predicting a continuation of whatever's happening now. But they more or less never successfully predict changes from the current trend.
To read about this Google "economic forecast accuracy". There have been many studies. But most working class people don't need studies to know economists don't understand the economy, they just need two events:
a. "Nobody" forecast the 2008 financial crisis.
b. "Everyone" forecast recession in case Leave won.
For example, the Treasury department published an economic forecast that said if Leave won the vote, the 2 year period of Article 50 negotiation would create such massive uncertainty that the economy would enter a year long recession in which it would lose 500,000 jobs in the best case, and 800,000 jobs in the worst case.
https://www.gov.uk/government/news/britain-to-enter-recessio...
Clearly this prediction can be tested against reality: the British economy grew strongly (for Europe). These forecasts weren't just wrong, they were wrong in the wrong direction and of course anyone outside of the London elite's knew that was going to happen: they were being told by idiot Londoners in Whitehall that leaving the EU should be the scariest thing that ever happened to them, and it just isn't.
The total corruption of the field of economics can be supported in many other ways. Paul Krugman, a Nobel Prize winning economist and staunch left wing anti-Brexit writer for the staunchly pro-EU New York Times, wrote this:
https://krugman.blogs.nytimes.com/2016/06/30/the-macroeconom...
"I believe that Brexit is a tragic development, which will do substantial long-run economic harm. But what we’re hearing overwhelmingly from economists is the claim that it will also have severe short-run adverse impacts. And that claim seems dubious. Or maybe more to the point, it’s a claim that doesn’t follow in any clear way from standard macroeconomics – but it’s being presented as if it does. And I worry that what we’re seeing is a case of motivated reasoning, which could end up damaging economists’ credibility."
One of the most frustrating things about Remain supporters for me - and very relevant to the class war this HN thread is originally about - is the complete refusal of so-called elites to update their priors in response to failed predictions by so-called experts.
It doesn't matter that economists get it completely wrong again and again. It doesn't matter that famous economists themselves are saying the field is riven with "motivated reasoning" i.e. politically biased BS posing as expertise. Working class people who draw their own conclusions based on their own lived experience and get it right are ignorant and bad; people with a bachelors degree who put their faith in professors and get it wrong are superior and should be in charge.
How long will it take until EU supporters recognise that many of their predictions have been tested and failed? My guess is never. I've never seen a single one say, gee, I believed the predictions of recession if Leave won and it didn't happen. Maybe I shouldn't have listened. It's a psychological and political decision for everyone in the end, not really about facts or economics.
Now, how badly will trade barriers affect the EU and UK? Honestly, I'm skeptical it will have any noticeable impact on the average British person's life. I think we're overdue for a global recession anyway and thus when the UK does next tip into recession, there will be a brief argument of the form "see! we told you Brexit would create a recession" because of the timing that will be answered with, "Europe is in recession too and America is sliding, because the world economy is cyclical and we were overdue". But that will pass and I don't think Brexit will have much impact on the real economy (except maybe currency prices, which are mostly reflective of the consensus of the sort of people who are hired as traders).
The reasons are pretty simple. Firstly, free trade is less important to economies than experts tend to say. I actually work with an expert in global trade, someone whose entire job is to be a specialist in trading policies, and she's said publicly that one of the lessons learned in recent years by the field is that free trade policies seem to have less impact than they predicted.
Secondly, the UK economy is primarily services oriented and its exports especially so. Services are tariff free under WTO GATT rules so wouldn't be affected, and anyway, the EU has never really created a single market for services and selling services into the EU is difficult, so the UK is less exposed than you might think. For instance I work for a company that sells software and services, so the EU can't impose tariffs on us without exiting the WTO framework.
Thirdly, the EU actually needs UK services much more seriously than most Remainers realise (because the newspapers they tend to read don't want to admit it). For instance there was much talk of the collapse of the City right after the vote because the UK would supposedly lose its so-called financial passport i.e. the EU would ban member state firms from buying UK financial services in retaliation for the UK leaving. You don't hear much about that anymore, because the Commission folded very quickly when it became clear Brexit wouldn't be immediately cancelled and granted "temporary" permission for trade with the City to continue due to the EU's dependence on London's financial services. Likewise for air travel and a variety of other things that would supposedly all be banned outright by the EU. All given "temporary" extensions (but not much will have changed by the time these extensions expire, so what will they do then?).
Add it all up and I think it's fair to say that the people who do understand growth theory the best aren't the ones being put in front of the British public, and even they don't really understand it that well.
Even if they did though, so what? Leaving the EU isn't actually about economics to most people. Polling showed the top issues for Leave voters are immigration and sovereignty. Pretending it's merely a cost/benefit calculation to be decided by discredited economists is exactly why Remain lost. The EU is structured as a dictatorship pretending to be a democracy: the average British person, working class or not, has no say whatsoever in its decisions and the EU elites routinely enjoy reminding them of that.
On factual points, recent data [1, 2, 3] shows that the UK is actually underperforming the Eurozone in growth, including Germany
You can't compare UK GDP growth to the Eurozone directly because the Eurozone includes a lot of ex-Soviet economies that have high percentage growth because they're poor, and that pushes up the percentage-wise average. Nobody would claim Romania has a better economy than Germany though. If we compare UK and Germany directly:
https://d3fy651gv2fhd3.cloudfront.net/charts/united-kingdom-...
We can see that the graphs look pretty similar. The UK compares very well to the best "100% European" case. In 2018-2019 UK growth has been lower in some quarters and higher in others, although German growth benefits from an artificially weak currency vs the pound. France was doing great until Jan 2018 when growth dropped off a cliff and has never recovered (what happened there? is that the gilets jaunes?). Italy is stagnant at near zero. Spain is doing better than I expected, actually: consistent growth, albeit very low.
Of course, this misses the bigger picture. British and German growth is all peanuts compared to the USA. The UK is doing pretty well compared to other EU member states. They're all doing terribly compared to a culturally and technologically very similar country that's not in the EU. The firehose of money the NHS would get if we had American levels of growth would render most existing political bun fights irrelevant.
I don't believe the British government will actually adopt US style economic policies and get US style growth anytime soon, even if we leave the EU, but that's partly because the policy-making classes can't psychologically escape the EU's moral and social philosophies. Leaving the EU completely and then getting a good trade deal with the USA is still a necessary step if we want to get there ... and I think we do.
