#Brexit Is A Disaster, But @DavidDavisMP Is Right About The 57 Documents

Attacking SecState DEXEU by using an easily foiled challenge does not aid the cause of those seeking soft or no Brexit. I will outline why the HMG position on the 57 documents is coherent and plausible, contrary to widespread opinion

Everyone seems to be struggling with the government’s stated position on these documents, claiming that there have been obvious inconsistencies.  I will argue that on this sole point, there have been no inconsistencies and in fact, the position of HMG is economically correct.

By “everyone,” I mean the Financial Times and noted QCs as well as the entire Twitter commentariat.  So that really is everyone.

The general position seems to be something approximating to the following. “Davis said HMG had done a lot of work (“57 documents”) on the economic impact of Brexit but then when he was asked to provide it, changed his position to the diametrically opposed one of “there are no documents.” ”  If he had said that, he would clearly be inconsistent and incompetent.  But, he did not say that.

The key to this is understanding the formal definition of an Impact Assessment.  According to Davis (and which I accept):

An Impact Assessment must include a “quantitative forecast of economic outcome”

This means that for an Impact Assessment to have been produced, a team of economists and sector experts has produced a complicated spreadsheet modelling cashflows.  Efforts have been made to see what the effect of tariffs on a particular sector would be.  Finally, and critically, assumptions have been made as to exactly what percentage of trade will be lost, to what extent this will be offset by other factors, and what the levels of various key parameters will be, such as GDP growth in the UK and the EU, CPI in various locations, and the level of employment and the flexibility of workers.  If a document does not have such a “quantitative forecast of economic outcome,” it is not an Impact Assessment.

Davis admits that no Impact Assessments have been made.  There has been, though, a great deal of assessment of the economic impact of Brexit.  These are the 57 documents.  Note also that these documents can have detailed numerical underpinning but still not meet the formal definition of being an Impact Assessment.  Just because something considers the impact of Brexit economically does not make it an Impact Assessment.  We see this when Davis says that the fact that a document contains the word impact is not sufficient to make it an Impact Assessment.

Should HMG do Impact Assessments?  No.  They are, again as Davis says, of limited value.  This is because we have little idea of what CPI or GDP are next year, and we have absolutely no idea over the 30 year horizon of relevance here.   I discuss such difficulties of forecasting in a precise way in my new book (see for example pp. 79-80):

https://timlshort.com/the-psychology-of-successful-trading-behavioural-strategies-for-profitability/

So, it is now clear that there is no inconsistency in the position taken by SecState DEXEU and it is in fact economically appropriate.

 

Author: Tim Short

I went to Imperial College in 1988 for a BSc(hons) in Physics. I then went back to my hometown, Bristol, for a PhD in Particle Physics. This was written in 1992 on the ZEUS experiment which was located at the HERA accelerator in Hamburg (http://discovery.ucl.ac.uk/1354624/). I spent the next four years as a post-doc in Hamburg. I learned German and developed a fondness for the language and people. I spent a couple of years doing technical sales for a US computer company in Ireland. In 1997, I returned to London to become an investment banker, joining the legendary Principal Finance Group at Nomura. After a spell at Paribas, I moved to Credit Suisse First Boston. I specialized in securitization, leading over €9bn of transactions. My interest in philosophy began in 2006, when I read David Chalmers's "The Conscious Mind." My reaction, apart from fascination, was "he has to be wrong, but I can't see why"! I then became an undergraduate in Philosophy at UCL in 2007. In 2010, I was admitted to graduate school, also at UCL. I wrote my Master's on the topic of "Nietzsche on Memory" (http://discovery.ucl.ac.uk/1421265/). Also during this time, I published a popular article on Sherlock Holmes (http://discovery.ucl.ac.uk/1430371/2/194-1429-1-PB.pdf). I then began work on the Simulation Theory account of Theory of Mind. This led to my second PhD on philosophical aspects of that topic; this was awarded by UCL in March 2016 (http://discovery.ucl.ac.uk/1475972/ -- currently embargoed for copyright reasons). The psychological version of this work formed my book "Simulation Theory". My second book, "The Psychology Of Successful Trading: Behavioural Strategies For Profitability" is in production at Taylor and Francis and will be published in December 2017. It will discuss how cognitive biases affect investment decisions and how knowing this can make us better traders by understanding ourselves and other market participants more fully. I am currently drafting my third book, wherein I will return to more purely academic philosophical psychology, on "Theory of Mind in Abnormal Psychology." Education: I have five degrees, two in physics and three in philosophy. Areas of Research / Professional Expertise: Particle physics, Monte Carlo simulation, Nietzsche (especially psychological topics), phenomenology, Theory of Mind, Simulation Theory Personal Interests: I am a bit of an opera fanatic and I often attend wine tastings. I follow current affairs, especially in their economic aspect. I started as a beginner at the London Piano Institute in August 2015 and passed Grade Two in November 2017!

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