I’m becoming irritated already with those who are “bored” of the Brexit debate. I’m sorry for your paucity of imagination! This referendum is a huge exercise in direct democracy – and offers us, by which I mean the elite, politically astute and educated folks who frequent finance/econ/politics blogs on the internet, a chance to focus the attentions of regular people on stuff that really matters. Of course the daily mail is prating on about immigration and personality politics – when are they not. That doesn’t mean we can’t have good and valuable conversations, so let’s have at it!
We’re being asked to take a view on whether we should keep with a particular institutional arrangement, or abandon it. I’d respectfully ask you to ignore anyone who focusses on forecasts of GDP costs and benefits, or the trade balance, or any such other random variables generated by complex emergent processes over which we have very limited forecasting abilities. What this is about is whether we should keep or abandon the institutions of the European union, ie, whether they are good or bad. Supposedly apocalyptic forecasts from the Treasury take as their worst case a 7.5% hit to GDP in 15 years time. That’s the worst case scenario from those actively promoting the union. It sounds like a reasonable amount, but that works out at 0.48% per annum. GDP revisions, such as the latest for Q4 2015, regularly revise GDP by tenths of percentages. In 2008, GDP per capita shrank 5% in a single year. The world economy is a complex beast that produces big shocks, 0.48% per annum in the worst scenario conjurable by statisticians is small potatoes.
For me, the issue is which institutions do we think are good and which are bad. Largely, I think the EU’s are bad. Turnout in elections for European politicians is low . The vast majority of decisions are made by heads of states, with the European parliament taking a largely subordinate role scrutinising legislation. Commissioners who propose legislation are chosen by horse trading. Contrast this to british parliamentary politics where constituency MP’s making up the largest party will elect a prime minister, who appoints further ministers. Precedent insures that the person who voters at the polls understand to be the leader of the party that wins will be prime minister – and largely, he has to appoint the people he said he would, and they have to be elected MP’s too, otherwise there would be an outcry. Much of this is based on precedent and custom but that’s exactly the point! Having a clear set of precedents and customs, well understood by the polity and respected by politicians, makes it clear to voters what will happen when they put their x in the box. With the EU, there is no such clarity. Democracy is much more than voting.
Then there has been the abject failure of EU institutions to combat any of the recent crises that have befallen the zone. Firstly, the financial crisis of 2009 is not a historical event for Greece – it has been ongoing for seven years! Default, devaluation and institutional reform were and still are the only solutions – but the zone cannot get its act together to allow it. “Lowest Common Denominator” politics where EU politicians converge on the only policy they can agree on rather than the best policy are immiserating the periphery countries – where unemployment rates are still high almost a decade after the “crisis” for the rest of the world. The refugee crisis generated by the Syrian conflict has been met with chaotic responses from the Eurozone, with member states unable to agree on sensible policies to either reduce the pull factors encouraging people to pile into rubber boats and attempt crossing of the mediterranean, or spread the burden of assimilating refugees in a reasonable way. Borders have been closed in a tit for tat way in defiance of EU treaties, which are not respected in the breach. It’s worth mentioning that the British response to the crisis has been shamefully callous, but at least it has been clear. Many refugees suffering in camps in Greece are doing so because they expected EU policies of welcoming them to continue, they didn’t.
That’s the extent of my justification to our voting to exit the EU, and there are many arguments made by the Brexiteers that I think are irrelevant. Aside from a politically generated housing crisis giving the appearance of a lack of homes, there is no great shortage of space in the UK. Community cohesion is a definite public good and assimilating immigrants carries costs – but the sense of crisis is exaggerated by warped perceptions and politically motivated austerity destroying communities and stagnating wages, which can easily be misattributed to migration. Islamic fundamentalism may be nasty to look at but it doesn’t appear to be all that catching. Terrorism claims mercifully few lives compared to car accidents or smoking related health conditions. Many brexiteers feel strongly about all these things – but they should carefully consult the various biases that make those feelings seem attractive before indulging them too heavily.
In terms of counterarguments, the main one to me seems to be strategic. Despite the high costs involved, European politicians have already made noises about inflicting altruistic punishments on the UK to send a signal that leaving the zone is a bad idea. This could magnify the costs of Brexit. Personally, in favour of doing the right thing, I’m happy to take an altruistic hit on behalf of other countries who might want to leave by showing the way. Clearly however it’s an important risk.
That about sums me up. I’d love to know your thoughts!