Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday, 2 May 2017

Why Brexit means more than Brexit

Some people think I go on about Brexit too much. That is easy to explain. The costs of a no deal Brexit almost certainly exceed the cost of UK austerity for the average UK citizen, and I went on about austerity a great deal because its costs exceeded those of anything else in macroeconomics.

But for me there is something else about Brexit that I find deeply worrying. It is that so many people could be persuaded to believe in a fantasy, from the ordinary voter to ministers of state. The number of people who will actually benefit from Brexit are extremely small indeed, yet they had the power and influence to persuade half a nation to leave the EU. That is both extraordinary, and something that should be of great concern to any democrat.

Understanding which groups were susceptible to this fantasy is important, but it is only part of any answer. As I have said before, we can show why groups become alienated from the social, economic and political system, but that does not explain why they start believing the snake oil salesmen, particularly when we know the snake oil will do them much harm. Perhaps alienation is necessary to start believing in harmful fantasies, but it is surely not sufficient.

The fantasy was that Brexit would do the UK no economic harm. I’ve talked at length about why this was central to victory. Why most Leave voters were not willing to pay to reduce immigration because they thought reducing immigration would make them better off by improving access to public services. Why in reality the opposite is true. Will Jennings from Southampton University produced this nice chart which shows just how different the economic perceptions of Leave and Remain voters became.

The fantasy was so powerful that it encompassed the perpetrators as well. David Davis, the secretary of state for leaving the EU, has said we can do a deal with the EU that would give us the exact same benefits as membership of the Single Market and customs union. He would not have given that pledge if he did not believe it. But anyone based in reality knows that when the EU say any deal must be costly for the UK, they are stating an inevitable truth. This is not punishment but survival: leaving has to involve a cost for the sake of preserving the remaining EU. This is why the leaked accounts of the May-Juncker supper worry so many. The fantasy that Brexiteers concocted to win the referendum has also taken hold of our political leaders.

For ordinary voters, I can trace how the fantasy was created, and why it was believed. A key part of that analysis involves shielding voters from the experts (not just some experts, but pretty well any experts) who could have easily brought voters down to Earth. But a year after the vote, reality is beginning to win through. Leavers are beginning to see the costs of Brexit in the high street, and a clear majority now say they want to stay in the Single Market even though that means accepting free movement (here, p7). Yet our political leaders, who really should have been told what experts know, remain deluded about key aspects of the leaving process.

This is why Brexit means more than Brexit. It is an example of how half a nation, included its leaders, can be persuaded to embark on a process that we know will do them great harm. I cannot think of anything like it during my lifetime, and I find that both interesting and appalling. It seems to me to be imperative to understand how this could happen so it does not continue to happen.    

25 comments:

  1. Leaving aside the fact that your conclusion (that Brexit will be bad) rather assumes what requires to be revealed - we will not know definitively for many years - there are other issues here. I use revealed rather than demonstrated as you would say that it has been demonstrated.

    Most people do not understand "experts"; whilst readers of this blog may well understand the elements of the Ricardian free trade model and concepts such as gravity modelling of trade flows, most do not and would be baffled and confused. This is not meant as an arrogant comment but merely a reasonable statement of fact. So it is hardly a surprise that experts are not listened to - because most are simply not understood and are also regarded as partial.The word "expert" in which you use it implies an entirely objective and technical argument that can decide an issue; however, if this is the case, then why do "experts" disagree because they do, and frequently? Your comment about voters being "shielded" from experts betrays a touching faith in the ability of most to understand the sort of issues that are everyday currency to you but are truly baffling for most.

    Furthermore, there are other more nebulous issues that might have been considered apart from economics. How do you evaluate the cultural aspects of having potentially lower immigration over a number of years; what is the trade off between say lower economic growth and a potentially lower population (forget the fact that the one directly affects the other; it the cultural aspect that I speak of)?

    To me the Brexit vote was as much a sign of general dissatisfaction as it was about the EU; many people see themselves as struggling with and prey to forces beyond their control or even comprehension.

    Brexit will now get the blame for everything that goes wrong with the economy and what I find amazing is that we have far bigger challenges in the form of demographics and robotics that are already with us that will provide a potentially much bigger challenge than Brexit.

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  2. No doubt the complete explanation will have to wait for the historians but it seems to me that one causal factor is that the Conservatives have been systematically running down the Civil Service so that apart from those various functions that were transferred to Brussel such as Trade negotiations, there is no longer the expertise to carry out the key functions of government nor the resources to deal with unexpected "Events". Add to this a group think belief expressed in its crassest form by Michael Gove that we have heard too much from experts and you have the basis for the imminent car crash.

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  3. I was expecting to see something about the French presidental frontrunner, but then I realised I misread the title of the blog as "Mainly Macron" ...

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    1. Do you have these quips on a reel?

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  4. I put this quote on this blog over austerity. And so it continues.

    “As he went on to admit, ‘as in religion, so in politics, few even of those who are enlightened enough to comprehend the meaning latent under the emblems of their faith can resist the contagion of the popular superstition. Often, when they flatter themselves that they are merely feigning a compliance with the prejudices of the vulgar, they are themselves under the influence of those very prejudices.’ Here, indeed, Macaulay for once seems more sophisticated than Bagehot, who, in The English Constitution, tends to make the distinction between the enlightened and the vulgar an absolute one” (J W Burrow, A Liberal Descent, 1981).

    I think Macaulay took the sentiment from Edmund Burke's second most popular work, Thoughts on the Cause of the Present Discontents, written in 1770.

    That it should begin with the originator of political conservatism seems the right place for us to start an analysis.

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  5. SW-L is puzzled by the fact that half or more of the population can be made to believe in an absurdity. SW-L is naive. Most of the human race are robots who can be programmed to think anything. Hitler persuaded an intelligent people (Germans) to believe it would be a great idea to declare war on the whole of the rest of the industrialised world. Other national leaders have persuaded people to think equally absurd thoughts.

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  6. I don't really understand why you should be surprised by so many people were persuaded by the Brexit fantasy. After all very many more have been persuaded that a modest rise in the world's temperature will bring a catastrophe to the planet.

    A much more interesting question is why so many people should wish to choose such a pessimistic outlook o the future.

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    1. "a modest rise in the world's temperature will bring a catastrophe to the planet"

      I think what the climatologists are actually saying is that a modest rise in the world's temperature will bring a catastrophe to the HUMAN RACE.

      Our civilisation is based around things like familiar coastlines, familiar crop-growing areas, and familiar weather. It is highly likely that climate change could change all three of these, with massive effects on economies. It is also highly likely that there would be massive social unrest, and massive numbers of deaths.
      The planet is highly likely to survive, not so the human race. After all we would not be the first species of human beings to become extinct. Homo sapiens is just Mother Nature's latest attempt to create a human species fit to live in the environment currently provided by the Earth.

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    2. Because facts?

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  7. " Why most Leave voters were not willing to pay to reduce immigration because they thought reducing immigration would make them better off by improving access to public services"
    Is it possible that 40 years or so of the "Washington Consensus" has left many individuals caring nothing more than for themselves?
    "No such thing as society" type nonsense.
    I know a number of people (not really friends, as that would suggest some kind of consideration other than themselves), whose single thought about Brexit was "will my wages increase" with fewer immigrants.
    Shocking eh. I blame Loadsamoney from the 1980s.
    I thought it was meant to be a parody.

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  8. "A key part of that analysis involves shielding voters from the experts (not just some experts, but pretty well any experts) who could have easily brought voters down to Earth."

    It's standard Conservatives practice to to drive a wedge between the public and the professions. The two professions that have most contact with the public are teaching and medicine.
    When, during a parents' evening at the local school, people are told by teachers about government cuts to education it's embarrassing for the Conservatives. What's even more worrying is that the parents believe the teachers and not the stories in the Daily Mail.
    How do the Conservatives get round the problem? They get the Daily Mail to trash the teachers. "Don't believe what that bunch of lefties tell you."
    That's why you never hear anything good about teachers in the Tory tabloids. And when was the last time you heard anything good about doctors or the NHS?

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  9. "This is why Brexit means more than Brexit. It is an example of how half a nation, included its leaders, can be persuaded to embark on a process that we know will do them great harm. I cannot think of anything like it during my lifetime, and I find that both interesting and appalling."

    I can think of something that occurred in November 2016 in the US.

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  10. I recently attended an event hosted by the think tank, Policy North, which promotes the so-called Northern Powerhouse. At that event, many of the corporate executives believe that by leaving the EU, they will be unshackled from EU regulation and red tape and by doing so, will leave them in a better position to compete on the world stage as an important economic region in its own right. I'd be most curious about your thoughts on this, Prof. Wren-Lewis.

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    1. I'll chip in on this one. See points four and five of https://medium.com/@s8mb/five-problems-with-change-britains-brexit-numbers-dc06f83eeec5

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  11. Several people have being saying that leaving the EU is not like leaving a golf club - but actually that is a reasonable analogy.

    As a member of a golf club you pay fees to access a course and a bar. The club may want you to abide by dress rules.

    We have been members of the club for a long time, though not a founder, and been very generous - but we have negotiated the right not to wear the club tie or jacket.

    If you decide to leave you will not need to pay any more dues - but you probably do need to settle your bar bill. And if you had promised to contribute to the extension then there is a moral duty for you to honour your promise.

    Of course if you never want to play golf again, you could walk away and they may have no come back. But you may find that if you do that then not only would you not be welcome to play golf there - but after word spreads on the grape vine every other course would want payment up front.

    The problem is we want to leave the club - but we want to continue playing golf on their course whenever we want without fees. We feel that as they let other non members play, we should be able to continue playing whenever we want - without paying even if we flout the dress code. ignoring the fact that those visitors pay considerably more than members for the privilege, only get access to the greens when members are not using them and still have to follow the dress code.

    Apparently not being a member we will be able to arrange terms with other golf courses -even though our club has failed to arrange reciprocal rights and the new committee of the largest club has a strict "Members First" policy.

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  12. It seems to me that lots of experts are converging on a 2% hit on GDP by 2025 (Anthony Hilton yesterday http://www.standard.co.uk/business/anthony-hilton-hit-from-hard-brexit-could-be-softer-than-feared-a3528261.html wrote a good column). This is also the Figure that Paul Krugman estimates (often quoted in comments here)

    As far as I can see this does not take into account (1) Benefits from extra trade deals (2) any possible compensation measures in things like corporate tax or business rates and (3) the money that we don't need to send to the EU (yes, I know it's not 350M per week but it's a lot until 2025).

    I think for many people this seems to be a price worth paying for the return of sovereignty.

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  13. I agree fully with the thrust of this article and it should be essential reading for all decision-makers but after looking at the YouGov research, which you quote, it shows a clear majority of Leavers want to remain in Customs Union but still reject the Single Market. This still supports the argument but in a more nuanced way.

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  14. I voted for Brexit last year then left the country for a while. I think that the vote was a symptom of a general powerless frustration expressed by a large % of the population.
    I voted yes fully knowing that my income would take a hit in a similar fashion to my yes vote in the Scottish referendum. I would excuse myself over the Scottish vote because I believed we would get a Scottish business investment bank along the lines of the German state banks and that to me made the income fall I would suffer ,worth it for the future of the nation, to get a banking system designed to develop industry and not to "Vampire Squid it". Alas all we have had from the SNP is Indyref talk while the country suffers. If we ever get an Indyref 2 I will go with NO that time.
    I voted for Brexit for because the EU is no longer a trade club of equals but a front for EU government, globalization and financialization , the Euro has been a night mare for the peripheral countries like Greece and even France and Spain and Italy have suffered from its introduction.Factor in the possible inclusion of Turkey and enough is enough.
    If Le Pen wins in France and starts Frexit then the chance of turning the EU back into "the Common market" a trading group of equals might increase. However that would mean getting rid of the countries who should never have been in there in the first place like the former Soviet block countries. I for one would be delighted if we could get rid of the crowds of Romanian beggars who litter Glasgow streets.
    You can understand the frustration of people when you look at companies like Cadburys and Rowntree's , great Quaker companies who did not pay lip-service to their employee's rights and conditions , no zero hour contracts from those organizations when the Quakers ran them. Yet in-spite of empty promises from Thatcher on downwards,some production has been moved to cheaper labour EU countries and the UK work force is reduced or made redundant. People are angry and sometimes people who are angry do foolish things and when they get really angry they chop off peoples heads.
    I did find my self shouting at the radio a couple of days ago at some junior minister saying words to the effect that if we do not get what we want we will walk away. My question was walk away to what sir walk away to what and that thought does worry me somewhat.

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  15. As an observer from across the ocean, it has been confusing to hear continued assertions of British power over the negotiations. I have to assume that to some degree the politicians believe what they are saying, but it should be painfully clear that in choosing to leave all the power went to the other side. There are without doubt some trade pains that the EU will not want to suffer, but on the other hand the politics of the thing seem so clear cut that it's frankly confusing to watch the UK side. I have to assume either the rhetoric of a weak EU, or of a strong UK, has become fact in the minds of UK leaders.

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    1. Politicians such as David Davis (Brexit minister, at least until June) and Boris Johnson (Foreign Secretary) have deceived themselves because it makes it so much easier to deceive others.

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  16. Professor, you wrote an article which deserves thought, maybe even deep thought.
    I had the pleasure of reading the report on the May-Juncker discussion in German (as a Dutchman living a long, long time in the USA, you get some experiences). What surprises me the most is the foggy way of speaking by Davis and May. There is some similarity with the speaking by Trump, he says one thing and changes it the next time.
    My Father, a Merchant-Marine Officer during WWII and later, taught me not to trust the English. We liked the words spoken by Mr. Churchill, but after him the clarity in the spoken English disappeared. Your American cousins use the same "unclarity" in their muddy-English, believe me, I have to live here.
    Fortunately Juncker and if not he, Mrs. Merkel see clearly the contracts signed 40 years ago and maybe o maybe Putin will lift the embargo on vegetables so the Dutch can send their tomatoes to Russia in stead of England. Maybe you will see rationing coming back, you have the experience, you were the last country having to ration food. It looks like you are the one calling out in the desert, to no avail.
    Good luck, do not hold your breath, you'll turn blue.
    Jack van Dijk, Cary, NC, USA

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  17. Dear Simon.
    I am surprised that you only wrote this article two days ago and not back when the results of the referendum were published. What you describe in your article is probably what pretty much every European citizen felt and wondered back then. And even today, none of us has found an explanation that satisfied us yet makes us gain trust & confidence in the EU.

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  18. The price of liberty is not, as some old romantics might have it, "eternal vigilance" but actually, eternal war, because "eternal war" - both guerilla and full frontal - is what reactionary forces wage against every bit of sensible and/or humanistic advance.

    Keep up the fight, Simon. Lots depends on you.

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  19. I think that susceptibility to fantasy in this instance in driven by desperation.

    It is not convenient to acknowledge, but many people have xenophobic and prejudiced views about people from other countries. Many people also have highly romanticised and deeply held convictions about their particular notions of "Britishness" or whatever cultural identity that they hold near.
    The inconvenient truth of the Globalisation movement which has swept Finance and Politics along in its wake these last 40 or so years, is that it promises a world where these people are not welcome.

    We have seen the same in America with the Trump vote. Their world view is incompatible with Establishment facts. And as such they gravitate towards anyone who is willing to espouse their views and find whatever justifications possible to refute accusations of lies and inaccuracies.

    My point being, that in this instance, it is not irrational for this particular section of our societies to ignore the logical critique of their positions. If your way of life is under threat, no amount of facts is likely to convince you that it should be.

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  20. A wise explanation, and I (almost) understand it. However, could someone look at the other sides' opinion and says, hmm, what do you mean? Is there a possibility that we have to start rationing again when the Dutch, who sell us veggies, will sell us 10% more expensive because that is what the WTO demands? Keep in mind, England signed the contracts with the EU, the ink use in the signature may turn into blood, your blood.

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