Winner of the New Statesman SPERI Prize in Political Economy 2016

Monday, 28 January 2019

Why the UK cannot see that Brexit is utterly, utterly stupid


If you talk to almost anyone overseas, except those at the right wing extreme (like Trump) or part of a tiny minority of the left, their reaction to Brexit is similar to the former Prime Minister of Finland. What the UK is doing is utterly, utterly stupid. An act of self harm with no point, no upside. Now sometimes outside opinion is based on incomplete or biased information and should be discounted, but on Brexit it is spot on. So why are so many people in the UK unable to see what outsiders can see quite clearly.

The days when Leavers were talking about the sunlit uplands are over. Liam Fox has not even managed to replicate the scores of trade deals the UK will lose when we leave the EU. As to independence, Leavers just cannot name any laws that the EU imposed on the UK they do not like. Since the referendum even public attitudes to immigration have become much more favourable.

Instead there has emerged one justification for reducing real wages, for allowing our economy to lose over 2% of its GDP, to allow firms to make plans and enact plans to leave the UK: the 2016 referendum. People voted for it so it has to be done. It is described as the will of the people. Yet few bother to note that almost half the people voted the other way, with those that would be most affected not even having a vote, and that this victory was won by illegal means. All that is brushed aside.

But what is really remarkable is the way what this vote was for has gradually mutated over time. Just before the vote, the Leave campaign talked of many ways of leaving, with Norway (which is in the EEA) as one option. They did this for a simple reason: every time Leavers came up with a feasible way of leaving other Leavers did not like it. Yet within little more than a year Leavers were declaring that the vote was obviously to leave both the Customs Union and Single Market. During the referendum campaign the Leave side talked about the great deal they would get from the EU, but within two years many of the same people were seriously pretending that voters really wanted No Deal. A vote for the ‘easiest’ deal in history has become a vote for no deal at all, apparently.

In much the same way, as Alex Andreou notes, what was once described as Project Fear transforms in time into ‘the people knew they were voting for that’. Claims there will be no short term hit to living standards made before the referendum has now become people knew there would be a short term cost. (Remember Rees-Mogg told us that short term means 50 years.)

Meanwhile warnings from important UK businesses become an excuse to talk about WWII, yet again. What people from outside the UK can see that too many inside cannot is how the case for Leaving has become little more than xenophobia and nationalism. What people overseas can also see but we seem unable to is that there is a world of difference between a vote to Leave the EU in an unspecified way and a real, practical plan. Which means that the first referendum, particularly as it was narrowly won, needs to be followed by a second referendum over an actual, realistic way of leaving. In other words a People’s Vote. When Jonathan Freedland says “the notion that a 52% vote for a hypothetical, pain-free Brexit translates into an unbreakable mandate for an actually existing Brexit is shaky at best” he is wrong: the notion is simply wrong.

Some of the arguments against this are so dumb, yet are allowed to pass as serious. ‘Why not the best of three’: there is no reason for a third referendum. ‘The first referendum was an unconditional vote to leave’: of course it could never be. [1] Suppose we found out that everyone would lose half their income under any specific way of leaving - would you still argue that in 2016 voters voted for that? Or that a second referendum means that ‘politicians have failed the people’. Most politicians voted to Remain because they knew that any realistic way of leaving would be bad for people. They have been proved right and a majority of the electorate might well agree.

But by far the worst excuse not to hold a People’s Vote is that a second referendum would be undemocratic. Orwell must be turning in his grave when he hears politicians say in all seriousness that a second referendum would undermine faith in democracy. This is the language of dictators and fascists, but few seem to mind. Given the difference between the final deal and the promises of the Leave campaign the case for a second referendum is overwhelming, but you would not know that from the UK public debate. There is only one way to make sense of the ‘People’s Vote = undemocratic’ equation, or the ‘will of the people’, and that is that the first referendum effectively disenfranchised Remain voters. [2]

That is exactly what happened after the 2016 vote. Those wanting to Remain to all intents and purposes ceased to exist. If we are just talking about Leave voters, then of course most will be disappointed by a second vote. Is this why Labour MPs just worry about Leave voters in their constituencies, because Remain voters no longer matter? It is why we get endless Vox pops from Leave constituencies, and no mention from EU citizens who have lived here for years who are worried sick because the computer might say you have to leave.

How did Remain voters get effectively disenfranchised? Why is the lunacy of what this country is doing only apparent to foreigners? Answering this question is not hard for anyone who has read my book ‘The Lies We Were Told’. What we have that foreigners do not is a public discourse shaped by a handful of newspaper proprietors who just happen [3] to be intensely hostile to the EU. Partly through intimidation by that same press and their political allies, the BBC follows this discourse. This is where the ‘will of the people’ came from. It was this press that puts rebel Conservative MPs on their front pages, and that uses language like saboteurs and traitors. It is intimidating MPs in order to influence the democratic process, but of course few in the media call it that. 

As I discuss in my book, I have seen this before in a milder form at least twice in recent times. In the first the UK convinced itself that austerity was the only way forward, despite most academic economists saying otherwise. It was the media that promoted claims that governments were just like households, even though first years economics students are taught why this is not true. And then it was the media that pushed (or left unchallenged) the idea that austerity was the result of Labour profligacy: it was a straight lie but it played a critical part in the 2015 election.

If people have doubts about my argument that the media played a central role is misdirecting the public then (and many do), well Brexit should be a test case. And so far Brexit has gone exactly as these newspaper proprietors would have wished. Three coincidences is a row? The reason why those overseas can see that Brexit is utterly, utterly stupid while the UK stockpiles food and medicine, and the Prime Minister tries to blackmail MPs into supporting her deal, is because those overseas are not influenced by the UK media.

[1] As this one seems very popular, it is worth spelling out why it is rubbish. The 2016 referendum was not some kind of contract, where all those voting to leave committed to support any vote to leave for all time. It is highly likely that some people voted for a particular kind of Brexit and would prefer Remain to other types of Brexit, which is crucial given the narrow victory. (Which is also why claims that Remain cannot be on any second referendum ballot are also nonsense.) Some may have voted Leave to give more money to the NHS and to stop Turkish immigrants, in which case they may have changed their minds. It does not say "we should leave whatever the form of leave at whatever cost" on the ballot or the small print, because there is no small print.  

[2] There is a serious and quite compelling argument that referendums in a representative democracy are a bad idea, but this equation is about a referendum that has been necessitated by an ambiguous first referendum.

[3] Well maybe not ‘just happen’: see here


25 comments:

  1. Gangs initiate new members by requiring them to participate in an act of violence (sometimes even murder) against an enemy of the gang, and the criminal complicity of the gang members thus assures their loyalty.

    I wonder if voting Leave in the 2016 referendum had a similar psychological effect to that of participating in a gang initiation?

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  2. I'd love it if English people were so bold in saying an independent Scotland or a united Ireland were utterly, utterly stupid.

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    1. Neither of those ideas are stupid. Brexit is, however. So your point is...?

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    2. Those ideas are stupid if Brexit is. A huge net fiscal transfer exists from England to Scotland, worth 8% of Scottish GDP, and the one to NI is even bigger, and in both cases "exports" to the rest of the UK are FOUR times bigger than what Scotland/NI sells to the rest of the EU.

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  3. To say that print media had no influence on the result would of course be wrong but the "media" in general was pro EU, and remains that way. Also don't forget that the government sent every household a leaflet extolling the virtues of the EU.

    The "stupid" remark was presumably based on the assumed economic impact of Brexit whereas the main reasons for voting Leave were sovereignty and immigration; remain voters stressed the economy. Are people really "stupid" to vote on the basis of sovereignty and immigration; is this somehow illegitimate? You have said that with regard to immigration people have the wrong notions and, in part, you may well be right. But the arguments against immigration are more nuanced than you think. The rate of inflow is a relevant issue as is the volatility of the flows, nether of which can be managed in the context of free movement.

    As regards sovereignty the EU is heading down the road of depoliticisation where the functioning of the state and the economy is disconnected from the democratic institutions and "democracy" is ultimately only a facade. The ceding of power to corporate interests and supranational bodies has been going on for years but this cannot be reversed inside a body such as the EU; it has to come from within the nation state.

    Also free movement is something which drives divergence in the EU; Poland for example has a demographic problem and it does nothing for them that so many young people want to go abroad to work. Many Poles are now returning and the government has welcomed this. Divergence is one thing that may well spell the end of the EU and some of its core policies such as free movement and of course the Euro are driving this.

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  4. Its not just the press, it is a trend in clearly visible in almost all democracies.
    I enjoy your blog, but I think you tend to write as if the UK is an exception, (the whole myth making we both abhor derives from the view of British exceptionalism).
    Politics has become very polarised and questions of identity dominate in such contests. This most easily seen in Northern Ireland, where the two previously "extreme" parties DUP and SF came to dominate. Scotland is well on its way to something similar, a straight fight of Tory vs SNP. Individual policies do not matter, rather what matters is who you hate and who hates you.

    Its no coincidence that so much of the public discourse from Brexiters is about liberal elites and very little now about GDP growth, different environmental policies.. In Scotland the SNP and Tory party could swap their entire manifestos as could SF and DUP with only one key change, keep their position on the question on identity and it would make little difference to their polling. Thus do small bases drive major policies, since people cannot "betray" their identity they take the whole package; somehow compromising on the size of government lacks the same thrill. I know the SNP is a mass party but they are united by one thing, Independence, their drift on education and economy suggest a party not doing a lot of serious broad thinking about actual policies (the SNP are no worse or better than anyone else).
    Why has identity come to dominate? Precisely because it removes policy from the arena. Policy means choice, winners and losers. As the public has disengaged from the complexity of real politics (agreeing a common position, trade off, compromises, messiness etc), parties have become extremely small monocultures where dissent from the line is suppressed. The public like nothing better than a single issue, purity and simplicity the thrill of unreasoning anger is quite a liberation (Orwell noted this in 1984). Brexit has arrived to fill that yearning.
    A truly mass member party would never have ended up supporting mad ideas like hard Brexit, internal debates would have rumbled it, the same for Labour's expropriation of 10 % of company stock. The right wing amped up the inherent tribalism we all feel. Et voila, Brexit is now central to the identity of > 40 % of the population. What a base to work with. The papers pushed the line over the 50 %, but the years of disengagement, the unwillingness of the public to honesty accept choice with winners and loser (thus a desire to be lied to about easy options that always disappoint) has led us to this pass and a tendency to frame policy arguments as there is no alternative (other views pre emptively dismissed).
    While I agree that the press made the difference at the margin, I am afraid what has done for us is what is doing for all democracies, the people. We have serious discussion of martial law, suspending Parliament and immigrant emergencies and no one blinks. Our future is strong (wo)man rule I am afraid, it will be academically interesting to see if its the ostensibly left wing sort (Maduro et al) or the right wing sort (Bolsonaro) or just the identity herren Volk sort (Poland). It will be much more popular than you or I with our caveats, witness the vilification of Soubry or Grieve it is precisely because they seem clever and unwilling to go along they are targeted.
    What is needed is 40 % in the tank for an identity question. Macron and co better do something, before they end up with le Pen or the left equivalent. Its too late for us we have jumped into the abyss, better to save themselves

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  5. The most important point you make is this: "It is highly likely that some people voted for a particular kind of Brexit and would prefer Remain to other types of Brexit, which is crucial given the narrow victory."

    The point is that the referendum was logically flawed, and this (not just the lies, or the illegal financing) is what makes it invalid and what lead to the current impasse.

    I develop this point systematically here:

    https://networkpolitics.svbtle.com/you-knew-that-there-was-something-fishy-about-the-brexit-referendum-well-you-were-right

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    1. This is contrived. Obviously there wasn't only one type of Remain, because integration would have continued, and we don't know the contents of future treaties, or indeed EU regulations. The same applied in 1975: does that mean the Yes vote was "invalid"?!

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  6. This is what I would expect to see from a generational change in politics; it is an affront to gradualism but that is why historians will give it a new chapter in their modern history because it is a new period.

    May and her government are on the run from Parliament including many of her own MPs, on the run from a general election, and on the run from a referendum because the government position will be defeated in all these places.

    It is a question of how much more damage Thatcherism will do before the people hoick it out of Britain.

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    1. After 1987 when Thatcher won a 102-seat majority in the general election, the best result the Conservative managed in the next 32 years was the 21-seat majority won by Major in 1992---which bye-elections whittled away to zero in a few years.
      Having somehow lost the ability to win big majorities in general elections---as the public, overdosed on Thatcherism, stopped voting Conservative in sufficient numbers---May must have been excited by prospect of a 100+ majority against Corbyn in 2017 when she called the election in April, with the Conservatives 20 points ahead of Labour in the opinion polls.

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  7. What with you being a clever economist and all that, the key question is: what have you done about it?
    You can apparently foresee the huge economic shifts that will occur in a few weeks' time, so how will you benefit economically from the predictable outcome?
    Have you mortgaged your house to fund a massive short on the FTSE?
    Put everything into Euro or USD?
    Gone long on turnip futures?
    What have you actually DONE???

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    1. :D I moved all of my money out of GBP in 2016 before the vote. I also gained Australian citizenship.
      My dad voted leave. He doesn't qualify.

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    2. Surely you recall the extraordinary prediction on this blog that sterling would rise in the event of a Corbyn government?

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  8. After the narrow win for Leave in the referendum, Teresa May called a General Election to confirm her version of Brexit. She did not get the mandate and had to be propped up by the DUP at a cost of £1 billion. So there is no democratic mandate for May's Brexit and it is right for Parliament to assume control. Put to a straight In or Out vote by MP's, In would win.

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    1. The £1 billion is over 5 years, which means annually 0.03% of UK central government spending.

      There is of course not a mandate for the Tories' Brexit (not in the sense of a majority govt's mandate). There is however a mandate for Brexit in general, since Brexit parties were elected to most seats in the Commons.

      Then again, that includes Labour, who accepted the referendum result. How could a majority vote In when they don't jhave a mandate to do so, having won their seats on Brexit manifestoes?

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    2. Between Red UKIP group and the ERG, parliament will vote to do nothing. Crash out inevitable.

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    3. The amazing thing is that May didn't do all the groundwork for the no-deal scenario before she used Article 50. That would have put her in a better negotiating position as well as prepared for the worst. How can she get re-elected if there's a recession? But I suppose all this was to use the abyss of no deal to get MPs to vote for a deal as close to EU membership as possible, because May was a Remainer anyway

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  9. In the interest of transparency perhaps you could let your readers know by how much you have personally benefited (financially I mean), directly or indirectly, from EU monies, over the past ten years or so, and how you manage this conflict in your writings.

    You are, after all, very willing to cast aspersions on the personal integrity and professional independence of those economists who are employed by commercial interests such as banks.

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  10. The real issue that Brexit has highlighted is that the majority of the general public do not understand economics and politics.

    When children attend secondary education they will have been taught at last one foreign language, English, maths and a science. They may also have been taught subjects like home economics, art, technology, history, geography and ICT in the first 3 years.


    Yet, very few school leavers will have been taught about the two subjects that touch them on a daily basis - economics and politics.

    It should be compulsory for secondary schools to teach 1 hour of combined economics and politics each week for the first three years. I know it is not the most enjoyable subject, but it would give teenagers a better understanding of how governments, economies work.

    At the moment, the majority of the population have not a clue on such subjects and rely on what their friends tell them, read in the newspapers/online or see on TV.


    If one thing comes out of Brexit, it is that future generations should be taught the basics of Economics and politics so they can understand the consequences of their vote.


    For instance, in the referendum, one of the issues was EU migration. I wonder how many people looked at the projected EU population figures that were compiled by the EU.

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  11. I don't doubt your analysis that the press was important, but why was the press able to do this so thoroughly? How was it that the metaphors associated with leaving the EU could resonate with so many people? Perhaps Fintan O'Toole's book, "Heroic Failures: Brexit and the Politics of Pain" provides the answer in a way that is complementary to the explanation in terms of the press.

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  12. Whilst I agree with the need for a free press, with the current lax ownership of the media it is surely time for some form of moderation in the way in which the press are allowed to report and more importantly comment on the news and current affairs.

    Most news items now reach the consumer directly via the Internet or the WWW. In such cases the public receive no moderated analysis of the events and have to rely on their own poorly arrived at views in the majority of cases or be indoctrinated by Mass Media Organisations. Surely we could have a moderating panel for each media outlet that considers the opinions expressed by writers and has the power to order changes where this is considered necessary. In order to prevent the panels becoming inncestious and influenced by a few wealthy proprietors such panels should be changed every six months in order to maintain vibrancy and bias.

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  13. It's only in blogs like this or in comments under Guardian articles that mention is made of the role of the UK's newspaper owners in "educating" their readers about the EU.
    Have you ever seen a television programme the role of the press in our "democracy"? Ever listened to a radio programme on it?
    The press act in virtual secrecy because nothing appears in the mainstream media.

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  14. I voted remain because I did not want this charade to take place from the outset.

    All we hear about is the Tory Brexit view, but in reality Europe was and always has been a capitalist club, the idea that it is some sort of welfare and defender of human rights is about thirty years out of date, today we have the richest country in Europe, Germany with poverty increasing and benefit cuts that directly hurt ordinary people, yet the wealthy continue to get ever richer. This article sums up the current situation in Germany https://www.waz.de/wirtschaft/leben-von-hartz-iv-wie-realistisch-ist-der-warenkorb-id216323657.html?fbclid=IwAR10vxyHTao2LqR9JFN2KslhHVTydm1QlOi0GTgI9hYA1W9Q3-Y19vU6TFw if you can't read German, then click on the article and scroll down for google to translate it for you. The great myth that Europe will enhance living standards for ordinary people is there for all to see, so why are people so blind they don't see it?

    When we look at trade Britain is at the bottom of the table, we not only have massive trade deficits with the rest of the world but also in Europe, and what little trade we still have will naturally migrate to where ever living standards are the lowest, such as the eastern European countries, or as they have been the far east. This is global capitalism at work and the notion Europe is a safe haven for us or anyone else in Europe is to forget what has happened over the last forty years.

    Yes getting out of Europe is the right thing to do, but not under the Tories who have already done a trade deal with Trump and don't really care how they crash out of Europe.

    What we need is a general election and a Labour government dedicated to spending directly into the economy where and when is necessary, clearly most who support Europe do not understand money creation and the ECB rules governing the Euro which means each country must earn Euros in order to spend into their economies. Hence Italy is currently in a recession and Germany is either in their first quarter or heading that way, irrespective of how well it is doing compared to the rest of Europe.

    There really is far too much ignorance in this country where people just seem to believe rather than genuinely find out for themselves what is really going on. There are also people that do know but have their own Neo-Liberal agenda hoping that will enhance their own personal interests rather than looking after the nation as a whole.

    The BBC is clearly prepared to openly lie to people and support the establishment to the point of incredulity, where is should by its own charter provide accurate information that enables people to understand what is happening. The clear distortion of what is happening to Venezuela is a classic example of what I am referring to.

    Lets have a general election and start planning for a new future, or blindly follow as we have done over the last forty years and see a small elite dominate life everywhere - reducing living standards to lowest possible level with all the ramifications we experienced before the last war.

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  15. “allowing our economy to lose over 2% of its GDP”

    There is a web link from this statement to the Centre for European Reform. They claim that up to Sept 2018 the UK economy is 2.3% smaller than it would have been had Britain voted to Remain. The figure up to June 2018 is 2.5%. So, strangely, had we decided to remain, our performance in Q3 2018 would have been 0.2% worse under remain than under leave. I don’t believe that, there must be something wrong with the methodology.

    Effectively, the CER is comparing our performance to that of comparable ‘doppelganger’ economies. There is a 50% contribution to the doppelganger from the US which since Brexit has introduced unfunded tax cuts that have given the country an unsustainable growth spurt (that retrospectively might be seen as part of a boom and bust cycle). The EU on the other hand has just slashed its growth forecasts for 2019. The growth forecast for the EU is down 0.6% and for Germany it is down 0.7%. The trouble with comparing growth between different countries is that you have to assume that their economic cycles are all in sync. We can’t know whether this assumption is merited or not until the slump in EU growth works itself out.

    We can however assume that Project Fear II has undermined consumer confidence in the UK, with talk of the Queen having to move out of London as martial law is imposed post-Brexit. It is difficult to know how much the hysteria in the Remainer media has damaged the economy but one thing is sure; any damage from this source should be owned by the Remainers and not blamed on the Brexiteers.

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  16. “The case for Leaving has become little more than xenophobia and nationalism.”

    Keep up the good work. As long as you persist in stereotyping Leave voters, you only reinforce their view of Remain supporters and their opinions.

    One thing I don’t understand is why economists, who were so against laissez faire economics, are so enamoured of laissez faire European immigration. There is nothing xenophobic about wanting to be able to determine the numbers of people arriving in your country. Any nation and its economy require a degree of planning and organization, you can’t leave it all to the market. Yet, the very people who oppose neoliberalism believe the level of immigration from European countries should only be determined only by the needs of big business and that the Government should have no say.

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