Brexit: it’s the economics, stupid.

The Global Future report published about a week ago, and particularly the polls it contained, received some attention, but in my view not nearly as much as they deserved. Respondents were shown four possible Brexit scenarios, together with an estimate of what each would do to the amount of money available to spend on public services. One of these options was the government’s preferred bespoke deal. All the options were overwhelming rejected, by Leave voters.

The Jack of Kent blog had a take on something similar that could also be applied to this poll result, after a well known children’s book: ‘That’s not my Brexit!’. It is very apt for this poll because it makes clear that none of the four types of Brexit offered are remotely like the Brexit people voted for. What is wrong with EEA, FTA, WTO or Bespoke in the mind of these voters? They all imply substantially less money for public services. The Brexit people voted for involved more money for public services.

This fits with the finding that most Leave voters continue to believe that they will be better off in economic terms as a result of Brexit. Many voted for Brexit because they were told more money would go to the NHS. The Remain side said that would not happen because of adverse macroeconomic consequences, but many voters believed the Leave side when they said these claims were just Project Fear. They were told that the EU would not decrease the ability of UK firms to trade with the EU because it was not in the EU's interests to do so. 

This is why polls that ask “In hindsight, do you think Britain was right or wrong to vote to leave the European Union?” only show a narrow majority for staying in the EU. In answering that question most Leave voters still believe they will be better off after Brexit. When presented with specific options that show we will not be (i.e. when presented with likely reality), you get quite different answers.

Forget those who say that the Brexit vote was all about sovereignty and not about economics. Economics matters, and the poll shows that in this case it matters a lot more than sovereignty or immigration. What Project Fear achieved, with considerable help from the media, was to take the economic factors that mattered off the table, or even replace them with mythical economic gains. [1] Voters went for what they saw as certain: £350 million a week, plus less immigration reducing pressure on public services. Both were lies, but Leave voters did not know that. Which is why most Leave voters continue to believe they will be better off, and why none of the four options they were presented with in the Global Future poll was the Brexit they voted for.

In short, half of the voting public bought snake-oil believing the claims made for it. Most continue to believe the claims, and put down the fact that the government appears not to be delivering what they were promised to something other than that they were sold a pig in a poke. If you think that is implausibly foolish, your main source of news is probably not a pro-Brexit newspaper or even the BBC.

The implications of this are huge. The Global Future poll shows that most Leave voters, and certainly most voters, do not want any Brexit deal that is actually possible. They only want the impossible deal they were promised by Brexiters. That means that any referendum on the final deal that included the government’s own realistic assessment of its economic consequences would result in a massive majority to Remain in the EU.

This is why Brexiter claims that everyone (and for the maths to work it has to be almost everyone) who voted Leave knew that meant leaving the Customs Union are beside the point, as well as being as economical with the truth as most Brexiter claims. Most Leave voters probably had only a hazy idea of what the Customs Union and Single Market were, but most clearly wanted a Brexit that delivered more money for public services. As it is now quite clear that the Brexiters cannot deliver that, then there is no mandate for Brexit. That is what these polls show.

I do not normally disagree with Martin Wolf, but I do when he says another referendum would tear the country apart. Instead, it would be the opportunity for most of those that voted Leave to realise that what they voted for is not on the table because it is not possible, and for them to gracefully retreat by changing their minds in the privacy of the voting booth. On the other hand to continue with Brexit would do far more harm to the UK’s body politic. We would have allowed politicians to put forward a fantasy and get away with it, which means every election from now on will involve claims more and more divorced from reality. The government, desperate to avoid the disappointed expectations of Leave voters, will resort to ever more populist tactics. The lurch towards an anti-pluralist democracy that we have seen since the referendum result could become entrenched in the UK.

Governments have been elected making impossible claims before, but when it turns out that they cannot deliver they can get voted out after 5 or less years. We have to think of the referendum in the same terms. We will have had two years to see if the government can produce the Brexit people voted for, and what these polls show is that they have failed to do so. That may be no surprise to many, but it is news for Leave voters. These polls show that Leave voters do not want the Brexit that is likely to be delivered. To deny people the chance of recognising that the Brexit they voted for is not possible in a referendum on the final deal is deeply undemocratic.

[1] I argue Trump did something very similar.

The unanswerable democratic case for a second referendum

Much discussion, including my most recent post on Brexit, argues that a second referendum is unlikely on political grounds. But that is very different from the question of whether there should be a second referendum. That is what this post is about.

A few days ago the Guardian published a piece by Simon Jenkins arguing that there should not be a second referendum. The argument is essentially this. The people have already voted to leave, and “effectively” delegated to government/parliament the choice of how we do it. All we should be talking about now is how to get the best deal. He writes:

“There are no rules for referendums because they do not feature in any constitutional edict, but convention dictates a second one would be justified only if the circumstances of the first have radically changed. The Danes (in 1993) and the Irish (in 2009) held second referendums, after renegotiations, to stay in the EU. Circumstances do not include second thoughts.”

There are so many problems with this argument that it is difficult to know where to start. Let me begin at the end. Now occasionally second thoughts arise through deep contemplation about your original decision, but most of the time second thoughts arise because circumstances change. The information people have about what leaving means has changed. Democracy is all about letting people change their minds because circumstances have changed. [1] 

Jenkins implies that holding a second referendum after a renegotiation is fine. What on earth does he think has been going on for the last year and a half. The conceptual difference between a negotiation and a renegotiation is zero. People may well have voted Leave because they believed, as they were encouraged to do, that the UK could get all the benefits of the single market after leaving. Finding out this isn’t possible is not some whimsical second thought, but exactly equivalent to an agreement being renegotiated as far as voters are concerned.

Jenkins does concede that “there might, just, be an argument for a referendum after a final deal, purely to confirm it.” You have a choice, as long as you say yes. This accepts the absurd framing of the government that the referendum fixes the decision to leave for all time, whatever the circumstances. There are no conventions that say that. The obvious choice to put to people once the deal is done is whether they still want to leave, now that the best feasible terms for leaving as approved by parliament are known.

The argument that this must be the convention because we have not had a referendum since 1975 is nonsense. The first point to make about 1975 is that we had already joined, so the negotiation had already been done. Second, there was a sort of understanding among politicians that we should only have another referendum if the nature of the EU changed, but (a) there was no referendum after the Single Market was established, and (b) we had a referendum in 2016 years after any conceivable change. So as conventions go this one has been honoured in the breach, for the straightforward reason that it makes little sense. Information about the benefits of being in a club of nations changes for many reasons besides treaty change. I think it is best to forget about conventions and just use common sense. [2]

The vote in 2016 was pretty close, and was based on no clear understanding of what leaving would actually involve. So common sense says that the democratic thing to do is revisit the question once the terms are known. People should be allowed to change their minds. If people are not allowed to do so, and must be bound by that one vote for a generation, then we are no longer a democracy. 

If you disagree with that, imagine the possibility that the UK ends up effectively agreeing to stay in the single market and customs union, accepting to all intents and purposes free movement and the authority of the European Court. Given the Irish border issue, and the economic advantages for the UK in staying in the single market for services, it is quite possible this is where we will end up. If this had been the choice in 2016, do you really think voters would have chosen it? Of course not, because we give up a say over the rules we have to obey. [3] That possibility shows that the case for a second referendum is unanswerable. [4]

A popular reposte to the case for a second referendum is why not make it the best out of three. An alternative way of putting it is that the elite wants to keep holding a referendum until voters give an answer they like. But this is nonsense, because in reality what is being argued by the Brexiter elite is not to hold a second referendum because it would probably give the wrong answer from their point of view. Clearly we will only have the chance of one more referendum before we leave: what can be wrong about giving people a second say on a decision that will profoundly influence their lives?

Unfortunately, because of the transition period that both sides are so keen on, we will not be able to have a second referendum on the final deal, to confirm or otherwise the first, because the final deal will be done after we have formally left. There is no inevitability about that, because extending the 2 year period for Article 50 is far easier than any transition period. But, as I have argued before, this transition is a democratic affront, precisely because it prevents a second referendum on a final deal. The only democratic response to that affront is to hold one anyway before we leave, on the basis that we now know a lot more about the final deal than we did in 2016.

If the polls were showing a larger majority in favour of leaving, then there might be a case that a second referendum was unnecessary, but of course polls are now consistently showing a majority to Remain. Insisting that despite this the 2016 referendum, which was based on almost zero knowledge of what leaving would mean, and where the majority was only 52%, denies any chance of a second referendum is, quite simply, a profoundly anti-democratic act.  

[1] We have fixed terms for governments for continuity, but Brexit is different: an irrevocable decision which will be with us forever. That makes it imperative that we allow people to change their minds before we leave.

[2] The underlying reason why it is a waste of time talking about conventions is that conventions are simply a cover for political expedience. In the UK at least, we have had referendums when the government is hopelessly divided about what to do. 

[3] Jenkins thinks this possibility is fine because “any trader can influence rules”. Not if they are outside the EU. The naivety here about the influence of the UK outside the EU is worthy of any Brexiter. I have argued that a Norway type deal for the UK is unlikely to be sustainable in the long run precisely because our influence on the EU and world stage generally once we leave will be much diminished.

[4] Some people object to a second referendum on the grounds that referendums are generally a bad idea. That is not a debate I want to address here, so it is best to take the statement that the case for a second referendum is unanswerable as contingent on parliament approving any final deal because they do not think they can override the 2016 referendum. 

The problem with a second referendum

My last post upset a few people who are campaigning to reverse Brexit, because I was so pessimistic about the chances of a second referendum before we leave in early 2019. They mistook my pessimism for defeatism. I would never suggest that those fighting for a second referendum, or an end to Brexit by any other means, should give up, just because the outlook looks bleak. You can never be certain about how things will turn out.

The path to a second referendum is clearly laid out by Andrew Adonis in this Remainiacs Podcast. Two things have to happen. First Corbyn needs to start arguing for a second referendum, which Adonis thinks he will do in the summer or autumn. I think this is conceivable, although far from certain. I would merely note that Remainers who declare that Corbyn will never do so because he is a Brexiter at heart are not only wrong, but are therefore by implication far more pessimistic about Brexit than I am, because this first stage is a necessary condition if a second referendum is going to happen.

The second thing that has to happen is that a majority of MPs write in the need to hold a second referendum as an amendment to the Brexit bill, a bill which thanks to rebel Conservative MPs is now a requirement. Yet there is a world of difference between demanding a proper bill before leaving, and demanding a second referendum. The Brexiters will ensure the government throws everything into preventing a second referendum, including perhaps its own survival. As I said in that earlier post, I cannot see it happening in the current environment, and this is the source of my short term pessimism.

One of the reasons I am so pessimistic is related to an earlier post, where I talked about how anti-democratic the concept of the transition period is. I could imagine at least some Conservative MPs arguing for a second referendum when the exact nature of the final deal is known. The first referendum was a decision to put an offer in for a new house: now the surveys and council searches are in we can take a final decision.

But, because of the transition period, what the final deal will be remains unclear, at least to most of the media and the public. The transition allows the Brexiters to continue to live in a fantasy land, where the final deal keeps all the advantages of being in the EU without any of the costs. I have argued, as have others, that the first stage agreement restricts the scope for what the final deal could look like, but this is denied by the government who are still busy eating cake. There is no reason for this to change in the next year, because the focus will be on the government’s futile attempts to avoid transition on EU terms. In this sense a second referendum will be just like the first: the realists will argue as hard as they can for reality, but reality will either not get a look in with the right wing press, or be balanced against fantasy by the broadcast media.

To threaten to bring down their government by voting for a second referendum, rebel Conservative MPs need a cast iron moral case. Alas because of transition they cannot argue that the second referendum will be a vote on the final deal, because the Brexiters can still claim the final deal will be all things to all men and women.

Would Remain win a second referendum?

I think it unlikely that we will have a second referendum before we leave in 2019. [1] Brexiteers fear losing it and Labour fears fighting it. So why ask the question? It will become clear.

I think if a second referendum was just a rerun of the first, then Remain would win comfortably. It is now pretty clear there will be no £350 million a week for the NHS, and instead as the OBR suggests there will be less money if we leave the EU. The economic concerns that the Leave campaign so effectively neutralised with ‘Project Fear’ are now becoming real: we had a depreciation (as predicted), real wages are falling, and GDP per head in the first half of the year is almost stagnant. I could go on, but this is enough for many Leavers to change their minds.

Partly because of this, a second referendum would not be a rerun of the first. Leave would have a new theme, which they would plug away at relentlessly. They would argue that the very existence of a second referendum was an attack on democracy. The people had already decided, and a second referendum was an attempt by MPs to take power away from the people. The people needed to take back control from MPs as well as the EU. They would argue that you should vote to Leave again to preserve democracy.

The simple point that people should be allowed to change their mind would be met by lots of rhetoric that sounds convincing. If a second, why not a third? Referendums are meant to last a generation, and not to be held every few years. (Quotes from David Cameron saying similar things from the last campaign would be trotted out.) We know from the polls that this argument has power, as many people who voted Remain think that nevertheless we should respect ‘the will of the people’. Many think that on a constitutional issue like this, a referendum should override the views of MPs, and will feel that by voting Leave they will be upholding this principle. In this sense it would be like the Labour leadership election in 2016, which Corbyn won in part because members felt MPs were trying to take members power away.

If your reaction to this is to say ‘what nonsense’ or ‘who would be so idiotic to fall for this tactic’ then you are who I’m writing this post for. The view that Remain lost and that result should be respected is a perfectly valid point of view. Furthermore, as Owen Jones has pointed out, the polls suggest there are many besides himself who take that view. It does the Remain cause no good whatsoever to suggest that people who hold this view are in any sense stupid. (The opposite is also true - the Re-Leavers view is also not obviously right, and needs to be argued. Is parliament overriding the referendum result really a 'coup against the popular will' when people realise they were duped and so no longer support Leaving?)

In addition, Remain campaigners just saying a majority of the electorate didn’t vote for Leave because some people did not vote will not convince anyone. Simply asserting that the original Leave campaign was based on lies is also not sufficient, because all election campaigns involve politicians telling lies of some kind. We need much better arguments than this if we are going to convince Remainers who think the original referendum result should stand.

A good place to start is a post by Richard Ekins, a Professor of Law at Oxford University, who argues “Political fairness and democratic principle require one to respect the outcome of the referendum even if one is persuaded that Brexit would be a very bad idea”. His arguments are strong and they need to be addressed (as I tried to do in March). We need to argue that the chosen electorate for the first referendum was not fair, and to allow just a simple majority to decide such an important and potentially irreversible event is not democratic, even after the event. We need to argue, as I tried to do, that the lies told by the Leave campaign went well beyond what normally happens in an election. In these circumstances a referendum result is not something to respect, but something you resist with all your power.

Remain campaigners also need to be politically realistic. To say, as some do, that Labour’s commitment yesterday (to staying in the Single Market and Customs Union during the transition period) means nothing and is “not good enough” because it still involves leaving the EU in 2019 completely misunderstands political realities. Brexit is not going to fall apart of its own accord. As George Eaton argues (see also Stephen Bush), the best bet for reversing Brexit is through a Labour government. Given this, to suggest that Labour would campaign against Brexit if it wasn’t for Jeremy Corbyn is both misdirected (it ignores many MPs in Leave voting constituencies who think Labour have to support Brexit) and counterproductive (if Brexit is reversed, it will likely be by a Labour government under Jeremy Corbyn).

When Owen Jones described ‘Hard Remainers’ online as increasingly resembling a cult, I was both shocked and surprised. I am, after all, someone who argues online that the referendum vote should not ‘be respected’. By cult he meant those he encountered who were

“Intolerant, hectoring, obsessively repeating a mantra that doesn’t convince outside of their bubble, subjecting any who dissent from their hardline stance to repeated social media pile-ons, engaging in outright abuse and harassment, saying that people who voted Remain aren’t really Remain supporters and are heretics.”

Now I like to think I do none of those things, and I know some of those campaigning to Remain who do not do these things either, but I can also see that others might take a much more aggressive and purist approach. This is a strange but I think real phenomenon: the less likely something is to happen, the more some demand that only it will do. The reality is that staying in the Single Market and Customs Union outside the EU permanently is a lot more likely than simply staying in the EU, and less costly that leaving either. Because it is obviously inferior to staying in the EU it may be how rejoining the EU eventually happens. Those campaigning to Remain are in no position to be aggressive or absolutist.

[1] A referendum where Remain is an option, and assuming we leave in 2019 and the Conservatives remain in power until then.  

Brexit and Democracy

A constant refrain from politicians and others is that we have to leave the EU because we have to respect democracy, where by democracy they mean that 52% voted to do so. Arguments that the vote was based on lies by the Leave side are met with dismissive remarks like both sides were the same, or what do you expect from politicians and so forth. The important thing, we are told, is to ‘respect democracy’.

In Poland the government recently passed a law which will dismiss all existing judges and allow the state to directly appoint their successors. This government was democratically elected, and the plan was in their manifesto. So why did the Polish President veto the plan, and why was the EU deeply concerned about it? Surely there was a clear mandate for this policy? Shouldn’t the President and the EU respect democracy?

The reason why the President and the EU were right is that democracy is much more than having elections or referendums every so often. Checks and balances, and the rule of law, are crucial ingredients of a well functioning democracy. But having an independent judiciary is not the only essential characteristic of democracy besides voting.

I personally think an important part of democracy is that politicians do not base campaigns on complete lies, and that knowledge, evidence, facts and expertise are respected and are easily accessible to all voters. Otherwise elections can be won by those who tell the biggest lies. If this happens and is not remedied democracy is a sham. As I noted here, lies were central to the Leave campaign (more money for the NHS, Turkey about to join the EU) and have already been shown to be untrue, while the central plank of the Remain campaign (dubbed Project Fear by Leave) has already come to pass. Polls suggest the Leave lies gained them votes. Only one side in the campaign spent a large amount of time dismissing or denigrating academic expertise (be it economists or lawyers).

In the US the Republicans control Congress and the White House, all won by democratic elections where a key part of the Republican platform was repealing Obamacare. The Republicans therefore appear to have an overwhelming democratic mandate for this repeal. So why are so many people protesting against this repeal? Isn’t it important for democracy that repeal goes ahead?

You may say that the Republicans did not say how they would repeal Obamacare, but neither did the Leave campaign say how they were going to leave the EU (or rather they said whatever people wanted to hear). You may say that Leave voters will lose their faith in the democratic system if Brexit doesn’t happen, but the same is surely true for Republican voters if Obamacare is not repealed. That is hardly a reason to do it.

But referendums are not like elections, we are told. Mandates from elections can be challenged but referendum results must be respected. But where is it written that referendum results (particularly those that are so close) can never be challenged? Where is it written that we must be bound by the words of politicians during the referendum.[1] If it turns out that the claims of one side in the referendum have been shown to be false, where is it written that the referendum result should nevertheless be cast in stone for a generation. The answer is nowhere, and for the good reasons that David Allen Green explains. All that is written is that parliament is sovereign.

People overseas, in the EU or outside, are mystified at what the UK is currently doing. The main supporter of Brexit overseas is an authoritarian regime, which should give you a clue about what is going on. There are two overwhelming reasons for challenging the referendum result: it was arrived at after a deeply flawed campaign, and we now have information that clearly shows the extent of the Leave campaign's lies. The Leave campaign abused democracy before the vote with lies, and then abused the word subsequently to stifle any dissent. When a vote is won narrowly in an election based on lies that have now been exposed, it seems to me a hallmark of a functioning democracy is that the original vote is challenged and voters have a chance to vote again.

[1] We could add whether we should be bound by an electorate chosen to keep Brexiteers happy.  

Why we must have a second referendum

I think many people who argue against a second referendum have not taken on board the scale of the difference between the various Brexit options. We could retain access to the single market and free movement of labour (the Norway option). Or we could just cut a trade deal with the EU, do nothing on services, and end free movement (the Canada option). Or other things in between. In economic terms the Norway option is much closer to EU membership than it is to some of the alternative forms of Brexit.

Perhaps an analogy is that you decide one day that it is time to move house, as you are really bored with your current property and aggravated by its various imperfections [1]. That decision is akin to the Brexit vote. But you have no idea where you are going to move to. It could just be a local move to a similar style property, or it could be to somewhere in another part of the country where property is cheaper but where you would have to find new friends and a new job.

The Brexit vote in practice is the green light to explore what possible alternatives are available. Having looked at the various alternatives, you may decide that you do indeed want to move. Or alternatively you may realise that your current house is not so bad after all, and is superior in many ways to the best available alternative, and so you decide to stay. To deny a second referendum is a bit like saying that once you have decided to move you cannot go back on that decision, no matter what the alternatives turn out to be. A slightly closer analogy is that you decide to move house, but then you get someone else to choose the best new house for you, and you have to accept the choice they come up with even if you think it is inferior to your current house..

So the key arguments for a second referendum are that the alternative to EU membership was not specified in the first referendum (they were also unknown at the time, and depend on what can be negotiated from the EU), and that these alternatives are very different from each other. I cannot see the logic in saying people should have a direct say on whether to leave the EU, but no direct say on what to leave it for. [2]

[1] I choose an analogy involving an individual rather than a group or society as a whole to avoid the (well known to economists) problems associated with non-transitive preferences for groups of individuals: see Jonathan Portes here.

[2] Note that I make no reference to voters being lied to in the first referendum. My argument still holds even if Leave had been completely honest.