Lesson of Brexit

Much to the dismay of the leadership of the UK, the citizens of the UK have voted to leave the European Union. Not by much. The vote was 51.8% in favor of leaving. A scant majority. But enough to overturn an established economic order.

Still, entire regions of the UK voted NOT to leave. Scotland was overwhelmingly in favor of staying joined (62%). London also overwhelmingly in favor (60%). Northern Ireland wanted to remain (56%). But the majority in the rest of Britain did not. And the majority ruled.

Link to map of voting:

No one knows the long term results of this separation. The pundits are having a field day. Mr Obama was sad. Fox News was joyous. As was Donald Trump. Doom and gloom and happiness and joy.

Some see this as a catastrophe for the economy of the UK. With repercussions throughout Europe and even the USA. Nothing investors fear more than instability. No one wants to put their money where it may be unsafe. Especially big investors. Will London cease to be the financial capital of Europe?

Others see this as a strike against globalization and free trade agreements. A strike for independence and freedom for the Brits. The end of the EU. A triumph of nativism and nationalism. Will the rest of the EU follow suit and secede, fragmenting Europe once again?

Of course, the Brits were never fully integrated into the EU anyway. They kept their own currency. They kept control of their borders, except for the flow of capital. And the Brits have always seen themselves as a nation apart (superior to? ) the rest of Europe.

So, what is the lesson learned?

For me the lesson is simple. Representative democracy is not a terribly effective system, but it is the best system human beings have been able to devise. Brexit is an example of what happens when elected leaders refuse to lead. They let emotions, rather than reason, prevail.

Brexit is a good  example of  “direct democracy” in action. A referendum. Letting the people decide. Absolutely idiotic. Referendums are emotional snapshots. They are not the way to make major decisions about longstanding relationships. Run a few more commercials and some people change their vote. Take the same vote next week and have a different result. Appeal to the anti-immigrant sentiment and the complexity of the issue becomes lost.

People are easily swayed by emotional and nationalistic slogans. Make the UK Great Again! Freedom from Tyranny! The EU is taxing us and we get nothing in return!

I can guarantee that most of the people who voted in this referendum know as much about the EU-UK relationship as you or I. Whether they voted for or against, how many actually understood the ties that bind the UK to the EU? How many actually understood the London financial markets and the effect on the pound and euro? How many knew the long  term effects on trading partners like the USA and China?  How many anticipated the slowing of growth over the next 10 years and how that will effect their jobs and income?

Put 10 economists in a tree and shake it. Each one that hits the ground will have a different theory of the effects of Brexit, with all kinds of “data” and predictions. And only one, perhaps none, will be correct.

So, how is the average citizen supposed to understand the complexity of this UK-EU relationship? He simply cannot.  So, he votes based on emotion.

This direct democracy is a failure. Because no matter which side of the issue you were on, the economists and politicians in Parliament and 10 Downing Street understood the issues much better. That is why they were elected. To lead. To make decisions. Not to pass the buck.

So, my lesson learned? We should never have a referendum on the law. Or other important issues. While representatives may not always represent us as we want them to, at least a good portion of them understand issues. And while they USUALLY act slowly, it is better than giving into the whims of emotion. (Think of the Patriot Act as the exception that proves the rule).

The lesson of Brexit? Stick to the awful system of “representative” government. It is still better than the alternatives.

 

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2 Comments

Filed under economics, Elections, Free Trade, Politics, Secede

2 responses to “Lesson of Brexit

  1. Spot on, mate. You notice how the Brexit leaders starting backtracking as soon as the vote was over. “Well, we really didn’t guarantee anything.”

    Like

  2. Jack

    Hey Joe-Like your analysis. Would only add couple more thoughts. The Brits’ fear of the newcomers/immigrant wave, attributing to them the decline in wages set off fear mongering in the English countryside where Brexit got the most yea votes. They also turned to economic false arguments, saying you’d be better off keeping your Euro dues for internal national health care. Post election interviews have shown those who voted yea later regretted it with comments like “I didn’t really understand the implications.” Maybe that’s why Brits’ most googled terms AFTER the election were questions like “What is the EU?”

    Liked by 1 person

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