Brexit: Self determination or self destruction?

By Christopher Lingle

The article originally appeared on 4th July 2016

The Brexit issue induced many people to engage in hyperbolic promises to encourage a Leave vote or excessive doom-and-gloom warning to inspire a Remain vote. This habit survived beyond the reports of the final results. For their part, the “Remainders” responded with an orgy of teeth-gnashing and finger-pointing to disparage those that had the cheek to vote: UK Out of EU. But let’s begin at the beginning, with first principles; and; if you will, with self-determination being a natural right based on human liberty and dignity. In terms of separating from others, people are entitled to act as individuals (migration), couples (divorce) or as members of a group with shared identity (Brexit).

This is contestable. Even while some European Union (EU) officials admitted it must be more responsive to citizens, opponents of the Leave option insisted ordinary voters should not decide such an important issue! In sum, these views would have the EU become more democratic but individual countries would become less so. Next, let’s engage some of the interpretations of the motives of theBrexit vote.

One narrative is that those resisting continuing expansion of power in the hands of EU institutions are xenophobes or racists. Another narrative is of disaffected masses that are protesting some of the negative impacts of globalization. This is often joined with another assertion that this is or should be an expression of outrage against increasing income inequality.

All of these narratives have an element of truth or they would not gain traction. But assertions that citizens’ disaffection is about grievances arising from destabilizing forces of globalization or income inequality should be viewed with great caution.

Indeed, there is strong evidence that what has been occurring is the outcome of political decisions that have had economic consequences. As such, the underlying cause is a failure of political governance. Naturally, those that supported or implemented the EU policy are either ignorant of their (unintended?) consequences or seek to deflect the blame away from themselves. In short, forces that prefer more government interventions in economic and social life are raising false narratives to deflect blame from problems arising from their own actions.

In this reading, the troubling rise of populism around the world must be interpreted as widespread disaffection with “politics as usual”. Brexit is but a part of a global “peasants’ revolt”, relying upon ballots rather than pitchforks, against the policies and judgments of the political elite -- the Establishment.

This apparently unseemly rise of nationalism and populism is not a random or spontaneous development. It can be traced to the expansion of state control and power that has marginalized individuals while promoting economic interests of special interests, including trade unions.

Indeed, these developments reveal the internal, fatal contradictions of representative democracy that may be approaching its logical end. We have reached a global “Weimar moment” whereby the detachment of the political elite from their citizens is driving them into the arms of dark nationalist, protectionist forces.

Political elites

Political elites have used democracy as a cover to insert their ideologies or their special interests (monopoly privileges or political correctness issues). In turn, citizens have found that their life outcomes and daily lives have become increasingly dominated by arbitrary political forces. In the case of the EU, it is primarily a “social democratic” construct. As in the case of Brexit, earlier votes that went against the agenda of the political establishment to expand the EU prerogatives and actions were met with howls of elitist disdain. The assertion was that the unwashed masses got it wrong and must vote again.

This happened when the Danes rejected the Maastricht Treaty (1992). After being obliged to vote again they accepted it, but the voters later refused to join the euro-zone as did Swedish voters.

As for the Irish voters, they rejected the Nice Treaty (2001) and the Lisbon Treaty (2008), but were compelled to vote again until delivering the correct answer. When French and Dutch voters turned down the EU Constitution (2005), their responses were ignored, as in the case of rejection by Greek voters of the terms of the euro bailout (2015).

In all events, the eventual outcome is uncertain. In the UK, it could lead to greater openness and increased exchanges with the rest of the world without the suffocating bureaucratic interferences from Brussels. Or it could collapse into an internecine nativism. It might also be the death knell for the cohesion of the UK as the Scots may choose independence.

Interpreting what Brexit means for financial markets or the UK economy involves a great many possible permutations so that no one can pretend to speak authoritatively. One thing is sure and is confirmed by the events of the first week after the vote, it is the case that uncertainty will often lead to increased market volatility.

For their part, ‘Remainers’ painted such an apocalyptic future for Brexit that they are largely to blame for the market turmoil. Now they have already begun scrambling to walk back their predictions to calm troubled waters and anxious markets.

In the long term, Brexit can be positive for the UK. But it will require that British leaders allow free trade with the lifting of obstructive EU regulations. As it is, London is very likely to remain the premier destination for investment capital in Europe for a very long time.

As for the EU, it as though a soldier has been shot and the bullet has passed through with death being imminent, though the soldier be unaware. Since neither the British nor EU elites thought that the Leave vote would succeed, their lack of insights makes them unable to address the grievances raised against them. One wonders how they would respond to the question as to whether the central institutions of the modern EU — the Schengen area and the euro — make the continent more stable or less?  

Christopher Lingle is adjunct professor of economics at Universidad Francisco Marroquin (Guatemala) and Research Associate at the Centre for Civil Society (Delhi). He is also a senior visiting fellow at the Advocata Institute.