By: Professor Vikas S. Shah, Thought Economics
June 13th, 2016 – Download this paper as a PDF here.
On June 23, 2016 the people of the United Kingdom will be asked the single most important political question in modern history, “Should the United Kingdom remain a member of the European Union?”
The ‘European Question’ is not a simple one. The population is being asked to distil hundreds of years of geopolitics, economics, culture, conflict, treaties and more into a simple ‘yes or no’ decision against a backdrop of exaggerated arguments, scare-tactics and misinformation (on both sides). The decision we (as citizens) make will not only impact many future generations of our own, but in this hyper-connected global world; it will have repercussions wider than we could possibly predict.
Our world is extraordinarily complex. Our economies, our governments, our cultures are connected intricately and deeply. No nation is an island, and internationally we have seen that creating economic and political unions has made our world safer and more prosperous than it has ever been. History has shown us time and time again that after severe economic crises, wars and upheavals- the only way forward for society is unity.
I have been extraordinarily fortunate in my life. I am the son of immigrant parents who came to the United Kingdom in the early 1960’s, worked hard and saved to give me the best education I could possibly receive. This education and a few lucky breaks along the way led me to start my first business (aged just 14) and in the past 20 years I’ve owned a number of businesses, worked with (and advised) companies all over the world, held senior positions in the non-profit sector, and been appointed as a Professor on one of the most prestigious MBA programmes in the world. The United Kingdom has given me the opportunity to follow my dreams, and our position in Europe has afforded me with the chance to build great businesses that provide employment for a lot of people. I’ve seen first-hand the importance of our position in Europe and how critical it is, and so- to be clear- I am voting we remain.
However; I’m no expert. I’m one of the millions of people who will be voting based on their own experience, together with the information they’ve collated through the course of the campaigns. So, to learn more about the EU Referendum, and the case for us to remain, I spoke to four individuals who genuinely are experts:
- Catherine Mann, Chief Economist of OECD (The Organisation for Economic Co-operation and Development) -an international economic organisation of 34 countries, founded in 1961 to stimulate economic progress and world trade.
- Professor Yanis Varoufakis (Economist & Former Minister of Finance, Greece)
- Andrew Sentance CBE, Senior Economic Adviser at Pricewaterhouse Coopers (PwC) and Bank of England Monetary Policy Committee (MPC) from October 2006 until May 2011.
- Adrian Berry, one of the UK’s foremost immigration, migration and human rights lawyers described by the Legal 500 as “Analytical, and extremely clever at complex law; the best of any barrister at EU and nationality law.”
- Brendan Simms, Professor in the History of International Relations at Cambridge University. A world expert on the History of European Geopolitics.
- Charles Wyplosz, Professor of International Economics at the Graduate Institute of Geneva and Director of the International Center of Monetary and Banking Studies.
- Professor Jonathan Wadsworth, Professor of Economics at Royal Holloway (University of London) and specialist in Labour Economics and the Economics of Education.
Q: To what extent is our identity as a sovereign nation linked to the EU?
[Professor Brendan Simms] Our identity is profoundly linked to the European question.
The United Kingdom is a product of the European state system, it was created in 1707, and essentially it was a union between England and Scotland to deal with the threat of Louis XIV of France, the danger of counter-reformation- Catholicism, and of French European and German interests. Maintaining the European balance of power, defending the United Kingdom against European threats has been a major factor in the creation of a British identity.
British identity is profoundly tied-up with Europe and vice-versa.
Q: Why are people grasping for sovereignty at the moment?
[Professor Brendan Simms] The defence of the United Kingdom has always been linked to the defence of the nation against threats from Europe. To that extent, the Brexit campaign around sovereignty seems entirely understandable.
What the Brexit campaign fails to take into account however, is what should happen in the rest of Europe. They have no concept for Continental Europe or the European Union as a whole, they describe it essentially as an evil, as a bad thing.
It’s one thing to say we want Britain to leave the United Kingdom, you could make an argument for that – but the idea that we should simply allow Europe to return to the condition it was before the European Union seems profoundly against British interests.
Q: What is wrong with the current structure of the EU?
[Yanis Varoufakis] The EU needs reform. Countries have transferred jurisdiction over legislations to a centre that makes decisions in somewhat of a vacuum, featuring a European Parliament that cannot itself initiate legislation. We have a paradox therefore where national parliaments give certain powers to the centre, without being compensated through the creation of an essential federal sovereignty; this is ineffective, and denying this is not helping us debate what is wrong with the EU and how to fix it. We need to work together as nations to reform and democratise EU institutions.
Q: Why are economies moving towards integration?
[Dr. Catherine Mann] Countries trade with each-other, and trade is in the context of goods, services, labour and many other things. They trade with each other because they’re different, and have different tastes and preferences, different attitudes towards risk, different technological frontiers, different resources, different climate and ecologies and so on.
Once countries start to trade with each other, their minority interests start to be served through imports. When you have a technology frontier, you find a new market abroad.
It’s differences in tastes and preferences, resources and technology together with ways of thinking (manifesting in managerial and design differences) which are the reasons countries benefit when they trade with each other in goods, services, finance and labour.
Q: Does economic integration come at the cost of losing identity?
[Dr. Catherine Mann] I’m surprised that people argue that economic integration causes a loss of identity. In fact, countries get the benefits of their own country (whether it be food, types of goods, technologies) but in-addition, they get the benefits of all the things other countries produce too.
Economic integration doesn’t remove a country’s identity, far from it… rather the range of products, services, instruments and intellectual processes available increases. You keep what you have and add things from abroad.
This is not reducing identity, but expanding it.
Q: What are the common misconceptions people have about the economic relationship between the UK & Europe?
[Dr. Andrew Sentance] There are three big misconceptions people have about the economic relationship between the UK and Europe.
There is a sentiment that we will be able to manage our trade and investment relationships well, without being part of the European Union. For over 40 years however, we’ve fostered trade and investment relationships because we’re in the EU (or the EEC as it was before). A lot of investment has flown into the UK because we’re in the EU; Nissan in the North-East, Toyota in the Midlands and other prospective investors such as Hitachi. A lot of these companies come to the UK because we’re fully-part of the EU, that’ a selling point. For all the other companies that operate in the UK, and trade with the rest of the world, being part of the European Union is an important underpinning to how we pay our way in the world. The UK has traditionally been an economy that thrives on trade and investment. The notion that trade and investment relationships would be just as good outside the EU as they are inside just don’t make sense; I don’t believe that, and I don’t think a lot of business people do either.
There is a lot of misinformation about how EU regulations impact our country too. The leave-campaign put forward this notion that EU regulations are holding back our country, and while we have a certain amount of product, social and environmental regulation; much of this we would still have in another form if we were not a part of the EU. And if we wanted to trade with the EU (our largest trading partner) we would need to meet these regulations in any-case.
People also have a misconception around the savings we would make if we left the EU. Yes, we do net-pay into the European budget, around 0.5% of our GDP but the IFS (Institute for Fiscal Studies) has shown that the potential ‘hit’ to government finances from leaving the EU is much larger than the potential savings we might get from not paying into the budget. The huge weekly figure thrown around by the leave campaign for our spending in Europe is the gross figure, it doesn’t take into account the money that flows back into the UK from Europe.
Q: Why has immigration become such a key issue in the Brexit debate?
[Professor Jonathan Wadsworth] There are pockets of the UK which are still economically depressed, and these areas have been depressed for some considerable time. It’s easy for people to blame immigration for issues that are nothing to do with immigration – industrial decline, austerity and so on.
Britain is not a sunlit territory, we have problems – and immigration is an easy target for people to blame, when the real causes of our problems are not connected to it.
Q: Does EU immigration to the UK matter?
[Professor Jonathan Wadsworth] The net effect of of EU migration to the UK is zero on unemployment and wages.
The ‘Brexit’ contingent would have you believe that there are lots of negative effects to the UK from EU migration, and that’s certainly not true. There’s no way that is borne out by the evidence.
The evidence of the net effect of EU migration to the UK labour market is now supported by lots of studies. Some could also argue that if the net effect is zero, migration may not have been good for the labour market at all, Well, even with this view you could say it’s neutral and not bad for our labour market!
Q: What is the reality of how immigration works within the European context?
[Adrian Berry] The reality is that because we’re in the EU, we have circulatory migration in terms of free movement. In other words, people can come and go from EU countries to the UK and back again.
That doesn’t sound significant, but if you think about migration from outside the EU, an economic migrant may come here under our work-permit arrangement. He or she may then be conscious that they may not be able to come back, so they often bring their families – and thus this tends to be one-way migration from outside the EU to the UK. In the long-run, that means- in context of migrants coming from outside the EU- that more people come here per economic migrant because they bring their families here and automatically settle here because they may not get another opportunity.
When we look at migration inside the EU, because people know they can come and go – you often don’t get this more-permanent migration, they often don’t stay forever. In fact, the circulatory migration principles we have in the EU lessen the pressure on inward migration by virtue of the fact that it is circulatory and not one-directional.
Q: What is the reality of how border controls would work in a leave or remain scenario?
[Adrian Berry] The fact that we can choose whether or not to remain in the EU shows that we can control our borders!
What we decided to do is to exercise control in a certain way, allowing circulatory movement in the EU states. We don’t have an absence of control, we made a choice. And we made that choice because our economy benefits from it.
We have inward net migration of around 300,000 people per year and most of that is a reflection of our economic need. If we scrapped free movement, we would have to multiply the work-permit relationships 10 fold to pick up the slack. Should we leave, we would either have to multiply the number of work-permit arrangements we have in place significantly or our economy would suffer serious damage.
Q: Has EU migration placed a strain on our public finances and public services?
[Professor Jonathan Wadsworth] Of all the net contributors to our economy, EU migrants are the biggest net contributors. If you take any other demographic group (including Brits who are net recipients of largesse if you add up pensions and benefits relative to tax contributions) you find that it’s EU migrants who pay far more in tax revenue than they take out.
EU migrants who come to the UK are usually young, well-educated and work. They are not sick or old, and don’t tend to draw on the state’s resources.
When people argue about the amount of resources used by migrants, you have to remember that this is proportional. For example, if the population of people with red hair goes up, then more red haired people will use health services. As far as we can tell however, migrants are no more or no less likely to use the health service than any other demographic groups.
There is no evidence to suggest that EU migrants are a big drain on public resources.
Q: What is the relationship of refugees to the immigration debate around Brexit?
[Professor Jonathan Wadsworth] The refugee crisis is completely abstract from the whole debate on immigration, wages and employment.
The route by which refugees enter the country is that they have to apply for asylum. This has very little to do with the debate about whether we’re in or out of the EU.
Asylum seekers can’t work here whilst their claims are being processed.
Are the numbers of refugees driven by EU policy and would we be able to control those numbers if we left? For asylum seekers, there isn’t free movement even within the existing EU membership- they have to apply for asylum directly.
Germany has accepted 1 million refugees. They could not come to Britain until they’ve got German citizenship, and I have not seen anything to suggest that asylum seekers are going to be given German citizenship anytime soon. The normal qualification time is 7 years, and that’s assuming no hiccups along the way.
The notion that our asylum numbers or process would be any different outside the EU is a total misnomer.
Q: Does our economy need EU migrants in our economy?
[Professor Jonathan Wadsworth] Trade is the main beneficiary of EU membership; the labour market effect is pretty neutral.
The ability to expand trade relatively easily is a contributor to growth for our economy, and that would be compromised if we left the EU. People argue over how much it would impact our economy, but it’s fair to say that the impact would be negative – and that’s important.
Q: How much of an economic shock would BREXIT create?
[Dr. Andrew Sentance] Nobody can foresee the broader economic consequences of an event like ‘brexit’ in a highly connected global economy. There are some things however which we can say with some degree of certainty.
There would be a significant halt to inward investment in the UK. We’re already seeing a lot of M&A deals we’re doing have ‘break clauses’ in case of Brexit, and the truth is that inward investment to the UK would be disrupted if we left.
Our trade relationships wouldn’t be disrupted immediately but there would be a huge amount of uncertainty created in the business environment whilst protracted negotiations take place.
The UK exerts a huge amount of ‘soft power’ in the world because of our participation and influence within international organisations such as NATO, the United Nations (UN), the Commonwealth, EU and more. Withdrawing from the EU would position our country negatively in terms of how we play our part in the world in the future.
Q: Could the United Kingdom easily negotiate trade deals if we left the EU?
[Dr. Catherine Mann] The biggest myth the leave-campaign are putting forward is this notion that it would be easy to renegotiate the trading arrangements we have right now.
On average, trade agreements take a minimum of 5 years to negotiate and that’s even with bilateral agreements. It’s simply not true that it would be easy to negotiate trade arrangements.
Q: Will the UK be financially better off if we left the EU?
[Dr. Catherine Mann] The leave-campaign put forward an argument that the United Kingdom will be fiscally better-off for not giving the 0.5% of GDP it costs to be in the EU.
In reality the United Kingdom will slow down, the growth-rate will slow, tax revenues will slow and people will become unemployed. The fiscal costs of Brexit will be large.
Yes, you are saving the 0.5% of GDP currently going to Brussels, but the UK will lose a lot more than that through the resulting financial slowdown.
Q: How would Brexit impact other countries?
[Dr. Catherine Mann] We’ve done some exercises on the real GDP cost to other economies in the short term out to 2018, and the Euro Area would lose a minimum of 1% of GDP should Britain leave the EU. Japan would lose around 0.5% of GDP, and the United States would lose around 0.3% of their GDP. Brexit is a big cost to other countries too, not just the UK.
Q: How can we make the EU stronger and better by being a part of it?
[Yanis Varoufakis] We need to take three major steps to reform the EU.
First, we need far more transparency in decision making. Full transcripts of all EU Council, Ecofin and Eurogroup meetings are of the essence.
Secondly, we need to stabilise the economic crisis that is reinforcing the centrifugal forces breaking the EU apart. We can do this by urging existing institutions (e.g. the EIB, the ECB, the ESM) to efficiently address the debt crisis, the large excess of savings over investment, poverty caused by deflation-depression and the banking crisis. We also need to institute new means of coordinating the monetary policies of the Bank of England and the ECB, etc.
Thirdly, we need to start a bottom-up constitutional process for drawing up a proper, democratic EU constitution (and in the process re-examing are national constitutions – e.g. promote the creation of an English Parliament).
Q: Why is there such a vocal anti-Europe movement now?
[Dr. Andrew Sentance] We’re hearing voices from a small minority of the population who feel very strongly about these issues.
There’s a general anti-globalisation movement which is manifesting itself in different countries in different ways, for example in the United States through Trump. To some extent, being anti-EU is being anti-globalisation; but here’s the rub, if you’re anti being part of the global economy? There isn’t an alternative if you want to be successful, but people don’t want to see it that way.
There’s a general feeling of disgruntlement with politics. People feel politicians are remote, and don’t engage with the population. The EU becomes a symbol for that as it’s even more distanced. There’s a lot of rhetoric about unelected bureaucrats determining our future, and it’s driven by this.
We’re also experiencing a general malaise following the financial crisis. People are finding life economically harder, and need to find something to blame for that. Even though it’s not fair, the EU has become a kicking-boy for their concerns.
The anti-globalisation crowd, political disconnection and disgruntlement following the financial crisis are key contributors to the anti-Europe sentiment, but we need to get people to think more strategically.
It’s understandable that people are disgruntled with the state of affairs, but you know what? It will be a whole lot worse if we leave the EU.
It’s been very hard for the ‘remain’ camp to galvanise opinion, after all- they are defending the status-quo…
Q: What have been the key successes and failures of Europe’s economic and financial integration and single currency? What is the future of Europe?
[Charles Wyplosz] It’s hard to be upbeat about Europe, but in fact, I am, at the very least about what has been done so far. What is interesting about Europe as a case for integration is that the Europeans, at the time they began regional integration, went way ahead of GATT. There were strong political and geo-strategic regions for the Europeans to do that, so they were willing to make sacrifices to go to complete market integration- it’s not one hundred percent, but close. What this meant was that pressure groups, and interest groups who were fighting for protection, lost to the overarching political objectives of Europe’s integration. Once these interest groups were defeated locally, individuals had nothing to fear from GATT, from world-integration, and that is why Europe has been pro-GATT and pro-WTO. There are famous exceptions, such as farmers, but that is not a specific exception to Europe. WTO fans don’t like regional integration because they see it as undermining world-integration. That is true in a small way, but when countries integrate locally they inevitably destroy some pro-protectionist lobbies, and once they have done it regionally, it is easier for them to integrate globally- so I don’t see regional integration as a threat to WTO.
Europe has been an extraordinary success story. Many parts of the world (though maybe not recently), have been thinking of emulating Europe- I have in mind South East Asia and South America. These regions have, though, simply not been able to do it for various reasons such as politics and protectionism. Europe has been able to achieve an incredible degree of trade integration, less so financial integration, and has been able to create a single currency. The single currency has been an enormous success, it has achieved complete exchange rate stability across the Euro area (by removing exchange rates!) and we do take it for granted- but the European experience was one of bruising exchange rate volatility, with recurrent currency crises, and this is now gone.
The price to pay for having a common currency in Europe has been to do a half-baked job- in the sense that governments have not been, and are still not, willing to give up sovereignty in fiscal policy matters. Even before the Euro was launched, we all recognised that there were weaknesses built in the European construction, and that if these were not attended to, they could turn out to be a big problem. And here we are today! The fiscal indiscipline in a number of countries has created the current debt crisis, and we will have to draw lessons and create solutions to prevent it happen again. While I am not surprised at the debt crisis itself, I am surprised at the political reactions and policy mistakes which have been made over the past few months which have given the Euro area a bad name around the world.
Looking at the addition of more countries to the European integrated zone. Clearly, the more countries you have, the higher the probability that one of these will misbehave. There is a sense in which the expansion of the Euro area is making the whole system more fragile, if you like you may have one link in the chain which becomes weaker- and the longer the chain, the more likely this is to occur. On the other side of this, we have to consider that the wider the Euro area, the more it protects countries, and the less exchange rate volatility worries occur, and the objective therefore is to have all countries within the European union within the monetary union, because they are all part of the single market.
Q: Would we have to renegotiate visa and other agreements if we left the EU?
[Adrian Berry] We would absolutely have to renegotiate with each EU country about visas, and how we would travel and work there.
Freedom of movement is a right given by a treaty, and if we walk away from that treaty everything is up for grabs.
We cannot have it both way. You either want to renounce freedom of movement and ‘take control of borders,’ or you preserve free movement rights.
The arguments around migration and immigration presented by the ‘leave’ contingent are intellectually incoherent.
Q: Why is there such an awful rhetoric around immigration within the EU Referendum?
[Adrian Berry] The rhetoric is connected to the perceived support for the views on immigration in perceived regions and parts of the United Kingdom. Areas which tend to do well economically are mostly pro remaining in the EU, whereas those which have fragile employment circumstances, a lack of investment and a lack of work tend to be supporters of leaving the EU.
These are not issues around migration. These are issues around people who feel the most economically secure (or not), who feels they benefit from the EU (or not).
The answer to regional economic disparities in our country lies with our government, not the EU.
Q: Why has there been such a strong growth of right-wing politics and populism in the UK and elsewhere?
[Yanis Varoufakis] The growth of right-wing politics and populism happens every time a banking crisis leads, through self-defeating austerity policies, to a deflationary moment in core countries and to depression in the periphery. It happened after 1929. It is happening now in the aftermath of 2008.
Q: Have we seen this rise of isolationism and right-wing politics before in our history?
[Professor Brendan Simms] The clash between a more continentalist foreign policy, based on the idea of engaging more with Europe and a more isolationist blue-water colonial or maritime policy is a theme that goes back hundreds of years in British history, and really begins in the 17th century, flowering fully in the 18th century where we saw the emergence of many Euro-sceptic versus Europhile debates.
The Whigs, essentially continentalists; wanted to intervene in Europe, maintain European alliances and argued that Britain’s security was best- in short- through a forward policy in Europe. You then had the Tories and radicals who argued that Britain is essentially a maritime, insular country with a colonial identity and destiny. They also thought that European alliances were a waste of time, and imported corruption from outside. The whole idea that Europe was a cultural and political threat, and that immigrants were a threat was seen at this time too. The Germans (Hanoverians) were criticised then, in much the same way that we see immigrants being criticised now.
Q: What role can Britain play within Europe?
[Professor Brendan Simms] The starting point of this debate should not be the relationship of Britain and Europe but rather what kind of order we want for continental Europe, that’s the key thing.
I’m in favour of a yes vote in June, because I feel a no vote would be highly damaging- not necessarily for Britain in the narrow sense, although you can argue that… but it would certainly be catastrophic for the European project in general- and that vote would be before the Europeans have sorted their problems out.
I’m unusual within remainers because I feel what we need is a continental European state, and once that happens there will be some kind of separation and renegotiations. Until that happens, Britain should certainly stay and be part of that journey.
Britain has more than just soft-power. The continental European order is in the fundamental-sense an Anglo-American order. It was created by the victor powers after the end of WWII; and they continued to guarantee, through NATO, the security of mainland Europe. Of the European powers, Britain is the most important contributor to NATO.
Britain has a very important role to play in Europe, and our strength and power gives us a voice and (for historical reasons) a right to express our views on European order.
Q: How can integrated economies bear better resilience to recessions and global macro-events?
[Charles Wyplosz] Regional integration can help global integration when it substitutes for global integration- insofar as when it does things at a regional level, which cannot be done at a global level, for example, we can have a common currency in Europe, but we cannot have it at a world level, it would make no rational sense. When you can do more regional integration, without reducing integration at the world level, that’s ok- the danger, of course, is building fortresses and undermining the global system- which would be a big step back.
When you are completely isolated, say in the example of North Korea, in many ways you are completely independent from the rest of the world- so world trade can go down the drain, and it wouldn’t do much to North Korea. The problem is that the North Korean population is starving because of their lousy system, and the system is lousy because their economy is so very closed.
If North Korea were integrated in the global system, it would be as rich as South Korea. A paradigm is buying a car. When you buy a car, you can have a car accident- a pretty nasty one, and that’s part of the deal. Global integration is helping people around the world, most of the time, but we have to accept that now and again we have accidents which affect all of the world- and that is part of the deal with globalisation. In the same way we decide to take our cars, with a certain degree of nervousness, while it’s good to be globalised- and we should drive carefully! We have organisations like the WTO giving us driving rules for what we can and can’t do, and we have the ambulance coming from the IMF when you have had a crash- so it’s pretty much the same story- you can’t have just pure goodness, there will always be drawbacks to everything. Each crisis is a good lesson about things which were not right, or overlooked, or unknown- and from crisis to crisis, we learn.
Q: What would be your message to voters to encourage them to stay in the EU?
[Dr. Andrew Sentance] Leaving the EU would create a massive amount of uncertainty that will hold-up economic activity over the next 2-3 years at least. We’re shooting ourselves in the foot if we vote for that.
The UK economy, even if we go back to Medieval times, has thrived because of trade and investment. If we want to maintain our trade and investment relationships with the rest of the world, we need to be part of the communities that trade with each other and attract investment, and being part of the EU is essential to that.
[Adrian Berry] The EU referendum is an extremely difficult topic; it’s hard to vote on something that involves complex aspects of international law, trade, economics and multinational political issues. I’m amazed that even lawyers or politicians can get their heads around it….
I’m Chair of an immigration policy membership charity and our view, which reflects mine, is that it’s better for the UK to remain in the EU.
Just as one example, as much as we benefit from people coming from EU states to live and work here, we also benefit by being able to go and work in those states too. This enlarges and riches our lives.
Our national self-interest points firmly to remaining in the EU.
[Professor Brendan Simms] Start with Europe.
If we leave, we will destabilise Europe to such an extent that the backwash will affect the United Kingdom. Even if Britain remains, the future of Europe is not secure.
The union as it is currently configured does not threaten British sovereignty. The union we need to get to would threaten our sovereignty however, and therefore what Britain needs to do is to play a lead role in the establishment of a new continental European union and to achieve new relationships with that union.
Unless continental Europe is stabilised, this debate and its fall-outs will go on forever.
[Yanis Varoufakis] Yes, your concerns about loss of sovereignty are justified, but (and this is very important), you cannot regain your sovereignty by exiting the EU. The single market to which you need to belong for the economic success of your nation requires pooled sovereignty, but done in such a way that it works effectively for all nations who are a part of it giving transparency, stability and with proper democratic processes.
So, stay in and join the rest of us who are fighting for the EU to be properly democratised.
[Dr. Catherine Mann] Remaining in the EU is a source of strength for the UK. It’s a source of new-ideas and comes with the productivity growth of being a part of the global economy.
Productivity growth is an essential underpinning of the capacity of an economy to grow and, in turn, deliver on promises to citizens.
Turning your back on your nearest-neighbour is not the avenue towards enhancing economic activity at home.
The campaign for our departure from the EU has been visceral. Nobel Prize Winning Economist, Daniel Kahneman recently said, “The major impression one gets observing the debate is that the reasons for exit are clearly emotional. The arguments look odd: they look short-term and based on irritation and anger. [however] These seem to be powerful enough that they may lead to Brexit.”
Kahneman’s view is echoed by the FT’s Chief Political Commentator, Philip Stephens who said, “The Brexiters have bet the bank on the triumph of emotion over reason. The tropes about a nation overrun by immigrants and in the grip of corrupt elites and corporate fat cats will be familiar to anyone who has followed Mr Trump’s progress. The EU Outs promise to ‘take back control’. But slamming the door against the world, is not exactly a prospectus. Above all they agree these populists are ‘against’ things — openness, globalisation, immigration, change. They thrive on anger. This marks out the essential difference between the Remain and Leave camps. Pro-Europeans have no illusions about the shortcomings of the EU, but see it as the best available vehicle for Britain to safeguard its security and prosperity in an age when global power no longer belongs to the west. The Outs pretend that all would be well if only Britain could make its own decisions. The irony is that Britain does make its own decisions. Look back over past decades and every choice of significance — about the size of the state, the structure of the economy, taxation and welfare, or war and peace — has been made by ministers and MPs.”
I also recently spoke to the Professor Andrew Solomon who told me that, “In the United States, in England and in Europe, we’re seeing a rise of populist extremism. People are made anxious by change and frequently, autocratic leaders appear to offer enormous stability. People who are unsettled will often be drawn to that perceived stability, even if it is accompanied by unattractive policies and bigotry. The great trick for governments is to teach people to tolerate the feeling of uncertainty, showing how uncertainty can be the precondition of striving for something better.”
Uncertainty has crept up on this world for a century, and the more we’ve globalised, the more we’ve connected and the more we depend on each other, the more we need union to keep the peace.
Professor Jody Williams won the Nobel Peace Prize in 1997 for her work with the International Campaign to Ban Landmines (ICBL). She is one of the world’s foremost experts on peacebuilding, and I asked her what conflicts are based on:
“Different conflicts result from different elements of economics, politics and other social factors- or combinations thereof. Race and religion are used as tools to inflame a populous to support or engage in war [but] War is pretty much always about money and power. The tools that are used to get to get the masses to engage in war can be race, religion, or anything that can make an enemy seem as ‘the other’ and seem ‘less’ than ‘we’ are; and therefore worthy of being killed in a war. Economics are also very important. Many of the massive demonstrations throughout Europe have been about economic stagnation and collapse. There are certainly the seeds being sown there of violent conflict. Even in the US, we are faced with appalling disparities of wealth that exist here. I wonder when people will not be able to tolerate it anymore. At some point, if people cannot provide for the basic needs of themselves and their families- or feel they haven’t the potential for a hopeful future? It’s pretty easy to get them to resort to violence as a means of bringing about change. It’s quite easy to get people motivated to engage in violence, but once you have divided a nation or peoples- it’s really hard to overcome those divisions. I see this in the US manifest as the polarisation between red and blue states, the tea-party, and congress. It comes from years of purposely dividing people. We’ve reached a pretty hideous state and god-knows where it’s going to go next.”
While Jody was speaking there on war (in the literal sense), it’s clear that many of her words resonate with what we’re seeing in the referendum, such as 1, 2, 3 and 4. I also interviewed Iby Knill (Auschwitz survivor) who said- when I asked her what her biggest learnings were from her experiences, “It’s very important for people to realise that you mustn’t allow a culture of us and them to develop.”
The Brexit contingent, the very group that are arguing for more ‘democracy,’ are the ones working so hard to divide the population, to create the culture of ‘them’ and ‘us’ with scare-tactics and misinformation, and encouraging ‘debate’ to create a dismissive view of any opinions apart from theirs. That’s not how a democracy works.
I realise the Brexit contingent will almost certainly use their boiler-plate retorts of democracy, immigration, scare-mongering, project-fear, taking-back-control and so on – but we have to see these remarks for what they are, emotive words that resonate with a segment of the population who feel politically and economically isolated, or segments of the population who stand to gain significantly (personally) through an ‘exit’ vote.
Let’s be clear, our economy is still struggling from the aftermath of a global financial crisis. The jobs picture is weak, and businesses are struggling to grow. For the majority of people in the United Kingdom, life is hard- and when life gets hard, it’s easy to apportion blame. The truth is all the world’s governments were culpable in the financial crisis, not just ours, but if we want to grow and recover our economy, isolating ourselves from the nervous system of commerce and trade is not the way to do it.
The special status of the United Kingdom in the European Union has also given us truly the best of both worlds. It gives legally-binding guarantees that our businesses cannot be discriminated against by virtue of us being outside the Eurozone (single currency). It gives legally-binding guarantees that we will retain sovereignty over our financial system, that we will never be required to participate in Eurozone bailouts, and that we have legally protected veto rights on matters concerning all EU Member States. Our settlement also commits to reducing the regulatory burden on business, removing remaining barriers to trade in the Single Market and a stronger commitment to forging free trade deals with the world’s most dynamic economies. The deal also legally guarantees that the United Kingdom is not committed to any further political integration in the EU, that our parliament has a stronger voice, and that decisions around our national-security and policies such as immigration and asylum rest solely with UK Government and Parliament. The settlement also gives the UK ‘emergency brakes’ to limit full access to in-work benefits by newly arrived EU workers, and guarantees we will not have to pay means-tested unemployment benefits to EU nationals who come to the UK as job seekers. It also includes clear guidance around child benefits, immigration and crime-fighting; all very much in our favour. The settlement also guarantees we will always keep the pound, we will not join the Schengen border-free area, and that we can opt-out of decisions that impact our national security.
This agreement is powerful, binding in international law, and irreversible without our consent. Should the UK leave the EU however, this agreement would cease to exist; and that matters. None of the alternatives, ranging from the ‘Norway’ model, to bilateral agreements or even a WTO-only model would score as well in a cost-benefit analysis, nor in terms of securing our own democratic sovereignty within a unified market. The process of negotiating any future agreements would take decades, require a taskforce of civil servants larger than we could possibly predict, and would also come after the lengthy and messy process of withdrawing from the EU; and during this time, our already fragile economy would be at best standard, and realistically would be damaged.
It is because of our status, power and role within the EU that we can (and have) negotiated a status that is so clearly beneficial to our national interests.
I hope that voters come out on June 23rd and vote to remain. Britain is a great nation, and our history is deeply entwined with that of Europe. We have a seat at the head table of the largest economic union on Earth, we are a strong democracy ourselves and are part of a diverse and strong democratic union, and have benefitted in countless ways from the peace and prosperity that our European Union has brought.
I am proud to be British, I am proud to be European, and I firmly believe those two need not be mutually exclusive.
“In Search of Identity”
by: Vikas Shah
In searching for the something,
We feel we ought to be,…
We miss the truth we are,
Which our mirrors tend to see.
The quest to find that someone,
Will never get us far…
And in the end it robs us,
Of who we really are.