Sunday, June 26, 2016

Lessons from Brexit

I didn’t predict this outcome. Few did. I thought it was too soon. But I wasn’t naive about the politics of the situation. One of my main concerns was that the Remain campaigners seemed overly attached to unrealistic models of economic doom, while simultaneously accusing the other side of spreading lies.

Almost nobody I asked could give me an economic reason to be in the EU. I read nothing that made any sense from this outsider’s perspective. No one could point to a particular policy change and clearly say exactly how the economic ramifications would play out. They couldn’t really. Because nobody knew, or even knows now, what the word of UK trade and immigration policy will look like post-EU.

The whole question is political.

Let me briefly note some of the main lessons I see from this experience. This post is as much a record of my thinking as it is a commentary on politics.

1. Facts don’t matter and politics rewards lies
Anyone able to make an objective assessment of the day-to-day behaviour of successful politicians in any country knows this. Lying is the main ingredient in political success. Yet the Remain campaign seemed to somehow think that stating facts could change people’s minds. For apparently scientifically-minded technocrats, that is absurdly naive.

2. Economic effects will be serious
This is the big lie that the Remain campaign couldn’t bring itself to admit was a lie. If they could admit this, they would have seen the campaign period as a battle of lies, and get over their foolish attachment to their own truth.

That the pound dropped a touch in a short period after the referendum result is economically meaningless. All it says is that currency traders were surprised. We also live in a world embroiled in a currency war, each country looking to deflate to stimulate its export sector. Yet somehow the weak pound is a bad thing for UK.

When other countries observe how economical benign it was for the UK to leave, others will follow, and this lie will become all too obvious even to those who believe it now. As James Galbraith said “such warnings will be even less credible when heard the next time.”

3. Technocrats underestimated peoples willingness to blame outsiders
War is the nature of civilisation. People are tribal animals. Yet somehow the mental model of Remain-side technocrats was too full of ideology over observation. People always blame outsiders for their problems. Always have. Always will. There doesn’t have to be truth in it and telling them ‘facts’ can actually strengthen their beliefs.

4. Naive support for the EU rent-seekers
Many people don't actually benefit from the free movement of labour across the EU. Highly educated professionals do. But your average labourer doesn’t. For most people they see only costs to political integration with Europe. And indeed, any benefits come at the cost of an enormous layer of bureaucracy and rent-seeking.

In many minds, the question is whether you want your political rent-seekers locally raised, or part of the outsider group you are inclined to blame for your troubles. The answer here is obvious.

5. High immigration is disruptive
Take a look at Germany. The refugee crisis really gave them no choice but to accept a huge influx of new immigrants. To maintain internal cohesion will require a massive propaganda effort, coupled with a massive intervention effort to teach the language and culture to the new immigrants.

It’s something that the left doesn’t like to speak about, but the evidence is pretty clear. High rates of immigration are disruptive to social institutions that share a group’s wealth. This is a fact of human nature.

Be honest now. I’m sure you can think of some person, or some group, that you perceive as an outsider and genuinely don’t want to lend a hand to, perhaps you even want to punish them. Absolute humanism, utilitarianism, or whatever you call it, where all lives are equally important, is pure fantasy. We are tribal, and the veil of equality is always a within-group phenomenon.

Last word
In all, the political ramifications of Brexit are far less interesting than the volumes of words spilt about it suggest. Some leaders will come and go as the internal transition is navigated. It’s no big deal. One will stick eventually.

And I think the one who sticks in the UK will have a surprisingly social agenda. A pro-UK agenda. If history is a guide, this is what people want once you've choked off immigration.

Other rich countries in the EU will see how “surprisingly” successful the transition has been and also leave. The EU in its current form is over. Without direct democratic input and fiscal unification it lasted longer than could be expected. We can only hope that what comes out of the EU rubble are the peaceful nation states that it helped create, and decades on we can say that the EU served its purpose of bringing widespread peace across Europe.

Or am I too naive?

In all honesty, if I was voting I would have voted Remain. But not for any rational reason. I just would have conformed to the expectations of my social group. And because of the social reinforcement, I probably would have become very passionate about my position. As a remote observer with no particular interests, it is much easier to see the underlying logic of the situation.


  1. Lovely stuff. I guess we'll never know how an honest Remain campaign would have give with the theme "We don't know what will happen but getting out will be tremendously complicated and possibly more bureaucratic than staying in."

  2. as an Australian with Finnish interests and an Irish Citizenship too I find the EU more than just rent seeking. I own property in Finland and that may be more problematic if the EU starts to disintergrate.

    I myself draw nothing from EU supports, so I'm essentially a net reduction of political and economic entropy in the EU

  3. I'm not so sure that leaving the UK is a "win for democracy and a blow to bureaucracy" - because now as has been pointed out the UK will almost certainly be bound by EU regulations (at least in the export competing sector) without having a say.

    Personally, I'm looking forward to getting a Scottish passport.-)

    1. P.S. I don't have and are not eligible for a British passport, but I might be eligible for a Scottish passport if they adopt a nationality law like the Irish one (probable I think).

  4. the cynicism is strong today.

    > Facts don’t matter and politics rewards lies

    Is that really true, in the long-run? I don't think it is.

    1. 100% true -but I want it not to be.

      Self deception is also strong amongst the liars. Ask a presidential candidate to say that God doesn't exist - they have no choice but to lie. Some things you just can't say because the public at large also believes the lies.

      It would be easy to show that in a game situation, liars will always win when faced with totally honest politicians, filtering out the honest, and leaving only liars. Same thing happens in academia - the liars are winning because even a tiny benefit to lying gives you an edge

  5. "
    It would be easy to show that in a game situation, liars will always win when faced with totally honest politicians,"

    This assumes that people are not able to pick out liars. I think that tests indicate that many people can.