Friday, 24 June 2016

Brexit or Bust...!

Brexit or Bust...!

How did we get here?

Philosophically the Anglo-American model of the State is quite different from the European State. Derived from Hobbes and Locke, it is rooted in a belief that man is, at core, evil and government exists primarily to protect us from ourselves. For the British relationships with the State are based upon a contract, whereby citizens grant authority to the government in exchange for guarantees to protect life, liberty and property. As Margaret Thatcher discovered, whilst trying to impose a new tax upon property, governments that are perceived to have failed to honour this contract swiftly pay the price. There can be no doubt that a large number of people perceive the EU as a threat to their liberty. This contrasts with the European model, derived from Rousseau, who believed that people are basically good, but corrupted by their environment. Thus the job of the European States is to manage and improve the society, with individual rights taking second place to the achievement of that objective.

Sociologically, Britain exhibits an island mentality, characterised by a resistance to distant authority. As maps of how different regions voted have shown, however, the strength of this feeling and the direction of its expression has revealed a highly fractured country. London voted to continue its leading international role. Scotland expressed its preference for rules made in Brussels to those made in London. Northern Ireland voted for continued EU financial aid and an open border with Eire. Whilst England Wales, beyond London, both turned their back on Brussels and revealed the disconnect between London and its governing elite, which increasingly are perceived to have more in common with elites in other global cities than with their own people.

As a Guardian columnist wrote immediately before the vote whilst it may be true that East Europeans are willing to do jobs for the minimum wage that the British are not, does that say something about the need for immigration or the exploitative nature of capitalism. Instead of bringing immigrants, he argued, we should consider paying a more realistic wage to start with.

Historically Britain has had a foreign policy based upon keeping out of European Affairs, only entering the fray when one state tries to dominate others. A cynical observer, such as that best captured in the satirical comedy Yes Minister1, might describe such an approach as divide and rule. Unable to make any further mess of the project from the inside the British have decided that the utility of membership has expired! True, or not, alongside the rise of scepticism across the continent combined with a series of overlapping crises, the British have drawn a line under the period of ever deeper political integration.

For both the Euro crisis that engulfed Greece and the immigration crisis flowing from the Middle East are rooted in the same problem. You cannot have a open borders policy or a common currency without a common policy on immigration and finance. To imagine otherwise has been shown to be folly. Yet such policies would be highly political in nature and could only work with some sort of federal agreement. It is this; a United States of Europe, led by an unaccountable self-serving elite, rooted in a communitarian view of the State that the British have turned their back upon. A willingness to trade freely and cooperate they have not. However, such was the awful level of the debate served up by Britain's leaders that such nuances were lost in the reactionary mud slinging of false and exaggerated statistics.



What does this mean?

Although he was mocked for raising this point during the campaign the one thing that Cameron did get right was the historical fact that whenever Europe has not been united the result has been conflict. Let us hope we have leaned our lesson!

For the Union of nations that is the United Kingdom, it is hard to escape the feeling that this is the end. Scotland will get the referendum it seeks and it will vote into the EU and out of the UK. Whilst Republicans in Northern Ireland are demanding unification with the South and Unionists will be forced to choose between their historical allegiance to London and their immediate economic interests in EU subsidies and grants. Brexit may yet have achieved what 30 years of conflict in Ireland could not – national unity. Yet equally it could be sufficient to re-ignite the conflict.

For business, in the short term, nothing much will change, beyond a devalued Pound, which will suit British exporters anyway. In the long term it simply isn't clear. As Britain is primarily a service based economy now, the EU has more to lose from a trade war and anyway access to London as the leading centre for global finance cannot be ignored. Equally Britain needs access to European markets to sell its services. I am minded of an article that appeared in The Independent newspaper arguing that the result of the referendum would make little difference: depending upon your point of view Britain will only need to accept EU rules where it wishes, or alternatively Britain will have to follow the rules without being able to influence them.

For education things are more clear cut and the news does not look good. EU students will be very unlikely to gain access to the British student loans scheme to cover their fees. There will be significantly less Erasmus exchanges and the ability of British Universities to participate in large pan-European research projects will be far less. Equally the EU will lose direct access to the second largest group, after America, of premier league Universities. British Universities, that have sought to become global education providers and invested heavily in European recruitment, are deeply concerned about how they will make up the shortfall in in finances and student numbers.

Alternatives for the UK

The simple model, as suggested above, is that nothing much changes and Britain, like Norway and Switzerland becomes a sort of adjunct member of the Single Market. However, this does assume a level of goodwill and vision from the EU that is unlikely in the present circumstances. Not least because it would encourage other truculent member states to follow the British Example. Although it may be the best possible outcome for all.

Forced to go it alone the British would need to define their competitive advantage in the global market place. Given the centrality of services, especially financial services, to the British economy they may well decide to leverage their economic flexibility to become a low tax home from which to invest into Europe and suck profits out at lower tax and bureaucratic cost. A sort of giant Jersey, or for those of a more left wing disposition a race to the bottom!

One of the ideas that was mooted by Eurosceptics at the time of the Maastricht Treaty was to join join existing alliance like NAFTA, to create an Atlantic Free Trade Area. Whether the US, Canada, or Mexico would welcome this, or Britain could accept an inevitably junior role, is far from clear. However, the British do share a common language, culture, system of government and law with the US and Canada.

Alternatively the British could try to form new trading alliance, based upon the old EFTA around the North Sea, with other Eurosceptic countries like Norway, Iceland, probably Denmark and possibly Holland. With more ambition, an attempt could be made to resurrect some form of the old Commonwealth, most likely with more developed English speaking nations such as Australia, New Zealand, South Africa and possibly India. This would take a gigantic leap of faith and require Britain to surrender much of its leadership role, but is not impossible.

What is most remarkable of all is that the Leave campaign was won without ever outlining any kind of positive vision of the future for Britain. It was an entirely negative campaign. This does not make it wrong, but it does create a vacuum, which some sort of new vision of the future will be required to fill. We can only hope that it does not come from the likes of Mr. Farage.


1https://www.youtube.com/watch?v=37iHSwA1SwE