An Economist’s Look at Brexit

If you don’t know what Brexit is at this point I really don’t know what to tell you, but I’ll explain anyway. On June 23rd, 2016, the British government held a referendum to decide the future of the country’s European Union (EU) membership. With a turnout of roughly 65%, citizens of the UK voted 51.9% in favour of withdrawing from the EU. The government has no legal obligation to act on the results, but Theresa May’s Conservatives have ruled out any chance of backing out now, as has Jeremy Corbyn, Leader of the Opposition. On March 29th, 2017, the British government triggered Article 50 of the Treaty of Lisbon, the mechanism by which states can officially declare their intent to leave the EU. The two-year negotiating period began then, leaving the UK and EU roughly eight months to figure out where to go from here.

That’s all old news now, though. Since the Brexiteers have gotten what they want, they shouldn’t have a problem with a small voice like mine throwing stones at their faulty logic. Below, I’ll outline some common arguments made in support of leaving the EU, followed by an explanation of why they’re dead wrong.

(Please note: there is a massive difference between the most popular arguments for leaving the EU, and the arguments with actual merit. I believe the two are almost mutually exclusive among British people, and will be writing from that perspective.)

#1. Immigrants are stealing our jobs!!!!

“I have a feeling in a few years people are going to be doing what they always do when the economy tanks. They will be blaming immigrants and poor people.” – The Big Short, 2015 (dir. Adam McKay).

Such was the lament of Steve Carell’s character at the end of The Big Short, a movie chronicling the financial crisis of the mid-2000’s. The respective climates of post-recession America and pre-referendum Britain are very different, and the logic applies in different ways. However, it is the same xenophobic nationalism driving the belief that two of the most marginalized groups in nearly any modern Western economy could possibly be responsible for economic stagnation.

The background to this argument is as follows: as a member of the EU, the UK is a part of the European Single Market. This guarantees the free movement of goods, services, capital, and labour (the “four freedoms”) between all member states. Thus, a citizen of any EU member state is free to reside and work in any other EU member state and does not need a visa to do so.

British people claim that such a policy is causing a shortage of jobs available for British citizens, in favour of giving them to incoming migrants from EU countries. In reality, EU nationals, particularly those from Poland and Romania, take jobs that British people have decided they’re too good for, and face extensive discrimination for doing so. In fact, many British industries, such as hospitality, customer service, and health care would face massive staffing crises if Brexit legislation requires that EU nationals leave the country after the UK is no longer a member of the EU.

If British people truly believe immigrants are hurting their employment prospects, I hope they’re ready to take on the jobs left behind by EU migrants and drop the nationalist vitriol constantly hurled at Polish window cleaners and Bulgarian baristas. Pick your poison Britain, you literally cannot have both.

#2. The European Court of Human Rights is encroaching on the jurisdiction of British courts!!!!

This one could almost sound like an intelligent argument to someone who doesn’t know much about the differences between the European Court of Human Rights (ECtHR) and the European Court of Justice (ECJ). The ECJ is the judicial body that ensures that EU law is applied equally across all member states. It is hard to say how much influence the court actually has on British law; the percentage of British laws that come from the ECJ depends on what you count as a law, and many simply codify already-existing British law at a European level. However, it is generally accepted that when it comes to the legislation that most impacts life on the ground for British people – public order, crime, health care, defense, etc. – the ECJ has very little sway.

The ECtHR, on the other hand, has a very narrow mandate. It has jurisdiction to rule on complaints brought by individuals or states concerning violations of the European Convention on Human Rights (ECHR) by signatories to the Convention. ECtHR verdicts have angered British politicians in the past, particularly in 2014 with a controversial ruling declaring that the UK could not deport someone suspected of involvement with radical Islamic groups.

But wait, what does any of that have to do with the EU?

That’s exactly my point. The biggest difference between the two is that the ECtHR is completely separate from all EU bodies. No connection whatsoever. At face value, Brexit has absolutely no implications for the relationship between the UK and the ECtHR; the UK would have to withdraw from the ECHR for that to be possible. Furthermore, the EU’s Brexit negotiating team has stipulated a clause that would immediately end any security and information-sharing deal if the UK were to withdraw from the ECHR upon leaving the EU. If the UK is stuck within the jurisdiction of the ECtHR either way, they might as well get the benefits of EU membership while they’re at it.

(Disclaimer: I am not trying to offer an opinion on whether the ECtHR made the right call in that specific case or others; nor am I endorsing the EU’s negotiating tactics. I am simply pointing out that the belief that the ECtHR will no longer have jurisdiction in the UK after Brexit is fundamentally incorrect.)

#3. Brexit will be good for the British economy!!!

I’d love to break this one down further, but I genuinely have no clue what the basis of this argument is. While the immediate aftermath of the referendum was not as catastrophic as originally expected, “not catastrophic” is not a synonym for “positive.” There is a pretty broad consensus among economists that in the long term, British GDP per capita will fall, and goods will become more expensive. Lower growth and higher prices creates a situation economists call “stagflation.” Without getting too technical, I’ll tell you that the last time Canada experienced real stagflation, Alberta practically threatened to secede when the government tried to respond (for those of you who remember the NEP, you know that this is only a slight exaggeration). There’s already enough regional disunity in Britain without the threat of economic instability exacerbating it.  

To conclude, none of this should read as me telling you that the EU is beyond criticism. In fact, you’d have a hard time convincing me that any level of criticism and scrutiny is too high for the political institutions that govern our lives. Many believe the EU to be unaccountable, undemocratic, and overly bureaucratic. However, almost none of these criticisms seem to have had much influence in Brexit voting. As we have sadly seen happen in other countries, particularly the United States, populism, nationalism, protectionism, and flat-out hatred have taken hold in certain demographics. These -isms seem to stem from fear: fear of what is different from us, fear of change, fear of losing one’s place in society. Perhaps when Leave-voters realize that the average EU migrant wants the same thing as they do – to do the best they can for themselves and their families – some common ground will be found, and the UK will think about reversing its decision and preserving a system that provides far more benefits than drawbacks. To that point, I’ll leave you with this slightly less nuanced but probably more astute (and undeniably British) commentary:

“In vs. out, it’s all very complicated. The other day, my flatmate was making me a cup of tea, and he asked me if I wanted the bag left in, or taken out. If you leave the bag in, the cup of tea as a whole will get stronger; it might appear like the bag is getting weaker, but it’s all part of a stronger cup of tea. Whereas, if you take the bag out, the tea is now quite weak, and the bag itself goes directly in the bin.”

Mallory Kroll is a fifth year Economics student and the Managing Editor of The Athenaeum.

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Thanks for sharing with us this blog post and rendering it public