What the disastrous Brexit caper tells us

Ever since the surprise result of the referendum on June 23, 2016, Brexit has been like a train wreck in slow motion. Stretching the metaphor further, the crash is now due on March 29, 2019. Nobody has a clue what will happen and there is no way to even start totting up costs.
 
The costs will be considerable, whatever occurs. Consider the two most extreme options. One is that the United Kingdom decides to remain within the EU — perhaps, after holding another referendum. This would be the least disruptive outcome and hence, the best in economic terms.
 

It looks to be very unlikely but even in this relatively benign scenario, there would be large opportunity costs. There have been 18 months of uncertainty. Think of how the UK economy has slowed. Think of the business that just went elsewhere. Think of the investments not made. Think of the UK-based organisations, which have created alternate headquarters elsewhere.
 

At the other extreme, a “hard Brexit” and a disorderly exit would likely lead to a crash in the UK’s growth as skilled labour and investment disappears, coupled with a spike in inflation as European Union goods became more expensive. It would also leave millions stranded on the wrong side of the English Channel. Some 3 million-odd EU citizens in the UK would see their right of residence, right to work, health care benefits, etc., being suspended. Similarly, millions of British citizens would be left in limbo on the continent.

 
A hard Brexit appears a higher probability outcome than “Remain”. But it’s more likely that some sort of compromise solution, somewhere between a soft to middling-hard Brexit, will be worked out. In that case, Britain will still lose out in terms of skilled labour and investment. It will still see businesses relocating. It will lose some importance as a financial centre. And, of course, there will be huge bureaucratic and legislative costs associated with unravelling 40-odd years of treaties and agreements.
 
In sum, the whole Brexit caper is a guaranteed disaster; only the dimensions might vary — from being substantial to absolutely monstrous. So it’s worth asking how and why Britain landed itself in this particular mess? 

 
One answer is the stupidity of crowds. There was a large voter turnout of 72 per cent of the eligible electorate. About 52 per cent of them voted for Brexit. The voters were indeed fed a string of lies and misinformation. But most of those lies were preposterous and easily verifiable as lies. A large proportion of “Leavers” wilfully chose to believe the lies.
 
A second reason is venality. The Leave campaign was created, run and energised, by venal people who wanted Britain to leave the EU for their own selfish reasons. They were also stupid. Many Leavers believed that they would receive a larger slice of the economic pie if Britain quit the EU. This group included quite a few members of Britain’s Asian community who thought their employment prospects would dim if there was an influx of European labour. They failed to realise that the pie itself would shrink, and perhaps, shrink quite drastically.

 
A third reason is genuine, knee-jerk racism. John Donne may have believed that no man is an island but it is true that islanders tend to be more isolationist in their world view. Some Leavers would like the UK to become a place populated only by English-speaking whites. They don’t really care, at this stage at least, if it also becomes a substantially less prosperous country. 
 
It’s hard to judge what the outcome of either a general election or another referendum would be. Opinion polls indicate that many erstwhile Leavers would now vote to Remain. But then, the opinion polls did not indicate the June 2016 result accurately. Also, if you believe the opinion polls, anti-immigrant sentiment remains high and that equates to the empowerment of enduring racism.

 
Brexit is an interesting case study. It shows how easy it is to influence large numbers of people to act against their own best interests. It highlights the flaws in democratic processes even in a rich, well-educated nation with a long democratic tradition.