The Economic Discussion on Brexit That Isn't Happening

Few discussions on the economic outcomes of Brexit find their way into Brexit media discourse. Why?

Millions of words have now been expended arguing the economic case for and against Brexit. It is a sad reflection on the economic literacy of the British political class and its media commentariat that so few of these arguments have been informed either by hard economic data or any deep understanding of the British economy.

The following is not an attempt at a definitive Brexit cost/benefit analysis but rather is intended to outline some of the underexplored economic realities that might have made for a more constructive debate. (“Remain” arguments alternate with “Leave” arguments to avoid the suspicion of some covert agenda here.)

Take, for example, the claim that it is EU membership that has impeded the ability of British manufacturers to export to the world beyond. “Remainers” could easily have given the lie to this delusion by referencing World Bank trade flow statistics that show its major EU competitors already typically enjoy a stronger export performance with this world beyond (including the Asian boom economies, Japan, the USA, and even Iran).

Britain deluded itself for 100 years about its preeminence as a manufacturing nation, and this is a major reason why it failed to match or even copy the wellspring of innovation of its competitors.

But economic statistics are not what drives the Brexit media circus. On the contrary, it has long been a fashionable media pose to virtue signal one’s dislike of data-driven economics talk and even to wear one’s mathematical and statistical incompetence as a badge of honor. Getting too detailed about the condition of UK industry could be risky territory for both “Remainers” and “Leavers” because it would involve confronting some of the electorate’s cherished mythologies. It risks revealing that the ills of British industry are essentially its own affair—neither particularly helped or hindered by membership in the EU.

A Century of Delusion

Britain deluded itself for 100 years about its preeminence as a manufacturing nation, and this is a major reason why it failed to match or even copy the wellspring of innovation of its competitors. The hard fact is that Britain’s relative industrial decline began in the second half of the 19th century—as soon as better adapted nations like Germany and the US began to compete with it. One reason for this is that in the UK’s class (and education) system, engineers and technologists have always been rather looked down on. The real cost of this cultural snobbery has been the survival of a culture of industrial management hopelessly outclassed by the international competition. Instead of facing up to these long-term fundamentals, my British compatriots have for decades tended to blame the poor performance on the policies of this or that recent government—a delusion with echoes all the way to the present time.

In the 1980s, Thatcherism gave Britain a long-overdue hard lesson in economic realism, albeit one that has still only been partially taken on board. This did kickstart a greater focus by the British on what is perhaps their greatest strength: trading in services. London, for example, is now more comfortable than ever in its role as a great global financial bazaar. These more recent changes will necessarily have implications for how Britain should best position itself in the global economy, but the media’s discussion of this has been vague and nebulous at best—not detailed and rigorous.

In making the case for a trade reorientation more toward the “Anglosphere,” even at the expense of tariff-free trade with the EU, Leavers could have made much more of the advantages to the UK of English as the lingua franca—and of Britain’s relatively advanced digital economy. But getting too specific about winners in this “new” economy would have the downside of needing to also get specific—and frank—about potential (often Brexit-voting) losers in the “old” manufacturing economy.

Few economic issues find their way into Brexit media discourse. Instead, there is a great deal of what journalists and producers love, which is pointing a microphone at someone and asking vague questions.

Remainers could have countered the Brexiteer bugbear issue of stifling EU bureaucracy by elaborating on the many instances where the UK Civil Service—far from being dragged along by EU regulation—actually has a history of "gold-plating" it, thereby scoring goals in terms of our competitiveness with continental neighbors. However, this might risk becoming a Pandora’s box, compounding hostility to the EU with hostility to the interventionist-leaning establishment as a whole.

Leavers could have made much more of the gulf that exists between British and French economic philosophies as a reason for getting out of the EU. The UK is arguably the only nation that believes unreservedly in “free trade” (and so it is that the UK’s utilities, railways, and automotive industry are mostly foreign-owned). At the opposite end of the spectrum among Western nations, the French are fiercely protectionist, not only of their national infrastructure but also of their big blue-chip “private” enterprises.

The Conversation Happening

Few, if any, of these kinds of issues find their way into Brexit media discourse. Instead, there has been a great deal of what journalists and producers love, which is pointing a microphone at someone and asking “What do YOU think? Do you think Britain is better off in Europe?” The theory is that this anecdotal approach brings economic issues to life.

To critique the standard tools of measurement of economic well-being, you first need to understand them—and what they do and do not signify.

The truth is that this kind of journalism is not really about the ostensible subject at all. It’s more about manufacturing a spurious drama. I suspect that only a minority of “educated” media commentators would comprehend economics as being (as in Robbins’s classic definition) a study of human behavior—the interaction of scarcity and desire—or whose thinking about economic decisions is properly informed by the concept of real cost.

Does it even matter so much what Brexit might or might not do to the UK’s GDP? Certainly, it is right to question, for example, to what extent GDP per capita is really a measure of quality of life. But to critique the standard tools of measurement of economic well-being, you first need to understand them—and what they do and do not signify. In media-driven, post-Enlightenment Britain, this is apparently unnecessary. All you need to know is how you feel.

Of course, the Brexit debate is about more than just economics. Brexiteers could point to the UK’s history as a uniquely stable and relatively liberal polity, going back 200 years or more and contrasting it with the historic fragility of European democracies. Remainers could remind Brexiteers that the UK is now only a small fish in a very large pond.

It is undeniably the case that even if all my imaginary economically informed Brexit pundits were laid end to end, they would still not (as in George Bernard Shaw’s quip) have reached a conclusion. On the other hand, the Brits might then have been somewhat more likely to have made a success of either option—whether in or out.

Further Reading

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