There is much being written about the implications of Brexit. This stream of commentary will undoubtedly continue for some time; Matthew Goodwin said the repercussions from Brexit will be felt 'for generations'. While the focus is mostly on the negative implications, some think there may be a silver lining in that the political and economic crisis facing the United Kingdom will be a wake-up call for future voters to be more discerning before supporting populist causes. However, that hope may be in vain.
Many see Brexit as a major setback for globalisation. Kevin Carmichael called it a ‘dark moment for internationalists’. Carmen Reinhart said Brexit was a blow to globalisation and ‘what is unique, and partly far-reaching, is the precedent Brexit sets for other countries to exit from their respective political and economic arrangements’. Charles Grant predicted the future narrative would be 'disintegration rather than integration', and Ken Rogoff predicted similar episodes may flare up across Europe.
But there’s also the notion that the political and economic pain being suffered by the UK will take the wind out of Eurosceptic sails across the continent. French President Francois Hollande said Brexit ‘can serve as a lesson for those who seek the end of Europe’. Mohamed El-Erian speculated on what may happen to the UK and Europe over the next three years and predicted that continental Eurosceptics would be disappointed in the long-term reaction to Brexit, as citizens witnessed the ‘buyer’s remorse of their peers across the channel’. El-Erian speculated that Brexit may actually strengthen ties between EU member countries.
John Edwards noted that while it may embolden opponents of globalisation and trade liberalisation (such as Donald Trump), the takeaway lesson may instead be that ‘loud, noisy and amusing protest leaders like him and Boris Johnson and Nigel Farage are fun but…not people to trust with the future of nations’.
Malcolm Turnbull played the Brexit card in the recent Australian election, stressing the importance of having a clear economic plan and political stability, and the dangers of registering a protest vote. Despite the widespread view that Brexit would favour the Coalition, it is difficult to argue that it had any impact it reduced the swing away from the Government and toward minor parties and independents.
The Brexit vote may have have little influence on the Australian election for much the same reason so-called elites failed to successfully prosecute the case for remaining in the EU; voters weren't in a mood for rational argument (this also suggests Brexit may not warn off future voters from supporting causes that aren't politically or economically sensible).
As Stephen Grenville comprehensively outlined, Brexit is economically ‘inexplicable’. There were dire warnings from HM Treasury, the IMF and the Bank of England about the implications of Brexit. But none of this persuaded the majority of voters taking part in the UK referendum to vote remain. The argument for the UK to stay in Europe was targeted at the intellect, but voters are motivated by many emotions, many of which are not economically rational. In the case of Brexit, nationalism loomed large. Many felt that decisions about the UK should be made in the UK, particularly when it comes to deciding who should enter the country. Many in the leave camp also seemed to feel that (despite the benefits from being in the EU) they personally were struggling; in short, they were ‘not happy with their lot’ and wanted change. The average income of the leave voter was well below that of the remain voter, as were levels of education.
Brexit is unlikely to mean that in future voters will be more discerning with their voting behaviour. Emotions will continue to override the intellect for many citizens, if not the majority.
Brexit also demonstrates the political danger of putting complex economic issues into a single yes-no referendum question. Imagine, for example, if Australia had a referendum on foreign investment in Australia. One of the strongest results in the 2016 Lowy Institute Poll was that 87% of Australians were either strongly or somewhat against allowing foreign companies to buy Australian farmland. I suspect that the strong opposition to foreign investment is not limited to buying farmland (despite Australia’s future prosperity being dependent on strong, continuing foreign investment).
A final lesson from Brexit is the need for political leaders to not only persuasively argue the economic benefits of trade liberalisation, foreign investment and integration, but to also effectively respond to the fears and concerns of those citizens who feel that they will not benefit from such policies, as Tristram Sainsbury pointed out. Political leadership is a hard slog.
Photo: Getty Images/Mary Turner