That was the first big mistake they made: calling it Brexit, in or out. Now you have Remainers and Brexiteers slugging it out and tearing the country in two.
In fact, if the whole debate had been played out in the context of the “different stages of economic integration”, it may have been a considerably more pleasant affair.
One of the leading lights in the early Chicago School of Economics in the 1930s, Jacob Viner, proposed a framework for economic integration in his The Customs Union Issue (1950). In a nutshell, the stages are:
2 or more countries giving each other beneficial customs tariffs
2 or more countries having no customs tariffs with each other
(but each chooses its own tariffs with other countries)
As (2), but they decide a single tariff with the rest of the world.
As (3) but adding the free movement of services, capital and labour.
Steps towards shared fiscal and budgetary policies, legislation, etc, added to (4).
What it says on the tin.
The individual countries now have virtually no individual economic control.
Britain and the EC are currently around stages 4 and 5, with Remainers at least wanting to maintain this status and some wanting farther integration.
The Brexiteers meanwhile want to pare back to stage 2, with maybe some accepting stages 3 or 4.
So maybe Brexiteers and Remainers have much more in common than they realise. They both want to continue trading with Europe, they both want to travel to Europe with a minimum of fuss, re air travel, roaming, etc; they both want a so-called democratic government to look after them (and let’s face it: there’s little difference between EU and UK legislation, in general); neither wants to be overwhelmed by immigration either, maybe they’d just disagree about the numbers coming in.
So maybe if we’d looked upon this so-called ‘Brexit’ not as an exit from something, but as somewhere we’d like to be on a sliding scale, the whole process might have been a bit more civilised.
To decide national policies most countries, of course, have elections with parties espousing various policies. Some might want a Stage 2 relationship with the EC, others stage 5; well, the normal thing is we have a vote and the party that ‘wins’ gets to decide which stage it wants. If the electorate doesn’t like it, they can try again in the next election a few years later.
However, the ex-PM, David Cameron, decided to bypass all of that and call for a referendum on being either “in” or “out” of Europe (as you can see from the stages above, what exactly does in or out mean?).
Anyway, the Brexiteers – as if democracy were a basketball match – “won” the referendum 52-48.
So did we go back to stage 2 or 3?
Eh, no. Not quite. After 2 years of ridiculous bickering, we now have a kind of ‘nothing’ agreement between Theresa May and the EC. Most things will stay the same for now, while more talks to solve everything may go on until 2020 (or longer).
The only reasonably sure thing is that – if the sticky NI/Irish border problem doesn’t get sorted -Britain and the EC will fall back to stage 3 – a customs union – but with GB having no input on this to try and improve the terms.
So, in other words, no-one’s happy. The Remainers aren’t, because the “agreement” takes them backwards, and the Brexiteers aren’t either, because it doesn’t go far enough back.
So what should be done?
Well, it’ll never happen in a million years. But probably the first thing the British government could do is remember what every 16-year-old economics student already knows: tariffs are bad !
And remember: tariffs may initially be paid for by companies importing or exporting, but they’re only going to do so if they can sell their goods. In other words, tariffs are ultimately paid for by us, as customers, by increased prices.
The Brexiteers talk about negotiating their own trade agreements; Trump talks about it taking years to reach one with Britain.
No it doesn’t. All the UK government has to do is issue a statement saying it will impose NO tariffs on any goods coming in or out of the country. That’s it ! (The EU won’t like it, of course, as it could convert Ireland into a back door country for zero tax ‘contraband’ into the EU.)
If other countries charge tariffs on British goods being exported to their countries, that’s up to them. Their citizens will be paying those extra costs. OK, that’s not good news for British exporting companies and their staff, but importing companies would benefit.
The British government makes £5 billion a year from tariffs. For a country with a GDP of £1.5 trillion a year, it’s not going to make a big hole in its finances.
But isn’t it good to have free movement of merchandise, people and capital?
Of course it is, and this is what the EU does right. But all of these things can be achieved without paying a central authority (the EU) to manage it. Any country can unilaterally offer all the above right now to whoever it likes – for free.
Of course, all of this means governments have less control (and a little less money), and this makes them reluctant to do it. But it’s perfectly possible, and advisable; as the increased flexibility makes everyone richer.
Couldn’t we have a second referendum, but better this time?
Well, we could have a second referendum, not based on “IN” or “OUT”, but based on the economic integration stages outlined above. So we could ask people, “Which do you prefer: stage 1, 2, 3, 4, or 5?”, for example.
However, I suspect the results would be something like Stage 2: 20%, Stage 3: 30%, Stage 4: 30%, Stage 5: 20%. Then, we could whittle it down by taking into account “second choices” or removing the loser from consecutive rounds, etc. But I reckon, in the end, Stage 3 “customs union” might win.
And, if it did, I think the best choice for a single tariff with the rest of the world would be ZERO. So we’d be back with my original solution of scrapping all tariffs unilaterally.