Stealing the initiative

In 2001, four American political scientists published a small book called Stealing the Initiative: How State Government Responds to Direct Democracy. It was a specialist title, dealing mostly with direct democratic "citizen's initiatives" (a kind of referendum) in the individual US states.  But it is a useful guide for understanding UK politics since 2016.

Their basic claim, stated in the introduction, is: "government actors must choose to comply with an initiative if it is to affect policy. ... We find that full compliance with initiatives is the exception, not the rule." Indeed, "[i]f... a legislative majority and the governor are united in their opposition to an initiative, then full compliance is extraordinarily unlikely – even if citizen support was high." They back this claim up with 11 case studies of California citizen's initiatives.

Another insight: "to ensure greater compliance with one's winning initiative, simply write a measure that is clearer in its instructions about implementation and enforcement...." But this might be hard: "an initiative's policy consequences may be difficult to anticipate, requiring government actors to retain discretion...." And, vagueness may help you win the election, since a too specific policy might present an easy target for opponents.

The other solution initiative proponents might have is "sanctions". "[Proponents] may also be able to mobilize voters... to withhold electoral... support from uncooperative elected officials".

We'll see!

How to think about Brexit

 

As promised. First draft. 

 

 

What kind of decision?

 

As we shall see, the economic consequences of Brexit are hard to know. The political consequences are even harder. In the end Brexit is not economic or even political, but existential. Existential decisions, like the choice to get married or pursue a particular career, are not about means and ends. They are about who we are. Still, some economic and political considerations are relevant. 

 

I will simplify the issues into a set of binary questions. One answer favours Remain, the other Leave.

 

 

Bad arguments

 

First let’s clear away some weeds:

 

The EU preserves peace in Europe. NATO provides protection against Russia. The EU preserves peace by binding France and Germany together, preventing future conflict between them. This worked before Britain joined. It will keep working after we go.

 

The referendum campaign was dishonest. Worse than the average election?

 

 

The economics

 

Economic analyses predict large losses from Brexit. They need to include numerous effects. Trade will decrease due to tariffs and non-tariff barriers. Unfortunately, it is hard to estimate the effect of NTBs, and these are the most important for Britain, especially as it is a services economy. Immigration, firm productivity, the quality of managers, and policy changes are all possible channels. Many of these are hard to predict. Here is a randomly plucked example. The 2016 OECD paper The Economic Consequences of Brexit predicted that net migration would decrease by 50000 per year after Brexit. So far, net migration has held constant.

 

Work like this deserves a hearing, but involves a lot of informed guesswork, which can be wrong even over a short time horizon. (Sometimes the guesswork is hidden within complex economic models with many moving parts.) Experts are not immune to cognitive biases and motivated reasoning. Many short term predictions of disaster have not really materialized. 

 

Beyond this, some consequences are simply inestimable. What if the Eurozone breaks up? Does Brexit make it more likely? Does it insulate us from the fallout? These questions involve Knightian uncertainty: nobody knows what the chances are.

 

So, we must each make our own judgment. Britain’s economic performance has been successful over the past forty years. Why?

 

One perspective is "Hong Kong". We pushed strongly for economic freedom. As a result we grew rich. Our neighbours have been trying to copy these policies for twenty years. Germany did so in the 2000s. Italy and France have not yet succeeded. The EU bureaucracy threatens our advantage. Leaving will free us.

 

Another perspective is that the EEC, later EU, was a complement to Thatcherism. It gave our firms big markets to sell to. Later, it provided cheap skilled labour, making up for the failings of UK education. The EU bureaucracy itself is now basically converted to economic liberalism, while the UK has devolved into what the Economist calls a chumocracy. All political systems eventually gum themselves up. (This is Mançur Olson’s idea in The Rise and Decline of Nations.) Europe is newer and fresher.

 

Or you may, like Jeremy Corbyn, regret Thatcherism and look back fondly to the 1970s. If so, I cannot advise you.

 

Economic freedom…

Needs the right policies: remain.

Needs a big market: leave.

 

 

Banding together

 

The real reason that my well-known journalist supported the EU is that it enables European countries to stand together against big rivals like Russia, China, and the US. This makes sense.

 

In 2007, Iran arrested some British marines who had strayed into their waters. In the nineteenth century we would have sent a gunboat. We can no longer do that casually. Iran backed down when the EU threatened sanctions. There is strength in numbers.

 

The historical precedent that keeps me up at night is the fate of Italy in the Renaissance. Wealthy, culturally avant-garde, financially advanced, but politically divided, the Italian city-states were chewed up by their big neighbours France and Austria. Divide-and-rule is Putin’s strategy, so it would not be surprising if he supported the Leave campaign.

 

There is an opposite worry. Progress has always taken place in times of state competition: Ancient Greece, Renaissance Italy, Europe 1600-1900. This progress has always been resolved by unification. Now we are competing at the highest level – a few global power blocs, the world of Orwell’s 1984. Where can we go from here? Perhaps we can only preserve freedom by keeping our rulers divided and in competition. If so, then the EU needs to be kept honest by a lively rival on its border.

 

What threatens European freedom?

Outside powers: remain.

A European superstate: leave.

 

 

Migration

 

The practical bite of arguments about “sovereignty” is that leaving the EU lets us control migration. Staying in prevents that. Remainers never had an answer to this point.

 

It’s arguable that EU membership shifts immigration towards people that nationalists would prefer (white, European, Christian). Angela Merkel’s choice to unilaterally open borders in response to the 2016 refugee crisis killed that argument, by making it clear that European border policy could be decided in Germany. That Leave.EU billboard was maybe nasty, but it pinpointed the issue. Merkel’s decision probably lost the referendum.

 

The economic case for free migration is fairly clear. The cultural case against it depends on many intangibles. There’s evidence that heterogenous communities find it harder to work together to provide public goods and control politicians. On the other hand, maybe good enough institutions can successfully integrate people from all over Europe.

 

What matters most to economics and politics?

Institutions: remain.

Culture: leave.

 

 

Democracy

 

Everyone in the original debate was clear that a vote to leave would be implemented. The EU has form in asking people twice when it doesn’t get the right answer.

 

Democracy came into Europe in the era of mass armies:

... it was the philosophers who first told stories to the people…. First up, may everyone know how to read the newspapers! It’s healthy! By God! And quick! No more illiterates! They’re not needed! Nothing but citizen-soldiers! Who vote! Who read! Who fight! Who march! Who blow kisses!.... And that was the send-off for the first battalions of the frenzied emancipated! The first of the voting, flag-waving sods that Dumouriez led off to get shot up in Flanders. 

Céline

As payback, the mobilized masses had to be given control. That era is past. It is not clear how the majority can enforce its will, when the rest of the system – the civil servants, political players, owners and managers of capital – is against it. Brexit is a test of strength.

 

Recent years have seen a decline in democracy, and even worries about its future in advanced Western democracies. These worries usually refer to Weimar Germany and other cases where demagogues have taken over. More likely, democracy will end not with a bang but a whimper. Walter Walter Bagehot said that political systems contained two parts. The dignified part looks good, while the efficient part is where policy is really decided. We may be moving towards a system where democracy and parliament are the dignified part, enacting the people’s will on trivial matters, while real decisions take place elsewhere. A second referendum would be a step towards that.

 

Who are we?

 

I have been puzzled to see young people marching and waving European flags. How do they think about the fact that they are marching to overturn a democratic decision? Perhaps they tell themselves that the referendum was stolen because the ignorant masses were duped.

 

Two visions are at war. One is of national democracy. The other is a post-democratic liberal arena. This goes beyond economic efficiency. The democratic vision goes back to the political struggles of the nineteenth century. It is part of us.

 

But it may be passing. In 1837, Thomas Carlyle thought it would last

Two centuries; hardly less; before Democracy go through its due, most baleful, stages of Quackocracy; and a pestilential World be burnt up, and have begun to grow green and young again.

Democracy fails in predictable ways. Voters have little incentive to study the issues deeply. Politicians may ignore the long term in favour of the here and now. Delegation to bureaucrats might help with that. So might federalism. The world’s longest-lasting democracy is a federation of states, with many powers reserved to the members. This preserves the freedom of people and capital to move away from inefficient local governments. 

 

The counter-argument is that a democracy requires a nation, with a sense of shared interest and a common future. Free mobility erodes that: as the economist Albert Hirschman said, the availability of exit can atrophy the art of voice.

 

Who are we?

Post-national liberals? Remain.

National democrats? Leave.