Referendums and Policy Decision Making: The Brexit Example

By Zhao Zhai, MPP, Staff Writer, Brief Policy Perspectives

On June 24, 2016, the British people made one of the most significant collective decisions in history: leaving the Europe Union. The conservative party held the referendum after facing significant pressure from many euroskeptic Conservative and UKIP (UK Independence Party) members of Parliament.  In the final vote, 51.9% voted to leave the EU while 48.1% voted to stay. While this may seem like a perfect exercise in democracy, the processes of decision making for Brexit was flawed. Major policy decisions, like the Brexit decision, shouldn’t be subject to an up-or-down vote but rather should undergo sophisticated policy analysis such as cost-benefit analysis, economic evaluation, and negotiation.

Political Background:

Many political theorists insist that democracy is supreme and that  all problems can be remedied by a popular vote. They argue that voting is not only for electing public officials, but for directly determining public policies. Francis Fukuyama, an American political scientist wrote “That is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.” This underlying theory motivated many British campaign groups to advocate for an in-out referendum on EU membership.

The final vote was sharply divided along age, education, class, and geographic lines. Generally, younger people voted remain while older people voted to leave. The map below demonstrates the geographic element to this divide. Large majorities in Scotland and London – highlighted in yellow – voted  to remain in the EU, but much of the rest of England -show in  blue – voted to leave.

brexit-results-cropped

brexit-results

So, why did so many people in England vote to leave the Europe Union?  Many businessmen and factory workers felt troubled by  what they perceived to be excessive EU regulation on trade, agriculture, and manufacturing. They felt that these regulations were impeding the UK economy. More importantly, these voters were motivated by nationalism and isolationism as well as a general ambivalence towards globalization. Due to stagnating wages and increasing inflation, many English people blamed migrant workers for taking away their jobs and putting pressure on prices. These feelings were encouraged by various pro-Leave advocacy groups. Many such groups, including Get Britain Out and Better Off Out, were accused of spreading anxiety about immigration ahead of the vote.

However, voters did not weigh many policy considerations when they went into the polling booth. For example, many did not consider whether Britain’s EU membership cost (13 billion pounds per year to the EU budget) was greater than the economic benefits membership provided. They also did not consider that Treasury might lose 10 billion pounds in tax revenue annually due to Britain’s lost free trade privileges with EU.  Furthermore, experts warned that Britain will have a more difficult time meeting its labor supply needs due to  uncertainty about the country’s immigration policy. Opposing free trade and open immigration will be major factors in impede Britain economic growth.  Those who voted to leave did not conduct balanced policy analysis, but rather voted with their emotions.

Brexit Mechanism Analysis:

Political leaders and governmental institutions did not play significant role in the Brexit decision.  It is true that the EU has a large bureaucracy that takes a decent bite out of member state’s budgets. However, this alone is not enough of a reason to leave the EU. Further, the British government did not try to change these factors. The government did not try to negotiate seriously with EU about the membership fee or put enough pressure on the EU to reform. Many of the eurosceptic members of Parliament who advocated Britain leaving EU did not have enough authority to make this big decision on their own. As a result, they advocated for a  referendum to leave the EU in order to secure a mandate for their position via  a successful popular vote.  Calling a referendum like this also allowed these members of Parliament to shirk their responsibilities and avoid having to face any negative effects of the Brexit decision.

The aftermath of the referendum created huge resentment and conflict among different regions within Britain. While the long term effects are still unknown, in the meantime Brexit has led to political unrest, currency volatility, and renewed talk of state split in the future. Prime Minister David Cameron was forced  to resign after campaigning unsuccessfully to remain. Furthermore,  since the Brexit vote, the pound has fallen 18 percent against the dollar while Scotland  has begun to  prepare a second referendum to leave the United Kingdom. There are even some who  advocate that London becoming its own independent city state, like Singapore, so that it can remain in the EU and maintain access to its financial centers.

Although the Brexit vote was a democratic decision,  it ignored the will of many people. It is unreasonable to use the winner-takes-all mechanism to make a decision for the whole country, especially if it dismisses  48.1% of the British public who wished to stay. The risk of the state split is high if the party leaders still do not come up with effective remedial policies. Different regions have different local interests and development plans. An accountable government should poll public opinion and consider people’s will seriously. Then the government should do policy research and formulate the best policy for the long-term benefit. Instead of simply breaking off its relationship with EU, the British government should instead  negotiate for specific terms that can be mutually agreed upon.  Britain should use its leverage as a major economic power and the second largest net-contributor to the EU budget to push  the  EU to reform its bureaucratic system. These steps should be taken well before Britain walks away from the table altogether with a so-called “hard Brexit”.

Next Steps:

Although the Brexit decision was short-sighted and  driven by emotion and false information while lacking any  sophisticated analysis, it might at least present us with a lesson in decision-making. Most British people did not have a plan for their future when the decision was made. In Britain, there are three million jobs dependent on export to the EU that would surley suffer should Britain leave the European Free Trade Area. The Brexit decision puts these workers in a position of  great uncertainty. The British government will now have to put more effort into negotiating with the EU and other countries on trade deals. Isolationism will only accelerate the meltdown.  In the future, Britain will endure more difficulties and the government could not simply launch a referendum to solve each problem.  The government should be more accountable and consider people’s interest more seriously.  In the future, party leaders should take more responsibilities on decision process rather than simply delegate obligation to people. Most political groups should strengthen institution to mediate interest conflict and adopt different proposal rather than launching referendum to make arbitrary decisions for their narrow interests.    

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