Brexit

Brexit is an Opportunity For Britain to Return its Classical Liberal Roots

How the U.K. can escape E.U. regulations and protectionism.

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The United Kingdom's decision to leave the European Union marks a historic shift in the nation's relationship not only with Europe but with the world.

The uncertainty of what happens next has spooked investors. That is perhaps understandable: In the short term, there will be costs, not least being the considerable time and effort that must now be spent redefining the rules governing trade between individuals and businesses in the U.K. and their counterparts in other nations.

In the longer term, however, Brexit presents a great opportunity for the U.K. to re-establish itself as a cosmopolitan, classical liberal democracy governed by the rule of law and open to trade. If it takes that path, then its prospects are far brighter than they would have been in an over-regulated, protectionist E.U..

Although recent polls indicated that the vote would be very close, investors had clearly expected the British public to vote to Remain. So when early results indicated that voters were choosing Leave, they reacted with incredulity, dumping Sterling, which fell to $1.32, its lowest level in 30 years, and selling off stocks around the world.

As the sun rose over London, it became clear that Leave had won. At around 8am, as Brits ate their breakfast, the nation's Prime Minister, David Cameron, who had campaigned to remain in the E.U., announced that he would leave office by October. Meanwhile, Scotland's First Minister, Nicole Sturgeon, demanded another vote on Scotland's independence.

In the three days since, social media has been awash with offended middle-class Remain voters describing Leave supporters as stupid and worse, a prankster group used bots to generate over 3 million mostly-fake signatures for a Petition for a new referendum on the U.K. Parliament's website (in an ironic twist, the petition was started by a Leave supporter), and a Labour MP has called on Parliament to reject the non-binding referendum vote.

European politicians are in disarray over the vote. On Friday, Jean-Claude Juncker, President of the European Commission called for a speedy exit, reportedly saying that Brexit was "not an amicable divorce" but that "it was not exactly a tight love affair anyway". And the Czech foreign minister has called for Juncker to resign, blaming him for Brexit. Meanwhile, Donald Tusk, President of the European Council, and other E.U. leaders, including German Chancellor Angela Merkel, have encouraged Britain's Parliament to reconsider.

For Britain formally to begin the process of leaving the E.U., it must—according to Article 50 of the Lisbon Treaty—notify the E.U. of that decision. The terms and date of exit will then be determined by agreement—but by default will occur two years after notification. While Britain has not yet formally notified the E.U. of its intention to leave, David Cameron has established an "E.U. Unit" in his cabinet, whose function is to develop the exit strategy.

Assuming that Parliament does not over-ride the referendum result, many vexing decisions must now be taken, among them: What should be Britain's trade policy? How should immigration be reformed? And which British regulations required by the E.U. should be kept and which scrapped? To make matters worse (or at least more confusing), these questions are not necessarily independent of one another.

Taking trade first: At present, the U.K. is part of the E.U. customs union and practically all trade policy decisions are made on an E.U.-wide basis. At present, all trade between the U.K. and other E.U. member states is tariff free—there are no taxes on import or exports. That applies not only to goods (which means anything physical, from oil to toasters) but also to services (such as computer programming, architecture, and financial planning) and capital (investments of various kinds). This preferential treatment for trade within the E.U. created a tendency for transactions to remain within the customs union. However, the slow growth of most E.U. economies compared with other less heavily regulated economies has resulted in a decline in the share of British trade with the E.U.—from about 55 percent in 1999 to 45 percent in 2015.

The rapid growth of Asian economies over the past three decades was driven in part by unilateral trade liberalization. Britain could potentially benefit enormously by following that route. Unilaterally removing external restrictions on imports of goods, services and capital would be both the simplest and in many respects the best policy, since it can be undertaken without the need for any intergovernmental negotiation. It would ensure that consumers and producers in the U.K. had access to these inputs at the lowest possible cost. This would drive stronger domestic competition, resulting in higher rates of innovation and growth.

A second, largely complementary, option is for the U.K. independently to join the World Trade Organization (WTO). The advantage of joining this multilateral agreement is that it limits the tariffs and other restrictions other members can impose on British exporters. However, accession to the WTO is not automatic and might take years, so should not be seen as an alternative to unilateralism: any delay in the removal of trade restrictions will harm the British economy.

A third option, which again is largely complementary to both unilateralism and membership of the WTO, is to join the European Free Trade Association (EFTA). This association, which currently comprises Norway, Iceland, Lichtenstein, and Switzerland (all non-E.U. states), impose no tariffs on goods traded between them. Apart from the immediate benefits of mutual free trade, joining EFTA would signal Britain's continued commitment to trade and comity with other European nations—and perhaps encourage other E.U. members considering withdrawal to embrace an arrangement based on trade rather than political patronage. Membership of EFTA would also bring the U.K. automatic membership of the 27 free trade agreements EFTA has negotiated for its members.

A fourth option would be for Britain to seek to negotiate trade agreements with various other nations, including Canada, Australia, and, of course, the United States. There is a danger that such negotiations could become very protracted, so again this option should be considered subordinate to unilateral liberalization and, in the first instance, to minimize the complexity of such negotiations, it might be best if Britain were to identify a basic set of principles that could be applied to all potential partners in free trade.

Turning to immigration: If Britain were to join EFTA, it might also have the option of joining the European Economic Area (EEA), which currently comprises three of the EFTA nations, Norway, Iceland, and Lichtenstein. Under EEA rules, the U.K. would maintain free movement of goods, services, capital, and people across all E.U. and EEA states. But that would effectively leave Britain with the same E.U. migration policy that has become so contentious with many in the Leave camp. Moreover, EEA members are also required to comply with E.U. regulations related to these activities—without having any say in the content of those regulations. Given that a key reason for the U.K. leaving the E.U. is the lack of transparency and accountability of the E.U.'s decision-making processes—and the arbitrary, capricious, and economically sclerotic regulations that have resulted—EEA membership is likely a non-starter.

There are many potential alternative immigration policies. The libertarian in me wants to advocate totally open migration but that would be even less politically acceptable in the current U.K. than joining the EEA.

So, some kind of restricted migration policy is, I think, inevitable. One way to do this would be to adopt an employment-based system of some kind. Sweden has arguably the best such system; it permits anyone with a qualifying job to migrate—removing much of the uncertainty, delay and cost of the kind of employment-based visa process now in place in the U.K. (and similar processes in the U.S.).

But there is a fundamental problem with all employment-based immigration systems, namely that they require immigrants to have a job prior to migration. This imposes high costs on both the firms seeking to employ migrants, which typically bear the cost of visa applications, and on immigrants, who must find jobs in foreign countries, go through selection processes, etc.

An alternative system, proposed by the late Nobel Prize–winning economist Gary Becker is to sell the right to migrate. This idea has the advantage that it does not require a person to have a job prior to migration, nor does it impose arbitrary restrictions based on current location, academic qualifications, or family relationships.

The main problem with this system is the difficulty knowing the "correct" price. Set the level too high and Britain would suffer from a lack of skilled labor, meaning that the cost of plumbing would rise unacceptably; set it too low and there might be a flood of migrants, leading to the same concerns that have been raised by the current opponents of open migration.

An additional problem with selling the right to migrate is that it does not accommodate those who might otherwise be permitted to immigrate on compassionate grounds, such as asylum seekers, refugees or family members. So, accommodation would have to be made for these people.

Last but by no means least, Britain will have to find a way to decide which of the thousands of regulations that derive from E.U. legislation to keep and with to discard. Britain has on several occasions sought to cut red tape, establishing various Parliamentary committees charged with deregulating the economy. Last year, Parliament passed a new Deregulation Act that again sought to reduce some of the red tape that has become so burdensome. But all of these changes were piecemeal and none could to stem the tide of E.U. legislation.

A recent example of E.U. regulation is the Tobacco Products Directive, which among other things imposed all manner of arbitrary and unnecessary restrictions on the types of vaping products that may be sold, including a maximum tank size of 2ml (many of the most popular tanks are currently 5ml), and a limit of 2 percent on the amount of nicotine in liquids (many contain more, and higher levels are seen as helpful for those in the first stages of switching from far more harmful combustible cigarettes).

Previous attempts at deregulation simply didn't have sufficient teeth. One solution would be automatically to sunset all E.U.-derived regulations at the date the E.U. exits the E.U.—which will be two years after it invokes (which will likely take place soon after a new Prime Minister is installed in October). During those two years, Parliament could investigate the need for those regulations and prioritize the reinstantiation of any deemed, on net, to be desirable. By making deregulation the default and imposing a limited timeframe, Parliament will be forced to prioritize more effectively than has previously been the case.

Britain's current relationship with the E.U. is untenable and must change. But that change should be an improvement on the status quo—and it must take into consideration the fact that the referendum was won only narrowly. As Daniel Hannan, a British Member of the European Parliament and one of the leading proponents of Leave, wrote on the day of the referendum,

"If, as I hope, we vote to leave, we won't be able simply to ignore the concerns of those who wanted to stay. A narrow leave vote is not a mandate for anything precipitate or radical. It is a mandate for a phased repatriation of power, with the agreement, wherever possible, of our European allies. Many of our existing arrangements will remain in place; and those which we want to disapply won't be scrapped overnight. Brexit, in other words, will be a process rather than an event. It will be the moment when Britain starts to pursue a different trajectory, away from political union with the E.U. and toward a looser arrangement based on trade and co-operation."

David Cameron has already initiated the process by which the U.K. government will negotiate with the E.U.. I have argued, in line with Hannan's observation, that a looser arrangement based on open trade with the E.U. and all other nations, an immigration policy that is more rational and humane, and the removal of many of the arbitrary and capricious regulations developed by bureaucrats in Brussels could lead to a much freer society. That would be a good thing for the people of Britain. It might also set an example for the rest of Europe.

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  1. The British will just go about fucking themselves over with their own stupid regulations.

    1. At least they get to vote to commit suicide, instead of it being foisted upon them by the EU.

      1. I guess I fail to see how voting solely in Britain alone where they have a voice (somewhat- House of Lords anyone?) is that much different from voting in the EU where they have a voice via MEPs.

        1. The British Parliament can write laws that have force, and the House of Commons selects the Prime Minister, who has actual power.

          The so-called European Parliament cannot write laws that have actual force (it can reject proposed laws sent in by the European Commission, but not initiate them) and it does not select anyone with actual power (though it has some power to influence who winds up on the European Commission).

          1. Yet you’re strangely ok with the US government which consists of 532 people 90% of whom are incumbents and are therefore “unelected” and “unaccountable” due to the safety of their position.

            These same people follow a President who is elected by as many “electors”, supposedly selected from the people but that doesn’t fucking matter.

            Cognitive dissonance much?

            Or are you a fucking hypocrite?

            1. You do understand that every single one of those 90% of incumbents DO actually get re-elected?

              That what you’re complaining about is that The People aren’t doing what you want therefore the people they elect are “unelected” and “unaccountable” because you didn’t get your way?

              That you’re just as much of an elitist asshole as the Remainers screaming that the franchise be limited to themselves because only they and theirs are intellectual enough to understand the issues involved?

              Whine some more. We enjoy it.

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  2. Pretty good read from Greenwald on the insularity of the establishment as a proximate cause of Brexit and the rise of Trump.

    1. Seems like he’s repeating the same point every paragraph in slightly different words. Still it’s a very good point. I do wonder, though. Has there ever been a time were the elites aren’t segregated from those they consider inferior? Why is this just becoming a problem now and not anytime else in the last two hundred years worth of democracy.

      1. That’s a good question. I think people being stupid and easily-led like they are, they needed an independent method of vetting and verification of the claims of the elite in order to call bullshit. Along with some personal pain. That method came into being only about 20 or so years ago, and has allowed just about everybody to see how badly they’re being lied to by both the financial and governmental elite, but also by the media elites. Combine the internet with the royal shagging the voters of both USA and UK have been getting over the same period of time, and I guess the bill just came due.

      2. Too lazy to look it up, but Charles Murray’s Coming Apart some interesting observations. There’s also several interviews and lectures on YouTube.

      3. Smart elites

        a) allow expansion into their ranks by lower orders (be it Equestrians becoming Senators in Rome, or industrialists marrying into aristocracy in 19th century England)
        b) keep their ear to the ground and try to head off potential discontent

        And it’s not ‘just becoming a problem now.’ Grachii brothers in Rome, peasant revolts in medieval Europe, French Revolution, Chartist movement in England, rise of Marxist ideology, Boxer Rebellion, Bolshevism, Blackshirts.
        Fuck, Thatcher and Reagan were equally “populist responses to failures of elites” almost 40 years ago.

        Now, in the context of the article, problem is of course neo-liberalism and deregulation since the 80s. Because it’s Greenwald.

        1. As for “how should elites remain elites while paying attention to lower orders”, we can always turn to Kipling.

          “But first you must master their language, their dialect, proverbs and songs.
          Don’t trust any clerk to interpret when they come with the tale of their wrongs.
          Let them know that you know what they’re saying; let them feel that you know what to say.
          Yes, even when you want to go hunting, hear ’em out if it takes you all day.

          They’ll drink every hour of the daylight and poach every hour of the dark.
          It’s the sport not the rabbits they’re after (we’ve plenty of game in the park).
          Don’t hang them or cut off their fingers. That’s wasteful as well as unkind,
          For a hard-bitten, South-country poacher makes the best man- at-arms you can find.

          “Appear with your wife and the children at their weddings and funerals and feasts.
          Be polite but not friendly to Bishops; be good to all poor parish priests.
          Say ‘we,’ ‘us’ and ‘ours’ when you’re talking, instead of ‘you fellows’ and ‘I.’
          Don’t ride over seeds; keep your temper; and never you tell ’em a lie!”

      4. Why is this just becoming a problem now and not anytime else in the last two hundred years worth of democracy.

        It largely has to do with the explosion in communications technology and the nationalization of society. Not that long ago, elites had more in common, just by sheer physical proximity, with local people in lower echelons of society than they had with elites in other regions of the country. A Wall Street banker could relate to the guy selling him his cigars more than he could with a Texas oilman or a Boston Brahmin or a Silicon Valley entrepreneur or a Midwest manufacturer because they shared a lot background information that neither would share with the oilman or the Brahmin. And, in a lot of cases (think the oilmen and they guys on his crew or the entrepreneur and his engineers), they’d have shared economic interests. But, increasingly, you’ve seen the homogenization of elite life. Part of it is communications technology and part of it is the consequence of just how prosperous we’ve become.

        Now tack on to that the centralization of authority within our society in the government.

      5. Internet.

        In the past you didn’t see what your representative was doing when he wasn’t around you, and when he was he was all smiles and charm and ‘great to see you’. And you probably only had a vague idea what was happening with the pols in neighboring districts.

        Now you get a daily dose of what exactly they’re doing when they’re not back home massaging their constituencies. And you get to see that its not just your guy (who downplays the marxist rhetoric when stumping locally) but *all* the guys who are working together to, little by little, transform your world into not only something you may not like, but something that you’re being deliberately excluded from having a say in.

        1. Internet.

          Now you get a daily dose of what exactly they’re doing when they’re not back home massaging their constituencies.

          Bingo. The last time an invention had this much impact was when the printing press and translating the bible into the vulgate broke the stranglehold of the priesthood.

          The ‘net is a great form of sousveillance against the pols.

    2. Good article. Should be required reading for all establishment shills. Yes, I’m talking about you Chapman.

  3. So it’s settled: The UK will become part of China and let people buy their way onto the island.

    1. The good news is they already have similar dental plans

  4. I hope they move in pro-freedom direction but that they do it in the most insulting-to-the-EU way possible.

  5. Brexit:Opportunity For Britain to Return its Classical Liberal Roots::Victoria’s Secret Fashion Show:Opportunity for me to get laid

    1. So you’re telling me there’s a chance!

  6. Return its Classical Liberal Roots

    The colonialist monarchy that had an empire that spanned large portions of the entire planet at one time… those classical liberal roots?

  7. Classical liberalism was really more of an aberration on Britain than it’s roots.

    1. +1 Cobden.

    2. Versus what?

    3. Weeds have roots

  8. Interestingly, if you watch the big propaganda movie that the Brexit movement was pushing to get votes, the message was entirely a classical liberal one:

    Brexit the Movie

  9. Everyone knows that 91% of Britons are Monarchists(according to Cato). Take that you bully Reason fucktard asshats!
    (laughs maniacally then shits pants)/ M. Hihn, esq. pdq. lgbtq. U.ofQ.

    1. I’m not sure a Constitutional Monarchy wouldn’t be a superior form of government to Democracy (as now practiced).

      1. It has the advantage of giving the will to worship others a healthier outlet than people with actual power.

  10. The traffic on my Facebook page is positively bizarre on this one. The flakes that were for staying with the EU seem to think that anybody who mentions #Brexit agrees with them and their brown-shirt goose-stepping pals.

    Along with that, it is pretty damn hilarious the hysteria coming out of the Remain movement. Like how Scotland will vote to leave the UK. Well, they just had a vote on that in 2014, and lowered the voting age to 16 to make sure they stayed in the UK. What are they going to do this time, take the vote away from anybody over 45?

    There is a whole pile of jive spread by Bloomberg about the GBP blip in exchange rate with USD. If you think that drop is bad, maybe check out what happened 1/1/1973 when the UK joined the EU. Free fall of the GBP for FOUR YEARS!

    Every damn Pollyanna observation these people make is spun from dung.

    1. Unfriend a couple and Facederp algorithm should adjust the feed. Creepy? Maybe, but god damn, I enjoy seeing 28mm miniatures and WW2 tank footage rather than bleating of losers, and their compatriots in US and Canada.

    2. What are they going to do this time, take the vote away from anybody over 45?

      They didn’t leave because they liked the English sugar daddy. They’ll see the EU as an even better sugar daddy.

  11. These are not difficult questions at all. Taking trade first

    1. At present, all trade between the U.K. and other E.U. member states is tariff free – and should remain tariff free on the UK side, even if the EU erects tariffs, and while they’re at it, remove tariffs from trade with other nations. So the UK need do nothing here and if it acts, should act to remove its obligation to do something and then do nothing.

    2. Turning to Immigration – the UK should not join the EEA as that would leave it in the same place it was as part of the EU. The UK should issue work visas with no quotas (either numerical or skill-based) to candidates who can pass a criminal screening and . . . that’s it. Don’t push ‘path to citizenship’ or anything, just allow those who want to come to work, to work, for a limited time, and then send them home. Like my recommendation for US visa reform – 3-6 month renewable licenses. If you don’t get into trouble then you’re not a burden, if you get into trouble you get booted and you can’t get a work visa.

    If the EU wishes to be dicks and lock out UK citizens the UK should still allow EU citizens to enter the UK under the same rules as above as free trade benefits you even if your trading partner is erecting barriers on his end.

    1. 3. Current EU regulations – should simply be kept as-is for the immediate future, legal stability being more important than what the actual laws are (generally), and revisited on a case-by-case basis as interested parties bring up reasons to remove or amend those laws. The more onerous laws will be called for review early – because the people they affect will be incentivized to lobby for their removal/amendment. No need to call up a blue-ribbon panel of experts to run committees looking into revision priorities.

  12. If, as I hope, we vote to leave, we won’t be able simply to ignore the concerns of those who wanted to stay. A narrow leave vote is not a mandate for anything precipitate or radical. It is a mandate for a phased repatriation of power, with the agreement, wherever possible, of our European allies.

    He’s right about the first part, but then, in a democracy, you’re *supposed* to not ignore the concerns of the losers – even when the losers end up a tiny minority.

    But he’s wrong as fuck about the last part. It is not a mandate for ‘phased repatriation’ and the ‘agreement, wherever possible, of our European allies’ is something to give fuck-all care about.

    ‘I’m leaving, if you agree – great, if not, go fuck yourself.’

  13. RE: Brexit is an Opportunity For Britain to Return its Classical Liberal Roots
    How the U.K. can escape E.U. regulations and protectionism.

    England must embrace regulations and protectionism now more than ever.
    It is through protectionism that made Detroit the city that it is today.
    It is through red tape, regulations, rules, laws, etc that made Greece, Portugal and Spain the economic giants they are today.
    It is only through government intervention and protectionism that protect the collective from the evils of capitalism.
    Socialism protects the unwashed masses from the ravages of capitalism by keeping them poor, oppressed and dependent upon The State. Only through benighted protectionism, unnecessary rules, regulations and strangling red tape can a capitalist hell hole be transformed into a socialist paradise. We should all get on our knees and pray to Saint Karl Marx, may his name be blessed, for his ideas of redistribution of wealth, oppressive red tape, the elimination of the bourgeoise (SP) and having the ruling elitist turds micromanage our worthless lives.
    No sane person in this country wants to become a millionaire, much less a billionaire by working harder and smarter, sacrifice, employing advanced business acumen, and out-witting their competition. Such policies only produce people who are happier, more financially independent and more satisfied in life than morally wealthy poor wretches who live on the public dole.
    Who would you rather be?

  14. The author correctly notes that the “Leave” vote was strongly predicated on the notion that a “free” UK would be free to restrict immigration. However, he fails to note that the “Leave” vote also reflects a desire to embrace protection, rather than the unilateral proclamation of “free trade” that he recommends. In the abstract, the UK will be free to pursue libertarian economic policies. The only problem is, that’s exactly what the “Leavers” don’t want.

    1. I don’t see where the ’embrace protection’ comes in at all.

      The EU *is a protectionist organization*. It just extends that umbrella to the member states of the EU. If the UK wants to embrace protectionism they could have stayed.

      Not to say they’re seriously considering pro-freedom policies, but leaving the EU is not a ‘pro-protectionism’ action.

    2. “…he fails to note that the “Leave” vote also reflects a desire to embrace protection,…”

      Presumes facts not in evidence. Typical.

  15. If, as I hope, we vote to leave, we won’t be able simply to ignore the concerns of those who wanted to stay.

    This is what I don’t understand.

    Trump has clenched the nomination because he has tapped into a well of resentment, fear, anger, anxiety, and a few other pejorative mindsets. Brexit happened because of fear, anger, resentment, anxiety,etc.

    All that fear, anxiety, and anger isn’t going to go away if the RNC manages to unbind the delegates from Trump to whoever. Like wise with the UK. If the elite manage to get another vote and get it to go their way, the fear and anger and stuff isn’t going to go away. It is just going to bottle up until it explodes. I’m guessing that repressing these kinds of feelings (whether they are justified or not( and I know how many here think. a few raped Swedes is a small price to pay for libertarian orthodoxy, i.e. open borders) is what leads to civil wars and shit. Are the elite that fucking ingorant of history? Or do they just need Nick to tell the to shut the fuck up because obviously things have never been better and the serfs just need to get over themselves?

    1. Well, he certainly has *something* clenched.

  16. I mentioned this in a past thread, if they leave Brexit to rediscover its classical liberal roots, it’s a win.

    But they’ve been pretty good at this PC crap themselves so I see no winners at the moment.

  17. Let the EU have Scotland.

    England free of Scotland and the EU would be a much freer place.

  18. The 2016 presidential election is also a chance for the US to return to its classical liberal roots. Too bad it won’t.

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  20. I strongly suspect that the amount of wide-eyed reporting on today’s stock market improvement will be somewhat smaller in volume than the amount of wide-eyed reporting on yesterday’s similarly-sized decrease.

    No reason though, I’m sure.

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