Brexit
An Analysis of the Problems Facing Global Economic Integration
With a Philosophical Facet
Joslyn Valente
INTL 3100 Global Political Economy
September 18th, 2017
Table of Contents
Table of Contents 1
Brexit – Britain’s Exit From the European Union 2
The Single Market 3
Benefits of This Market 3
Criticisms 3
Emotional Voting 4
Migration Crisis 4
The Free Riding Temptation 5
And the Prisoner’s Dilemma 5
Tyranny of the Majority? 6
International Cooperation 7
Conclusion 7
References 9
Brexit – Britain’s Exit From the European Union
On the 23rd of June, 2016, more than 30 million UK citizens took part in a historic referendum, reshifting the global political economy. Shocking the international community, the majority voted to leave the European Union, causing chaos within the international arena and a dissatisfied sentiment among many UK citizens who voted for the UK to remain an EU member. “The decision by the UK electorate to leave the European Union has had an electrifying effect on the media, on financial markets and even on interpersonal relationships”, reporters claimed. Almost overnight, Britain welcomed a new Prime Minister – Theresa May. The value of the pound dropped immensely (and remains about 15% lower than the current euro). Citizens and outside observers even noted a rise in racist activity, exclaiming that “Brexit has given a voice to racism” (Rachman, 2016).
So why, amongst all of these downfalls and reminitions of insecurity, did the majority of UK voters decide to leave the European Union? This essay aims to explore potential incentives, with a specific focus on the ways this referendum reflects obstacles often found within the global economic community. In further examination, this essay will also analyze this current event through a philosophical lense; bringing perspectives such as John Stuart Mill’s “tyranny of the majority” to light.
The Single Market
When analyzing through an economic lense, the single market has been praised as quite an international achievement. Completed in 1992, this market enables the free movement of goods and services throughout EU member countries, as well as other economic benefits. By committing to brexit, the UK lost full access to this market, leaving cities like London, with a booming international tourism market, to suffer immense economic consequence.
Benefits of This Market
The single market is one of the core reasons the European Union was actually founded. Member states grew frustrated with the obstacles in the way of accepting work abroad, participating in interstate trade, and the struggle of managing rising tariffs (Ravenhill, 2017). To boost the economy, cut the costs of trade, and create jobs, the single market was designed and quickly utilized.
Criticisms
While the single market may seem sensible, there are some requirements that may not appeal to all states. Markets like this one require common law-making systems to ensure production is held to the same standard, and member states are all engaging on a level playing field. “Critics say it generates too many petty regulations and robs members of control over their own affairs” authors Hunt and Wheeler explain in their guide to understanding Brexit. “Mass migration from poorer to richer countries has also raised questions about the free movement rule” (Hunt, Wheeler, 2017). In truth, issues of economics are often rooted in other issues entirely; social justice issues, migration policies, etc. Which brings us to the topic of emotional voting, and the impact that human emotions can have on the financial sector.
Emotional Voting
Britain was not entirely unfamiliar with the free trade idea when joining the European Union. The UK was a member of a free trade area prior to becoming a member state, however there are some notable differences between the markets. In a free trade area, states and trading partners are able to avoid tariffs. They don’t, however, have to merge or align their economies to assure a level-playing field. Analysts believe this could have been one way citizens of the UK fueled a distaste for the single market; expectations could have led to irritation when the UK was expected to adhere to a EU production market.
Migration Crisis
Apart from trade, frustration grew under the pressure of the EU migration crisis. States such as the UK became wary of accepting refugees or migrants and criticisms towards to EU saw an increase as the EU struggled to instill policies to mobilize and protect refugees. Feeling ignored or pushed aside in their own home country, analysts believe this phenomenon may have led voters to make decisions based on emotion rather than rationality (Carney, 2016).
The Free Riding Temptation
And the Prisoner’s Dilemma
In unions such as the EU that include many different states, grievances are often expressed when it is time for states to come together on a common issue. States will express their sovereign will to differ in approaches on certain social issues, will argue that they are offering more assistance or effort than other states, will avoid participation, etc. The idea that all states will sacrifice equally and benefit equally works in rational settings, but we are simply not solely rational beings. The issue of “free-riding” becomes relevant when states need to come together to combat problems (Pettinger, 2016).
This can be analyzed in the current migration crisis the EU is facing. As refugees flee from Syria and the surrounding region, it is expected that EU members will share the burden, whilst allowing state leaders some freedom in how to handle the influx. The UK was not eager to take in refugees, and many were frustrated, even outraged, at their inability to express this within the EU. To experience what economists would refer to as nash equilibrium with other member states, UK citizens would have needed to experience a sense of fairness regarding their sacrifices and pay-offs. Unfortunately, this did not happen. We can see this illustrated in other economic games as well, such as assurance games, in which states possibly doubt the benefits they’ll receive through adopting certain global economic policies (Ravenhill, 2017). While the UK faces criticism from other countries for possibly benefiting from EU management without experiencing as much sacrifice as other EU member states (often referred to as free-riders), UK citizens were not satisfied with the distribution of refugees throughout the EU. With UK citizens pointing fingers at other states, accusing them of free-riding, and other member states pointing their fingers at the UK exclaiming the same, the situation worsened.
Tyranny of the Majority?
From a philosophical perspective, one cannot help but think of John Stuart Mill’s concern for the tyranny of the majority. Was this an emotional decision that includes heavy economic consequence? Perhaps John Stuart Mill would say so. Does this reflect an error in our democratic processing?
In John Stuart Mill’s eyes, as long as decisions lie in the hands of the majority with no restriction, there is potential danger (Mill, 1860). Because as long as the majority consists of emotional, often irrational human beings, a powerful entity could potentially come along and convince the majority to make a bad decision.
International Cooperation
In reflection, brexit could be seen as an obstacle worth re-visiting in the way of successful global economic integration. International cooperation is a fundamental aspect of that stride, making brexit a recognizable example of the ways “cooperation may itself itself entail varying costs and benefits for participating states” (Ravenhill, 55). Individuals are unique and differ in what they believe to be of highest political importance. Financially speaking, “policies that make an economy open to trade and investment with the rest of the world are needed for sustained economic growth. The evidence on this is clear” (IMF, 2001). However, this may be easier said than done. As long as the will to convince the majority is possible, individuals may continue to naturally think emotionally and not rationally or economically.
Conclusion
In conclusion, philosophical hypotheses from the 19th century can be used to gage just how irrational and emotional mankind can be in their decision making, regardless of economic rationality. Global economic cooperation is needed for sustainable economic growth, however, social issues will continue to play a heavy role in the way states interact economically. Multi-dimensional economic deals must recognize the differing cultural aspects within relevant states before imposing potentially problematic guidelines. By assuring that all members have functioning systems in place to air their grievances and feel validated, a fundamental problem leading up to the brexit decision within the UK in regards to the migration crisis, the global political economy could witness progress.
References
Carney, Senior Research Associate (Psychology), Lancaster University, J. (2016, July 5). How primitive emotions may explain Brexit. Retrieved September 17, 2017, from http://theconversation.com/how-primitive-emotions-may-explain-brexit-61936
Hunt, A., & Wheeler, B. (2017, September 05). Brexit: All you need to know about the UK leaving the EU. Retrieved September 18, 2017, from http://www.bbc.com/news/uk-politics-32810887
Mill, John Stuart. On Liberty, Indianapolis: Library of Liberal Arts.
Pettinger, T. (2016, May 22). Free Rider Problem. Retrieved September 20, 2017, from https://www.economicshelp.org/blog/1626/economics/free-rider-problem/
Rachman, G. (2016, June 24). Brexit and the Making of a Global Crisis . Retrieved September 20, 2017, from https://www.ft.com/content/5490d754-3a0e-11e6-9a05-82a9b15a8ee7
Ravenhill, J. (2017). Global political economy (4th ed.). Oxford, United Kingdom: Oxford University Press.