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Brexit Final
Brexit Final
Brexit Final
Introduction
The rise of populism has raised the rather important issue of the relationship between
the deliberative and the representative democracy. Alternatively, and more specifically,
between demagogy and plebiscitary support. The topic as old as political thought, starting with
Xenophon, Plato, and Aristotle (Sen reports on similar themes in early Indian political thought,
but I know nothing about that).
The way to approach this topic within contemporary positive political science or
political economy is that of public choice theory (check Mueller’s advanced textbook overview
and Calculus of Consent by Buchanan and Tullock for the most authoritative early,
foundational statement). Here is an essayistic, but hopefully not simplified, account of the
theory and of the topic of democratic decision making on the example of Brexit. The query is
this:
How could have such an issue like the status of the Irish border post-Brexit been so
utterly disregarded or dismissed in the public debate preceding the referendum?
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withdrawal (secession) and of the post-secession relationship are being negotiated, and there is
no final popular vote scheduled that might contradict the result of the initial referendum given
the agreement reached.
The argument could be made that there is not much of a difference between the two
procedures because a lengthy public debate preceded the referendum on Brexit. And that
should provide for quite an adequate substitute for the pre-decision political negotiations. Thus,
the question is:
Whether public deliberation can indeed substitute for political decision making or
whether there is a significant difference in the final outcome between the choice made in the
public square and the one that emerges from the pre-referendum negotiations, in the political
market as it were? Put differently, does trading arguments in the public square secure equal or
even greater democratic legitimacy in comparison with trading votes and commitments in the
political market?
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Gligorov, The Unanimity Principle; also, Strnčević and Gligorov, Good, Pareto-Better, and the
Best).
Thus, what if the political decisions are made in the same way in which they are made
in the market?
Political market includes public goods though, so a decision on any single issue comes
with free-riding and externalities, so:
(i) unanimity has to be required, rather than implied,
(ii) items to be voted on may have to be bundled, i.e. log-rolled, i.e. there will be
compromises, and
(iii) votes have to be tradable.
With that, costs and benefits of e.g. item by item voting may be properly aligned for
each and all voters. The final vote on e.g. the trade bill, or the budget, or on market regulation,
or on all of them together will still be required to ascertain that the process has indeed delivered
the result which commands the necessary overall level of support.
Why is the vote on the final composite bill required? Because the overall costs may add
up to more than the public, the voters, may have had in mind when voting on any separate issue
or on any bundle of issues short of all the issues put together. So, what are even unanimous
referenda on the parts may not imply unanimous or convincing majority support in the
referendum on the whole. The same applies to the inverted procedure: vote on the final outcome
may not be consistent with the line item votes (see Sen’s Collective Choice and Social Welfare
on that).
Why? Because allowing for vote-trading (to rule out dictatorship) should enable not
just the representation of preferences but of their intensities too. That violates the independence
of irrelevant alternatives condition of social choice theory (i.e. binary preference ranking and
choice). That, however, means that the decision can be manipulated – voters may misrepresent
their preferences in order to get their preferred outcome on specific issues (what is called
strategic voting). Overall, however, in an up or down referendum, especially if it requires
unanimity or realistically qualified majority (e.g. that all of the regions in UK vote for the deal),
they may not agree to the outcome of item by item votes (or region by region votes, i.e.
federalism and centralism may not end up agreeing on the separately taken decisions even if
all of them were supported unanimously).
That is why, a referendum on the final deal is needed and it needs to be planned in
advance, it has to be expected. The hope then is that the political process of vote-trading across
specific issues of interests will not only aggregate the votes and bundle specific issues into the
overall final outcome, but will also discipline the manipulations to those that can at least
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command, or rather will be expected to command, the support of the convincing majority in
the final referendum (i.e. there might be side-payments in addition to vote trading). Majority
vote will still lead to inefficiencies (compared to unanimity), but at least the sign should be the
right one, and that is all that is being decided at that late stage anyway.
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E.g. laud Brexit and reject that there is the Irish border problem or propagate Brexit and
then search for solutions to the Irish border problem. E.g. an invisible one, like with eyes wide
shut.
Thus, the experts lose, if they lose, because they argue that the desirable is not feasible,
which is what is meant losing to populism or to plebiscitary will.
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institutionalised principle-agent relationship in a Westminster type of representative
government.
Thus, if the representatives turn demagogues, there is no expert check on the policies
that they are advocating. That still may not work, as it did not in the Brexit case, in elections,
but it may work via a plebiscite, as it did. Decide first on the desirable, then have the experts
find the way to make it feasible. In that, there will have to be arguments that will be wrong, but
not necessarily discarded in the public square. Or, there will be problems which will be
disregarded or minimised, such as the issue of the Irish border.
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than not this will happen over the national interests. Nation being the usual framework of
democratic decision making.
An interesting case where the expertise loses to demagogy is that of trade policy. In the
Brexit case, the claim that multilateralism within and through the EU is inferior to the bilateral
opportunities opened up by leaving the EU. It turns out, though it should have been known in
advance, that for one, the multilateral context cannot be avoided, and for another, the
immediate alternative to the multilateralism of the EU is the multilateralism of the WTO, with
the latter being clearly inferior to the former.
Most basically, the multilateralism of trade never goes away (the point made already
by Smith and Ricardo, though with different takes on the welfare consequences of
protectionism; more in Gligorov, The Theory of (International) Value). But the distribution of
power does change e.g. for the member of the EU negotiating trade agreements in the global
trade setting alone rather than jointly.
In trade theory and policy, the bilateral setting of a country and the rest of the world is
useful to see the policy alternatives for a small open economy. For economies with some weight
bilateral trade policies have to either assume away the rest of the world with a caeteris paribus
condition or have to take multilateralism into account explicitly. If e.g. UK is to negotiate a
trade agreement with the US, both parties need to take into account their trade relations with
the other countries or the rest of the world with all the trade-offs that implies. Issue then is
whether the influence of the UK as a member of the EU, which is a large trading block, in
negotiations with third parties or with multilateral institutions is higher or lower than that of
the UK alone. On the basis of the weight of the economy, clearly UK enhances its influence as
a member of the EU both within the EU, within which it is a large economy, and with the rest
of the world, where it is a much smaller economy.
Another important example is that of sovereignty. And that gets to the heart of the Irish
border issue. The issue is not about trade facilitation and not about the post-Brexit trade regime.
It is about the Good Friday Agreement. Now, international agreements are the expression of
sovereignty, not a limitation of it. In this case, there is an agreement, the Good Friday
Agreement, between two sovereign states, Ireland and the UK, which, and that is crucial, is
facilitated by their joint membership in the European Union. The latter, through the single
market and the EU human rights convention, enables both the equal rights provisions in the
Good Friday Agreement and the self-determination right for Northern Ireland. The latter is
crucially dependent on the former in the following way:
The crucial requirement in secessions or in exercises of self-determination is that there
is no deterioration in the equality of rights of the individuals and peoples, of the minorities in
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particular. Which is why the Irish border issue is the withdrawal issue, not the issue of the
future trade or market regime.
The issue then is does Brexit invalidate the Good Friday Agreement by changing the
rights and liberties on the island of Ireland?
If it does, does that represent the limitation on UK sovereignty? The answer is obviously
negative, the Good Friday Agreement being a sovereign decision of the UK government on a
contract with the Republic of Ireland. Both the membership in the EU and the agreement with
Ireland are sovereign acts. The issue is:
Can a sovereign country renege on its international obligations?
That goes to the heart of the issue of sovereignty as far back as Bodin:
In the end, sovereignty is a real, not a legal capacity (the same way a state is, comes
into being, as a real entity and not through a legal process).
UK can leave the EU legally on the basis of the Article 50 of the EU Treaty, but the
Good Friday Agreement has no time limit and no exit close. So, getting out of it, albeit by
leaving the EU, risks legitimacy crisis in Northern Ireland. And then it is a real not a legal
question whether the UK government can impose its will on Northern Ireland. The persistent
crisis of legitimacy and sovereignty on the Irish Island led to the Good Friday Agreement, with
the EU membership of both Ireland and the UK facilitating it, so the same issue of effective
sovereignty which the UK faced prior to the Good Friday Agreement is what potentially UK is
going to face post-Brexit if Good Friday Agreement is invalidated in the process.
The bet of the Brexiteers is that it is one thing to keep the legitimacy crisis alive for
years or decades even, while it is another to trigger it again after a prolonged period of peace
even if the terms on which that peace is maintained have been changed. There are fixed costs
which may make it undesirable and thus getting out of the EU and the Good Friday Agreement,
albeit de facto by changing the rights and liberties of people living on the Irish Island, may
prove feasible, and thus an exercise of effective sovereignty. By, and that is crucial, violating
the previous sovereign contractual obligation.
That leads to the understanding of the one condition which enables the effective use of
demagogy, known since Demosthenes and Cicero. National interests are especially susceptible
to demagogy for two reasons: the public good problem and the emphasis on privileges over
rights.
National interest is almost intrinsically about public goods, e.g. security or sovereignty
or protectionism. That enables the public debate that is about the ends rather than the means,
because the voter can be under impression that they can free-ride on the costs of their decisions
– they can have their cake and eat it. Indeed, one can demonstrate one’s patriotism apparently
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without cost, e.g. one is ready to be poor to be sovereign, especially if one is already poor or
even more readily if one is not, as in the case of Mr. Michael Caine’s counterfactual patriotism
quoted at the head of this piece.
That leads to the second opening for the demagogues – attracting support of the special
interests by arguing that their rights will be privileged, e.g. over the rights of foreigners: my
interest, i.e. my job, is in the national interest while yours is not because you are a foreigner
(where the criteria of foreignness may be satisfied even by citizens let alone by non-citizens).
These are incentives which are hard to argue against on their merits, because the rights of the
others, of the foreigners, have to be considered too, who of course are not party to the
conversation, which is why experts, who are arguing, if they are arguing, impartially tend to
lose in the debates about the national interests – when they do not turn demagogues themselves,
the latter happening all too often with the rise of populism (more on the social welfare function
in Gligorov, The Theory of (International) Value).
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disregarded. However, if indeed, post factum, it must be considered, as there is now realisation
that it must, constitutional problems will emerge with the requests for equal treatment of the
other union members. Indeed, UK is not a federation, but it is a political union, a composite
state so to speak, and though it is mostly governed centrally, by the Parliament in Westminster,
the constitutional stability still depends on the sense of legitimacy among the union members.
Indeed, UK is more of a political union then most federations because the member regions and
nations have the right to secede if they choose to do so. And a decision to leave the EU without
the consent of, in this case, Northern Ireland and Scotland, who voted against leaving the EU,
can clearly trigger constitutional crisis in the form of increased support for independence.
This is also relevant for sovereignty or to the desire to take back control. UK is
externally sovereign, while constituent regions are not. However, internally, sovereignty is
devolved and while UK is fairly centralised, comparatively speaking, the right of Scotland or
Northern Ireland to secede makes them indirectly externally sovereign too. Of course, not as
long as they are within the UK, but to the extent that they can condition UK’s external
sovereignty, i.e. its ability to sign international contracts or get out of those, with the threat to
deny their legitimacy or outright secede. As in the case of the Irish border.
From the theory of public choice point of view, federalisation contributes to stability
because it limits the discretionary power – in this case of the centre over the regions. And it
limits the potential for rent-seeking. This indeed was one of the arguments for the inclusion of
the article 50 in the current EU treaty. If used consistently, the threat of secession should
discipline the power of the central governing body and strengthen the consensual aspects of
governance.
Again, as in the case of sovereignty, the power of the centre is a real or political and
not necessarily a legal issue. However, in the case of Northern Ireland it is not clear whether
the real can beat the legal, which also can lead to constitutional challenges in other devolved
regions of the UK. The way the referendum decision was taken and is being implemented does
increase the risks for stability of the political union, of the UK (more on that in Gligorov, Why
Do Countries Break Up: The Case of Yugoslavia).
Invisible Backstop
The normative part of public choice theory is its contractual view of legitimate coercion
or of governing. This is true of social contract theory in general since the earliest versions from
Hobbes to Kant. Its importance for the decision like Brexit is clear in the example of the
problem with the so-called backstop provision on the Irish border. To see this, take the
argument that the backstop arrangement, by which the border between the UK and the EU will
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not be re-established if an alternative arrangement is not found which will rule out the necessity
for that border in the first place. The backstop, which in essence continues to treat Northern
Ireland as if it was inside the single market as long as a permanent arrangement is agreed on
which does not, to simplify, violate the Good Friday Agreement. It is a temporary arrangement,
although without a precise time limit. The backstop will not be resorted to if the two sides, the
EU and the UK, agree to the permanent alternative arrangement.
The argument then is that it is an insurance policy which is needed at the point of UK’s
withdrawal from the EU, but will never be invoked because the future permanent arrangement
will be agreed on during the transition period, during which UK will as a whole be in effect
inside the single market. The problem with this argument is that to the extent that the Good
Friday Agreement relies on the support by the joint, Irish and UK, membership in the single
market, there is no alternative to that which does not violate some parts of the Good Friday
Agreement. Therefore, joint agreement to the alternative arrangement will be needed, not a
unilateral decision by the UK, which is not going to be forthcoming if indeed it is to change
the rights and liberties that people living on both sides of the Irish border enjoy.
So, rather than looking for an invisible border, the negotiations will have to somehow
make the backstop solution invisible.
Contractual government or rule by consent is conservative in the sense of Burke, it does
require the agreement of all the parties to the contract, which is to say that without unanimity
of the parties to the contract, the status quo prevails.
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to ends ahead of proper consideration of the availability of means, with populist policies
proving to be unfeasible or self-defeating (most of those studies are about left-wing populism
in Latin America in particular and indeed they led to the so-called Washington Consensus as
the policy remedy for that variety of populism).
However, once there is the commitment, ideological competition becomes an obstacle
rather than the instrument of rationalisation. This is clear on the Brexit example. The demagogy
of ends becomes the one of authenticity of the commitment. The initial expression of desire
becomes the instrument of blackmail to stay true to the decision – ideology turns into
blackmail. Those who would change their mind are labelled traitors.
Thus, populist demagogy collapses the political and ideological space, it engenders an
ideological revolution by crossing ideological and party lines e.g. by pitting the people against
the establishment or the bureaucracy or the experts, against the feasible, in the triumph of the
will as it were, which then serves as the commitment that the demagogues rely on to urge the
public to stay true to.
That is blackmail by authenticity. E.g. the slogan: no deal is better than a bad deal,
which turns out to mean: there is no better deal than no deal.
Put simply, pragmatists tend to lose to hard-liners in the populist ideological
competition. The remedy is the rebirth of political competition, which is possible once
democratic mechanisms of decision-making are used to reassess the political commitment –
i.e. the feasibility of the desirable.
Brexit is the perfect example. The referendum is basically a constitutional moment, i.e.
a potential change in the constitution i.e. from representative to plebiscitary democracy. The
constitution will be changed if the result of the referendum cannot be challenged in a follow
up referendum or in the Parliament, preferably after the general election. The demagogical
argument is that the decision was made, and implementation is the only issue left, even if that
meant pure democratic impotence.
Alternatively, political market needs to be recreated. In that, the public square should
play a role if it can resurrect proper ideological competition. This is where the public push for
a popular vote is helpful. While public debate ahead of a referendum may prove fertile ground
for demagogues, public consideration after the terms of implementation are known may
provide the public of the opportunity to think twice, to decline the ideological or political
blackmail.
The central issue is the structural change to the UK economy and policy after Brexit.
Labour leaders believe that Soft Brexit will keep all the benefits of membership in the European
Union with the added freedom to rely on industrial policy which is now limited by the state aid
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restrictions that membership in the EU entails. Labour looks to instruments of renationalisation
or subsidies to specific industries in order to support their constituencies.
By contrast, Conservatives see Brexit as an opportunity to (i) weaken the power of the
employees in the labour market, and (ii) redesign the welfare system so that risks are borne
privately more than socially.
Both Labour and Conservatives see their version of Brexit as giving them the political
upper hand and the enduring hold on power and the Government. Thus, proper political and
ideological competition would likely keep the UK within the EU, as it has for over forty years
now.
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