Can the Brexit Denial Finally Stop Now?

Up until the very last minute, people simply still wouldn’t believe it.

Even after the British people voted for Brexit; even after parliament reaffirmed their decision; even as recently as this month, with the country on the brink of triggering Article 50 to begin exiting the European Union, numerous observers — whether commentators, politicians, or business leaders — continued to think that a way would be found to get around it. Brexit might be softened, they say. Voters could change their minds.

This, even though the signs that not only did Brexit mean Brexit, it meant hard Brexit, were there all along. After Prime Minister Theresa May’s speech to the Conservative Party conference last October, when she made it clear that, post-Brexit, she expected Britain to be able to “control its own borders” and to be free from the jurisdiction of the European Union’s court, there remained those who insisted that this was a political strategy — that she couldn’t mean what she said.

Then, after her speech in January, in which she declared her desire to end freedom of movement between Britain and Europe, and that she would forsake Britain’s membership in the EU’s single market to achieve that end, still, political elites in Britain and elsewhere insisted that it was a bluff.

Why has this been this so difficult to accept? Why do financial markets seem to react as if slapped with every new sign that May has remained entirely consistent in her intentions?

Because conventional wisdom is a stubborn thing. And conventional wisdom says politics isn’t supposed to work this way.

By opting for a clean break with the European Union and all its accompanying economic mechanisms and institutions, the British government is embarking on a course that will, in all likelihood, hit voters in their wallets. On the long-term effects of Brexit, there’s no clear consensus. Most economists predict significant permanent impacts; others disagree. But even Brexiters — at least the more honest ones — concede that leaving the single market and the customs union is likely to have a significant negative effect on the British economy in the short term, as it adjusts to new trade patterns.

That the denials of the coming hard Brexit lasted so long, and remained so steadfast, demonstrates how fixed the notion has become, in the minds of the commentariat at least, that good economics is good politics. We are used to a politics sensitive to the arguments of big business and to aggregate economic data. It is an article of faith for a wide swath of the British elite — not just those who work in or near financial markets — that the rational self-interest of voters dictates an overriding concern not just with economics, but with the health of the national economy.

The occupant of No. 10 Downing Street is not meant to ignore lobbying from the city, or complaints from businesses concerned about losing access to their major export market. Nor is the wider public supposed to be so sanguine about potential costs to the economy. When Bill Clinton’s strategist summed up the rules of the political game as ‘It’s the economy, stupid,’ for most politicians of that generation, that meant the economy writ large — gross domestic product and its growth — was the ultimate goal.

That, however, was then. Politics, as it turns out, works differently now.

This shift has occurred for two reasons, not all directly connected to Brexit, and not all confined to the United Kingdom, where the absence of a credible opposition makes the prime minister uniquely powerful and essentially able to anticipate electoral victory, come what may.

The first reason is the public’s loss of trust in aggregate economics. It is not so much that they do not believe the “experts” who say that a particular course of action might harm commercial interests and damage the GDP. Rather — and particularly since the financial crisis — they do not see a connection between these figures and their own lives and thus don’t care. Years of listening to officials trot out positive economic data while their incomes have fallen and their living costs have risen have led to this; this is as true of many supporters of President Donald Trump as it is of some Brexiters. Many in the Rust Belt simply do not believe that browbeating manufacturers to produce in America, even at the cost of driving some companies away, will necessarily spell economic disaster for the country or themselves. Many hear economists warn that outside the single market, the attractiveness of London as a base for financial services firms is likely to decline markedly, and that many of these might choose to relocate to preserve their EU presence and see nothing that’s relevant to them.

The second reason, however, reflects a more radical shift. People, it turns out, might be more willing than anyone expected to be less well-off — both collectively and individually — to live in what they see as a better society. Better, of course, means many different things to different people. In the case of Brexit voters, it might mean prioritizing the needs of co-nationals, or reducing inequality between the rich and poor, at the expense of economic growth. This isn’t an irrational choice, nor will the politicians responsible for carrying out these policies necessarily be punished in future elections. Brexit might mean the economy takes a hit, as immigration slows, and that the City of London, financial powerhouse, loses business and clout. Yet in many of the Labour Party’s historic heartlands, this combination of outcomes is a vote-winner, not a vote-loser. Similarly, there are those who believe that even if Trump’s “America First” program results in the United States falling down the international wealth rankings, and even if it does not turn back the clock to some manufacturing golden age, it will have worked if it derails the current course toward a globalized, post-modern, politically correct future devoid of community and identity.

For elites in denial, these beliefs are both anathema and erroneous. It is impossible for employment to increase if national wealth decreases, for instance, or for rational behavior to include the acceptance of less security and wealth. As a result, there is a widespread assumption that once people who have been “hoodwinked” by nationalists and populist politicians start to feel economic reality bite, they will revert to the political center and normal service will be restored. Concerns about identity will be replaced by anxiety about cash.

It’s a comforting thought, but not a compelling one. For the ultimate irony is that, should these doomsayers be proved right, it might weaken, rather than strengthen, their political influence. Even if Brexit leads to economic crisis, even if “America First” leads to job losses and Social Security cuts, their cheerleaders are not the kind to hold up their hands with a meek “mea culpa.” Rather, the cry will be “sabotage”: It was the “establishment,” or the “foreigners,” or indeed both who deliberately worked to make the new project fail. If it was the failure of the policies espoused by “the establishment” that created the conditions for the current political insurgency, the failure of these anti-establishment policies might nurture it still further.

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