The UK's Self-Immolation Proves (Among Other Things) That Business Needs Regulations

by Neil H. Buchanan

Apparently, "Everyone Regrets Brexit," according not only to one UK-based news outlet but to poll after poll showing that the people of the UK now rue their country's 52-48 plebiscite vote to leave the EU.  Astonishingly, according to a recent mega-poll of ten thousand respondents, the "we should have stayeds" outpace the "glad we lefts" by almost a two-to-one margin.  That is hardly surprising, because the idea of getting out of Europe was sold on lies in the first place, and the county's long, grinding decline has only accelerated in the last six years.

Does that mean that the UK will soon be back in the EU?  That would make too much sense.  Before we even get to the question of rejoining, recall that that 2016 vote was non-binding, and it was only when the Conservative Party decided to go all-in on carrying through with Brexit -- and "hard Brexit" at that -- that the divorce was hammered out.  In addition, the supposed mandate from the voters in 2019 that put the serial liar Boris Johnson (whose career of brazen, very public lying stretches back at least to 1988) in charge of "getting Brexit done" in fact saw more than half of the voters that year choosing parties that opposed Brexit.  Again, this is a train wreck that the Tory party embraced and delivered, ignoring every warning along the way.

So surely the Labour government-in-waiting will seize on popular discontent.  Right?

No.  Party leader Keir Starmer says that he will not back any effort to rejoin the EU.  That is very, very reminiscent of Clintonian triangulation, which is disappointing coming from a party that is much less timid than its Democratic cousins in the US.  Even so, it probably does not matter, because there is no reason for the EU to agree to welcome the Brits back, no matter how remorseful they might (or might not) be.  It is true that the Ireland/Northern Ireland border problem is a headache that could become a malignant tumor, but all indications are that European leaders will let the UK government deal with the problem of where to put the post-Brexit customs checkpoints.

The point is that it is all a mess.  And as I wrote in two columns last week, while I was on a visit to the UK that required me carefully to work around the effects of the most recent national work stoppages -- which I strongly support, to be clear -- all of this is ultimately an act of self-harm.  Well, not in fact self-harm, because as I also pointed out, the people who run that country's political system and who stoked the nationalistic fervor and anti-"other" hatred that resulted in the fateful vote to Leave, are not themselves likely to feel much if any pain from what they have done.  Johnson, for example, was just published on the Washington Post's op-ed page, treated as a global leader after having only a few months ago been forced to leave No. 10 in disgrace.  The insiders land on their feet.

Here, I want to steer the conversation away from the politics (as deliciously awful as they are) and instead talk about why Brexit has been such a (predictable) economic calamity for the country that wanted to "take back control" of its own decisions.  It turns out that it is easy to say that the rest of the world can sod off, but imagining that Britain (or pretty much any country) can improve its economy by doing so is a destructive fantasy.

Let us leave aside the effects (which I mentioned briefly last Thursday) of cutting oneself off from workers who were more than willing to travel within the EU to a Britain that allowed them to have semi-decent jobs and wages.  The remaining Brexiteers are now saying that labor shortages are proof that their plan worked, because now all of those jobs are there for Brits.  So why are those jobs not being filled?

As an aside, the ultimate proof that the Leave crowd is in trouble is that the most committed of them are now claiming that Brexit never happened -- not as it should have been done!  Yes, they now join the apologists who claim, as Professor Dorf once disparagingly noted, that Marxism has not failed, because it was never truly tried.  Come to think of it, the argument that Marxism was co-opted by murderous tyrants and thus was never given a genuine road test is much easier to sustain than the idea that the UK's Tories never gave Brexit a royal chance.

Why am I so sure about that?  The answer to that question brings me back to the economics of Brexit.  As I suggested above, there is something much more fundamental at work here than the problem of worker migration.  The deeply mistaken belief that motivated some people to conclude that political independence would be an economic boon to the UK is the same mistaken belief that underpins neoliberal econo-theology in general: The Government is the problem.  That is, the conservative movements in both the UK and the US have been feeding off of each other for decades, with the Reagan/Thatcher axis having been particularly damaging.  One of Reagan's infamous applause lines among his hard-right fans was that "the nine scariest words in the English language are: 'I'm from the government, and I'm here to help.'"  Yuk yuk.  Thatcher believed that her father's hard work proved that people should (and can) stand on their own two feet.  No nanny state here!

The idea, then, is that any time we can get the government to "do less," we have increased liberty, which will surely lead to a flowering of economic prosperity.  But what does it mean for a government to do less?  And if less is good, even less has to be better, and nothing at all must be pure bliss.  No government means maximum freedom, surely...  I mean ... right?  Must be.

And even if they cannot get to their ideal no-government situation, then getting out from under the thumb of the EU's bureaucrats and regulations would allow Britain's enlightened, Tory-inspired anti-regulatory economic policy ideas to replace all of that nasty continental red tape, which would be good for all of those businesses that were supposedly groaning under the weight of the pencil-pushers' silly rules.

Not so much.  When the UK's Conservative elites said that they did not want British businesses to continue to prostrate themselves in response to dictates emanating from Brussels, they forgot (or conveniently chose not to mention) that there would need to be different rules that the UK would have to promulgate in every sphere of business, from food safety to transport protocols to payment requirements.

This means that British businesses, which oh-so-recently could sell their goods both at home and in the rest of the EU under one set of regulations, now have to figure out how to comply with two sets of rules to sell the same goods in two different markets.  This has been disastrous for British businesses.  Some have shut down because it was too expensive to continue to operate.  Some have had to do without the profits from their EU sales, because they can no longer operate in both markets.  Some have had to form partnerships with EU-based companies, or be bought out by them.  Some have shut down at home and simply moved abroad.  And even the larger companies that can keep going even after complying with the new sets of rules are necessarily less profitable than they could have been.

Why not just continue to operate under a single set of rules?  Well, the whole point was that the old rules were bad, so new rules would be better.  And even after the economic reality became clear, it was too embarrassing to say, "We'll go back to the pre-Brexit legal regime, but without the benefit of having input into the enactment of EU rules, which we used to have."  Indeed, the current Tory government is pushing forward a bill to repeal all remaining vestiges of EU-compliant UK laws: everything, everywhere, all at once.

But surely, one might say, there is a meaningful way in which the UK's new rules could be deemed to constitute "less government."  Why should British business be regulated at all?  Why, for example, have food safety laws?  If people want to buy safe food, the invisible hand of the free market will provide it for them, goes the logic.  But how does a customer know what is safe?  Will there be recourse for consumers who are harmed by products that they buy?  If so, then that is a regulation (even if the government delegates that task to nominally private tribunals).

Indeed, well run businesses have long understood that they are in fact better off if they do not have to negotiate one-off contracts with every customer or to litigate claims that would not have to be litigated if everyone worked under the same set of widely applied rules.  The Brexiteers, however, hate regulations and want to write their own rules.  But wait, it turns out that the word "rules" is from Middle English, which had roots in Anglo-French and is based on the Latin "regula."  Oh no, the regulations are coming from inside the house.

This, then, is a very old story.  The anti-regulatory regime that Brexiteers imagine is simply a different regulatory regime, one that they thought would be better because they would be able to write it.  As a matter of reality, they could not avoid having product safety laws, or financial protection laws, or any of the panoply of legal rules that permits modern capitalism to flourish.  If "True Brexit" was understood to mean that there would be no regulations at all, then of course the post-Brexit existence of regulations must be the dastardly work of the UK's version of the Deep State.  In that case, yes, True Brexit was never tried -- and never could be.

At least conservatives in the US, to their very minimal credit, might have imagined that their country is so large and economically powerful that it can get away with having its own set of rules  That is most definitely not true, but a political party steeped in American exceptionalism easily fell for the romantic idea of being truly independent from the pressures of outsiders.  That was never true of the UK, even at the height of its trade-dependent empire, and certainly not now, as it tries to hold together a four-part country with a GDP that is smaller than California's and barely larger than India's (which must be especially annoying for the former colonizers).

What is worse than following rules?  Anarchy.  What is worse than following someone else's rules (even though, again, the UK participated in making the EU's rules)?  Having to write your own rules and hope that enough people will be willing and able to follow them that you will still have an economy.  As the Brits brace themselves to be passed by countries that were once far in their rearview mirror, such as Poland, they can thank the Tories' exploitation of racism and their endless denial of the fact that their country simply is not what it used to be.  In the end, the UK needs the rest of the world much more than the rest of the world needs the UK.