Stumbling and Mumbling

Brexit: a worthless experiment

chris dillow
Publish date: Tue, 11 Oct 2016, 01:33 PM
chris dillow
0 2,773
An extremist, not a fanatic

In an attempt to defend the indefensible, Janan Ganesh invites us to regard a "hard Brexit"* as an experiment.

Sometimes history throws up ideas that are better tested than forever stymied...ideas, unless they are plainly malign or ruinous, have to be held accountable in the end by real-world application. There is only so much mileage in the statecraft of frustrating them.

A "soft Brexit" he says would allow Leavers to claim that any ill-effects are due to "betrayal", to not implementing Brexit properly. A "hard Brexit" would at least permit a proper "falsification of their project". And, he adds, if things work out badly we can rejoin the EU.

I'm unconvinced.

This experiment risks imposing real costs on real people - lower wages and unemployment. And as Neil Kinnock famously said, "you can't play politics with people's lives".

This objection, however, won't work: it only applies to the left.

Instead, I've other objections to Janan's piece.

One is that Brexit is not a scientific hypothesis to be discarded when it is falsified. Instead, Leavers have invested their ego in the idea; I question Janan's claim that many are "open to falsification."** This means that if a hard Brexit is followed by economic troubles, they'll invent immunizing strategies to deny this.

And it'll be easy to find such strategies. One reason for this is that a "hard Brexit" will not be a genuine experiment. In a true experiment, we can compare a treatment group to a control and so discover the effects of the treatment. But after a "hard Brexit" we'll never see the control. We'll not see the counterfactual, what would have happened if we'd stayed in the EU.

This matters. The case for remain is not that Brexit will lead to catastrophe but that it will cause slower long-term growth; real GDP will grow by a bit less than 2% per year rather than a bit more. If this happens, Leavers will be able to claim that Brexit wasn't so bad. But this would be entirely consistent with the Remainers being correct.

Also, the Duhem-Quine problem - that we often can't test hypotheses in isolation - is especially severe in this case. Let's say Brexit leads to slower growth in trade and productivity as Remainers claim. Leavers will find it easy to show other reasons for this. Exporters are "fat and lazy"; investment has been low; secular stagnation means there's little innovation. And so on.

And the thing is, these claims will have some truth. There are always many plausible explanations for poor economic performance.

You needn't look far for an example of what I'm saying. On Radio 4's Today programme this morning Gerard Lyons - one of the more sensible Leavers - claimed that a weaker pound was "inevitable" because of the UK's big current account deficit (2"14' in). That's a way of denying an effect of Brexit.

I very much doubt, therefore, that a "hard Brexit" is a worthwhile experiment. Even if the Remainers are correct abut its effects, most Leavers won't admit they were wrong.

I suspect instead that Janan is giving us another example of the fact that there is no government policy so bad that it will entirely lack supporters; the corridors of power lend gravitas to even the daftest ideas. As Adam Smith said, "We frequently see the respectful attentions of the world more strongly directed towards the rich and the great, than towards the wise and the virtuous."

* I'm putting scare quotes around "hard Brexit" because I take Owen's point that the phrase serves framing rather than purely descriptive purposes.

** Yes, some are. But the better Brexiters such as Daniel Hannan and Andrew Lilico are already having their doubts; I'm thinking instead of fans of a "hard Brexit".

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