Brexit: Why it Matters

Written by: Byron Mühlberg

The current year is one in which several crucial democratic elections will occur across the globe; elections which will unquestionably have an affect on the discourse within our global political economy, and have often unforeseeable and far-reaching implications on economic and civil liberty across the world.

By the close of 2016, we will have an indication as to the extent to which the ANC’s support base has diminished, as well as an idea about which political faction will fill the void left behind in their wake. Further abroad, we will know who will succeed Obama in the White House, and oversee the United States for at least another four years of this unique period in world history. And finally, we will know whether the European Union’s third most populous member-state will remain within, or embark on a political exodus from, that union.

And it is the latter that I wish to examine today; for the implications of a British Exit from the EU (Brexit) may well prove to be a defining act in the shaping of the European political stage during the 21^st century.

On Thursday, 23 June 2016, citizens of the United Kingdom and Gibraltar will participate in a once-in-a-lifetime referendum in which the UK’s membership in the EU may be called into question. The Remain Campaign – whose de facto leader is Prime Minister David Cameron – argue that Britain’s political association with Europe is key to mutual long-term economic cooperation and security. His position is backed by United States President Barack Obama, as well as the heads of several prominent multinationals and a sizeable swathe of British MPs. Coupled with the fact that there are several pertinent arguments in favour of Britain’s remaining in the EU, it would seem as though the Remain Campaign do indeed have a feather in their cap going into the referendum, so to speak. The Leave Campaign – led by UK Independence Party leader Nigel Farage – presses the intersected issues of freer trade, economic and political sovereignty, and immigration as their main campaign points, as these are indeed the contentions upon which a Brexit would rest. At this point, with under two months before the referendum, the polls are indicative of a close race in which the result could go either way.

So which side is it that makes the best case for Britain?

The answer comes down to what people agree is the future of the country: one of perpetuated sociopolitical integration and economic uncertainty, or one in which the UK risks economic isolation in favour of political self-determination. While being a somewhat cynical answer, this is indeed the narrative portrayed by much of the mainstream media. Let’s attempt to unravel this question – and there’s no better place to start than by taking a look at the nature of the very organization in question:

The European Union – as both an exceedingly regulatory economic institution and as a political institution being rigorously oligarchic in nature – cannot seriously be defended by any person who claims to value free-market economic principles and the notion of liberal elective democracy, and this point will be made clearer throughout this article. As such, a British withdrawal from the European Union will have several indubitable short-term benefits in the way of self-determination as well as crucial economic benefits in the medium-to-long-term. These benefits can be expressed threefold; namely those relating to the economy (regarding trade, regulation and the EU budget), immigration and sovereignty.

British Sovereignty

If I were to suggest that Britain’s relationship to Brussels was akin to that of Wyoming’s to Washington DC, one would likely reject this as an unfounded absurdity. While the comparison may be somewhat tenuous, it is nonetheless truer than claiming that the UK is a completely autonomous, independent nation in the same way as it was prior to 1973 when it began its political integration into Europe.

In the UK, the highest court in the land, the Supreme Court of the United Kingdom, is still lower than that of the central European judiciary. According to data released by Business for Britain, 64.7 per cent of UK law passed between 1993 and 2014 is of EU-origin. This is certainly an alarming figure, as it is indicative of the titanic influence the European Union has over the British Legislature.

Moreover, every single EU directive is proposed by a single body called the European Commission, which is responsible for proposing and enforcing European Legislation. The disquieting thing about this body is that the officials that constitute the Commission are EU-appointed bureaucrats; individuals who are not elected in either the member-states’ general elections, or in the European elections themselves. Essentially, European citizens have absolutely no influence over the body which holds the sole right to make and repeal the very law which is supreme over all EU member-states. This is profoundly undemocratic; and essentially countries joining the European Union are, upon doing so, surrendering their sovereignty. With regards to Britain’s aforementioned lack of legislative autonomy, the incumbent Secretary of State for Justice Michael Gove had this to say:

“As a minister I’ve seen hundreds of new EU rules cross my desk, none of which were requested by the UK Parliament, none of which I or any other British politician could alter in any way and none of which made us freer, richer, or fairer.”

Economic Implications of a Brexit

The first and most obvious event the UK economy will experience upon an exit from the EU would be the cessation of its payment of the EU membership fee to Brussels. This payment amounts to an annual fee of £10 billion (just short of R215 billion). This will decrease the UK’s balance of payments deficit by approximately 20 per cent within the first year after Brexit, providing more than half a per cent boost to the British GDP and enabling tax-cuts or increased public spending. Moreover, and perhaps more importantly in terms of long-term economic benefit, the UK will regain its economic sovereignty. While it is widely predicted that the British economy may indeed experience a period of initial uncertainty post-Brexit due to a decline in investor confidence, it is worth noting that such events are generally very temporary in nature. Thereafter, Britain will be unrestricted in creating her own free trade deals with the international community; deals which will encourage economic growth at a level perhaps not witnessed in decades. A common counter-argument to this would be that Britain, by isolating itself from the EU, will narrow its trade window with Europe. This, however, is an unlikely scenario in itself due to the fact that Britain is among the largest importers of European goods, and in a system whereby the UK determines her own trade agreements it seems somewhat improbable that extensive trade with the continent will significantly decline. One ought to keep in mind that such trade is highly lucrative for both sides of the Channel.

The Immigration Issue

Open-border immigration is economically unsustainable. For the sake of expediency, I am not going to explore the immense societal impact of allowing vast numbers of individuals with disparate ideologies into a relatively small country; although this is an interesting and pertinent topic within itself.

I will instead deal with this issue by making the case that open-border immigration can easily devastate an economy within decades. Britain is fortunate enough to be geographically situated on a group of islands, making immigration rates into the country notably lower than those of the continental countries. On the flip-side however, the UK’s welfare system greatly incentivises migration. If one were to ask the average migrant on a dinghy in the Mediterranean where it is they were headed, the answer would likely be either to Germany or to the UK. It is precisely this that is perpetuating an economic calamity in Europe today: the population is markedly ageing, and by extension there are fewer and fewer taxpayers every year. When tens of thousands of new migrants enter a country and remain unemployed due to a low overall demand for unskilled labour (Europe is after all a high-value producing economic region, rather than a high-volume producing economic region), welfare expenditure will naturally increase to compensate for the new arrivals. While the taxpaying natural population continues to decline, the immigration rate will continue to increase due to the open-border policy in question. Such events can create what may already be witnessed in their infancy today in countries such as Sweden and Germany, where ‘welfare bubbles’ allow for large sections of a population to live almost entirely independently of the economy; they are noncontributing and invariable in nature.

Such approaches are clearly unsustainable in the long term. There are two resolutions to such a problem: the first would be a long-term solution wherein these ‘welfare bubbles’ are slowly assimilated into the economy by the gradual reduction of welfare spending and embracing a policy of free-market, noninterventionist capitalism. The second solution would be short-term, in which immigration would be deliberately reduced by securing the borders. A British exit from the European Union would allow the country to make completely independent decisions regarding the security of its own borders – an action which most truly sovereign states take for granted.

Furthermore, it is worth noting that the European Union’s ill-equipped response to the Migrant Crisis, and its subsequent attempt to enforce quotas on member-states further exacerbates the anti-EU climate in both Britain and Europe itself.

In Conclusion

The United Kingdom has historically been a Eurosceptic entity; wary of the continent exerting too much political power over British affairs. However it is worth noting that being anti-EU ought not to be conflated with being anti-Europe. Asserting such is a common argument employed by Remain Campaign sympathizers, yet this contention is nothing more than a flaccid strawman. Nations such as Germany, France and the Netherlands have historically held close diplomatic relations and economic ties with the UK since long before the establishment of the European Union. Such relationships are mutually advantageous, and will undoubtedly be maintained and perpetuated in a post-Brexit scenario. As an EU citizen myself, I view the notion of European cooperation as not only beneficial, but necessary. I do not, however, regard the notion of political union and economic integration in anywhere near the same light. Europe is not the United States of America, and deeply-ensconced cultural differences do and will continue to separate European nations along both economic and political lines. A British exit from the European Union will provide the very soils upon which a well-established Eurosceptic movement can be cultivated in the future – one which may indeed see an end to the oligarchic ways of that organization.

Author: Byron Mühlberg is a student at Stellenbosch University and is pursuing majors in Political Science, History, and French. His interests lie in free-market economics, and in journalism promoting small-government conservatism.