This Referendum Is about Governance

5 mins. to read
This Referendum Is about Governance

By Alex Story of Leave.EU

The key question in this referendum is: Does the UK wish to be free or not? Amidst the noise that has been generated by the referendum to either remain or leave the European Union, much of the discussion seems to have revolved around derivatives issues, in particular growth and border control.

However, the fundamental matter is who makes what decisions when circumstances change and how. And most importantly, on whom do the people of the UK bestow that right. In short, this referendum is about governance. No more, no less.

Currently, the Remain camp has nailed its colours and the reputations of many an economist to the topic of GDP growth. Many economists predict that there will be more growth if the UK stays part of the European Union than if she left. This is the argument on which the entire strategy of the Remain camp hinges. Superficially, it is seductive. After all, who would want to vote for the “less growth” option?

However, it is an odd approach given the discrepancy between their bullish pitch about future growth and the reality on the ground: Firstly, the EU has barely grown in aggregate since the financial crash and has suffered persistently high levels of unemployment; secondly the economics profession has a terrible reputation in forecasting.

Significantly, polls seem to show that the bulk of the population is not that worried about the effect of leaving the European Union on the country’s growth prospects. Ipso Mori recently showed that a substantial majority of respondents think their financial position will not be affected whichever way the vote goes. This is in spite of prophesies by High Priests of Doom that the end of the world is nigh if the majority of the country votes to leave on June 23rd.

The gamble for the Remainers is that people will vote with their wallets. However, on this topic, things might not be quite as they seem. It might be that many feel that the size of their wallets, more precisely what they can buy with the money they have in it, has shrunk in real terms within the EU since 1999.

According to the Office of National Statistics, inflation averaged 1.6% from 1997 to 2015. However, whilst salaries in that period increased by 60%, house prices shot up by an astounding 280%. Whereas house prices were 3.5 times salaries in 1999, they are now way over 6 times earnings, vastly outstripping what the average British family can afford. In addition, UK house prices are forecasted to rise by a quarter in the next 5 years, shifting resources away from consumption yet more.

Over the same period, household debts have skyrocketed. Today, housing tops the “average household expenditure” charts, up from third place 17 years ago when it ranked behind spending on leisure, goods and services.  Whatever the reasons, although GDP in nominal terms is higher now than it was then, people feel poorer. They spend relatively more on surviving and much less on having fun than they once did.

This might be a crucial point in understanding why the Remain camp’s economic argument is falling on deaf ears. People were repeatedly told that the changes to their country’s centuries-old constitution were necessary because they would create more growth. However, when growth did come, many felt nothing more than a steady impoverishment.

On the other side of the fence, the Leavers make the point that our borders cannot be controlled. Interestingly, this topic is both the most distasteful to the well-heeled and, simultaneously, the most obvious example of a nation state’s loss of control.

Cities, towns and villages across the United Kingdom have changed dramatically, without the consent of its people, with a marked acceleration from 2004 onwards. It might be that Bradford, Dewsbury, Tower Hamlets and Birmingham are more vibrant today than they were a couple of decades ago but few ever asked the locals their opinion on the matter. And when a few did, the answers were often dismissed as these didn’t chime with the prevailing view of the regiment of bien-pensants.

What we have here is the world as a hypothesis, inhabited by the Remainers, against the real world which is the one that the Leave camp addresses as experienced by most of our fellow citizens.

The Remain camp has made the mistake of thinking that the more economists they have on their side, the more compelling their case for staying becomes. The problem is that the dismal science of economics has a near perfect record in getting forecasts wrong. In 2008, Queen Elizabeth asked the academics at the London School of Economics: “Why did nobody notice the turmoil on financial markets?” Professor Luis Garicano, then director of research at the London School of Economics’ management department, is reported as giving Her Majesty a straight answer: “At every stage, someone was relying on somebody else and everyone thought they were doing the right thing.”

Worse, and perhaps most damningly, the Remain camp is becoming the “no can do” camp. Their message is bereft of hope and aspiration. They sound increasingly like medieval priests trying to force Christopher Columbus to Remain on the shore of the Old World because to Leave to brighter shores will lead to their inevitable doom.

Having grown accustomed to operating behind closed doors and to speaking mainly among themselves, the Remain side has lost the ability to read the signals coming from the people of this country. The bright light of the referendum campaign has forced them to defend their position and it is not as solid as they once assumed.

With time running out and the polls levelling, they might have to change tack drastically to carry the day. They might want to stop campaigning on the flawed models of economic forecasting and go out selling supranational government by Brussels, as fervently and honestly as they can, to the British electorate. It is clearly an uphill battle. But it is the one that they are engaged in. This fight is about governance. Nothing more. Nothing less.

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