I have been struggling to make sense of the Brexit debate. Perfectly reasonable, well informed and highly intelligent people reach diametrically opposite conclusions, all impeccably argued. In order to make sense of the debate, I did what any quant might do and made a graph of the competing Brexit visions.
Consider 4 alternatives for the GDP of Britain:
Of these, the last is most interesting. Will leaving the European Union unleash the forces of economic growth, giving us Singapore or Hong Kong style economic growth instead of continuing stagnation.
Before the vote I wondered if we would get the 1950s or Hong Kong. We now know much more about what Brexit actually means.
For many living in the London liberal bubble, the libertarian Hong Kong/Singapore vision certainly is real, after all, it represents their views or the views of their friends. What is discussed in dinner parties. For me, if I believed this, I would have voted for Brexit. But, I voted remain.
Recall what what happened with universal suffrage (when the poor could also vote) in the early 20th century, and what happened to economic policy.
In the political marketplace, I think the Sunderland view is going to win.
Britain will be hit by a double whammy, the cost and inefficiency of leaving the European Union and the cost and inefficiency of the future populist economic order.
© All rights reserved, Jon Danielsson, 2019