On why Brexit is much more involved for the UK than the EU. Includes world-beating graphics.
First published in July 2020.
Imagine we’ve got a bunch of states (A to D) that have been doing their own thing.
They look pretty similar, although you’ll notice they have developed policies a bit differently (state A’s policy A isn’t quite like state D’s; state B has pushed ahead with a policy on E).
Now imagine that A, B and C decide to set up a grouping, to work together on things. State D isn't involved and so trundles along on the outside of this.
The grouping starts to develop joint policies (in areas A and C), either replacing or (more usually) supplementing state action in those areas.
That brings more coordination and alignment in those areas for the states involved.
But that’s not all. State B (progressive country that it is) wants the group to build up joint policy in area E (not least because it can upload its preferences, while others don’t really have sunk costs to consider).
So the group gets policy E.
(note that State D also develops this policy, because it is now becoming more of a thing (not least because the group has policy on this and the emergent links between the group and D require some reciprocity.))
More time passes. As state functions grow (as they tend to), so the group becomes the place for initial development and coordination of new policies F and G.
Again, states are usually building up parallel structures, but for states A-C, this is done in the context of the group.
And now the issue.
State C wants to leave. (in this model, the reasons aren’t really important: it’s the removal from the group that matters)
State C now loses access to the group’s work in all those policy areas, both the ones it used to run by itself, and the new ones.
So let’s compare the burdens for all involved.
The group (and states A and B) keep what they had, but need to move some people around, plus they have to work out their new relations with state C (for which they presumably have the template of relations with D)
State D also has an easy ride – it keeps its relations with the group and only has to fix new ones with C (and it might use the previous group relationship as a template).
And state C?
Well, it has got a lot more to do. Repatriating policies from the group; building new policies it never did by itself before; deciding how much it wants any of these to be different from before (sunk costs matter here); plus working out life with everyone else.
The burden of adjustment falls much more on state C than on anyone else. It is the necessary flipside of ‘taking back control’ from the group.
This isn’t a trap or a plot, but a mechanical result of removing yourself from regulatory coordination: Even a decision that you will go ‘light touch’ in those areas still needs legal and administrative structures and processes.
Hopefully the model translates to real-world examples easily enough for you, but the tl;dr is: if you don’t want in, then you carry the costs of being out.🔷
A few comments to add/clarify:
- Most importantly: this is adjustment costs only, NOT the value (or not) of being in a group;
- You can certainly argue that those adjustment costs will be rapidly outweighed by regaining of sovereignty and/or economic gains – I take no position on that here;
- While those adjustment costs grow over time, I am not saying that means leaving is ever impossible or undesirable, just more costly in terms of recreating regulatory capacity;
- It is a long-winded way of explaining my argument, but sometimes it is helpful to unpack the steps of thinking behind something, especially if it helps isolate weaknesses in the logic;
- Finally, I always welcome constructive criticism, so if you see gaps/extensions/anything, then say so and I’ll see how I might express this all more usefully.