51.9% Leave doesn’t tell the truth. Neither do words from European and UK leaders. The irrational Brexit puts both Europe and UK in a prisoner’s position. Stay or Leave, this is the Dilemma. Even after the Referendum.
I moved to the UK, to London in particular, a bit over a year ago. I left Italy because I thought an international experience would enrich me both personally and professionally. I felt that I was losing confidence in the future and didn’t reflect myself in how the economical, political and cultural instabilities have transformed Italians, a population that I will always admire for its strong values and ability to adapt.
Being in the UK today represents something that I won’t probably experience again for the rest of my life. The most stable country in Europe, whose GBP has grown consistently from 1982 onwards (2009 and 2010 excluded), whose unemployment rate is one of the lowest in Europe, whose currency was exchanged at 40% more than the Euro, whose rating was the highest in the region, suddenly calls for a thoughtless referendum and votes to Leave the EU. It sounds irrational.
Suppose two friends, Europe and the UK, are suspected of committing a crime and are interrogated in separate rooms. They are rational human beings so they both want to minimise their penalty. What is called the prisoner’s dilemma offers multiple scenarios: if only one of them betrays the other, who confesses will be free and who keeps silent will be jailed for 10 years. In case both of them keep silent, they will serve only 1 year in prison. If both confess, both Europe and the UK will be given 5 years of prison. In case of asymmetric information, in absence of communication between the entities, this scenario will always lead to a non efficient situation in which both parties choose to protect themselves at the expense of the other participant. As a result of following a purely logical thought process to help oneself, both participants find themselves in a worse state than if they had cooperated with each other in the decision-making process.
Luckily, Europe and UK are not in two different rooms and have the chance to communicate. But unfortunately they are not in a zero-sum game. If one becomes weaker, the other is likely to become weaker as well and it’s not clear who would benefit from this conflict. This unpromising scenario suggests that Brexit is not the only way, as it’s not an efficient one. The well said and formal words that politicians all over Europe have been communicating following the referendum don’t match mathematical and economical principles on the base of which most of business and political decisions are taken. And despite Prime Minister Cameron and London’s Mayor Sadiq Khan both said that people clearly expressed their choice, a majority of 1.9% doesn’t seem big enough to justify such a big decision, in which not motivated by plan and at least partially based on false information: the £350m pledge to fund the NHS has been declared a mistake by Farage, the higher control of the borders is not likely to happen as Britain wants to access the single market. 17.4m people strong “Leave” was largely based on these two points.
It’s no surprise then that the initial requests by Juncker about UK leaving the EU in the next three months has quickly been calmed down by leaders of Germany, France and Italy who decided against a rapid start for the negotiations. Similar case for JP Morgan Jamie Dimon who first announced that the bank would have moved 16 thousand people in case of Brexit and yesterday said that the bank will maintain a huge presence in London, Bournemouth and Scotland. Again, they are simply rationale.
Therefore, after the first crazy days in which markets panicked much more than expected, there is the general feeling that leaders all over the world have sat down to think strategically about the possible next steps. Sadiq Khan has just named Rajesh Agrawal deputy mayor to protect the City after Brexit. The self-made multi-millionaire who grew up in poverty in India before moving to the UK and making his fortune is the first move of Mr Khan to keep his promise to be the “most pro-business mayor yet”. On the other hand, Boris Johnson has decided to not run for Prime Minister and Nigel Farage is stepping down as leader of the UKIP party. The two main supporters of the Leave campaign have dragged UK down into mess and are now expecting others to pick up the pieces.
Despite markets have slightly calmed down, the equilibrium is far to be reached. Another storm is yet to come. The only hope is that troublemaker leaders will adapt a rational behaviour instead of making it their own battle or their chance of visibility. Farage’s last claim “My political ambition has been achieved” suggests he acted for a battle, not for a vision. Neither Europe nor the UK need heroes, they need not to be prisoners. People don’t need to watch videos of those political leaders screaming in Parliament and insulting each other; people don’t need episodes of racism masked as political discussions. Whatever politicians decide, we will always be citizens of Europe. Democracy is clearly the base of our society, but 51.9% of majority under false information doesn’t lead to a rational and democratic equilibrium. I believe Farage and Leave won the Referendum battle but will lose the Brexit war, in the name of rationality, in the name of the equilibrium.