The recent vote by Great Britain to exit the European Union (aka Brexit) is an example of making decisions emotionally and without thoroughly analyzing the consequences. Or, of not thinking things through. As has been shown in various studies, people’s decisions tend to be emotional rather than rational. Indeed, some say our decisions are 90 % emotionally based and 10% rationally based! Based on the news coverage, the campaigning on both sides was quite emotional and so, no doubt, the decision made was emotional.
Once the results were in, the British pound plunged by about 9% against the dollar, and the stock markets around the world lost value. (Indeed, the Dow Jones industrial average lost 611 points on June 24, 2016.) While the Bank of England stated it was prepared for Brexit and is attempting to allay financial fears, many international companies with offices in London, are trying to figure out what to do next. Do they close their offices and move to Northern Ireland, Brussels, Germany or France so as not to disrupt their relationship with the EU or do they stay and put up with the barriers that may arise? Even the soccer players are wondering how this affects them (the shares of Manchester United did decline a bit!).
Indeed, with the ramifications slowly sinking in, more than 1.2 million British have indicated that they regret their Leave” vote. More than 4 million have petitioned for a revote or “do-over”. ( Id.) The EU has responded firmly, saying there will be no re-vote. Rather, the EU is pushing to proceed with the “divorce ” with all due speed!
So- the question is “What now’? According to an article in The Economist, Great Britain has two years to negotiate its departure. But, what will that departure look like? One option is to become like Norway which “”¦ is a member of the European Economic Area (EEA) in return for which it is required to contribute to the EU’s budget and allow the free movement of people. “(Id.) But, is this option realistic in light of strong hints that the EU countries will retaliate for the Brexit vote? That is, following game theory, the EU will not play nice, but, rather, will play “tit for tat”.
The second option is to opt out of the EU entirely, and simply trade with the EU under the rules of the World Trade Organization in the same way as does the United States, China and many other countries. But “”¦ most economists agree that this would do more damage to the British economy.” (Id.)
It is ironic that one of the driving forces behind the Leave campaign was immigration: The British wanted to be able to control the number of refugees (from Syria and elsewhere) coming into the country rather than being told by the EU how many immigrants must be accepted.
Now, having voted to Leave, the British must sacrifice either the economy or the free movement of people. If they opt to be like Norway (assuming the EU allows it!), the economy will not be damaged by Brexit but they must allow the free movement of people which means allowing immigration. If they choose to opt out completely, they regain control of their immigration policies but sacrifice the economy.
Last year I attended a seminar in which the presenter noted that in any negotiation (and Brexit, was indeed, a ‘negotiation” on a world scale), the hard questions must be asked ahead of time. Some of those questions involve outcomes; what will be the likely outcome or consequences of our decision? What will be the likely benefits? The likely costs? What will be the positive ramifications? The negative ramifications? That is, will we be “better off” or “worse off” in various respects. What REALLY is the emotional reason behind the decision? What REALLY is the factual or business reason behind the decision? In short, what REALLY IS prompting us to decide the way we are deciding and is that decision REALLY in our best interests?
In any negotiation, one must consider all of the ramifications of any decision being made. And while, it is not possible to know all of the ramifications, it is feasible to obtain a good grasp on most of them. To not think about consequences could lead to a bad decision; one that does not benefit you in any way.
Unfortunately, this may be Britain’s fate: to gain control over their immigration policy, they voted to Leave, yet now the British must choose either to have no control over immigration or suffer economically.
“¦ Just something to think about.
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